New York Files Landmark Lawsuits Against Coinbase and Gemini Over “Prediction Markets” — Calling Them Illegal Gambling

In a dramatic escalation of the ongoing legal battle over prediction markets, New York Attorney General Letitia James has filed lawsuits against two of crypto’s biggest names — Coinbase and Gemini — accusing them of running unlicensed gambling operations under the guise of “prediction markets.”

The lawsuits, filed Tuesday in New York state court, allege that both companies are offering sports, entertainment, and election-based betting products that violate state gambling laws. James’ office argues that these so-called “prediction markets” are nothing more than digital bookmaking operations, allowing users to wager real money on outcomes they cannot control.

“Gambling by Another Name”

“New York law is clear: gambling by another name is still gambling,” James said in a statement. “These platforms are operating illegal gambling operations, and we will not allow them to skirt our laws and exploit New Yorkers.”

The suits detail how Coinbase and Gemini market their prediction markets, describing them in promotional materials as places where users can “bet” on everything from the Super Bowl winner to the next Oscar recipient. The NYAG’s office says the platforms act as bookmakers, setting odds, taking wagers, and paying out winnings — classic hallmarks of gambling operations.

The Legal Battle Heats Up

This move by New York is part of a broader, multi-state crackdown on prediction markets. Nevada, Washington, Arizona, Connecticut, Illinois, and others have filed similar lawsuits, arguing that sports-related prediction contracts are bets, not the federally regulated swaps that companies like Coinbase claim they are.

The issue has now reached multiple federal appeals courts and is widely expected to land before the U.S. Supreme Court. At the heart of the dispute is whether the Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over these markets — as the agency claims — or whether states can enforce their own gambling laws.

Coinbase Pushes Back

Coinbase Chief Legal Officer Paul Grewal fired back on social media, asserting that “prediction markets are federally regulated national exchanges” and that the company would fight for federal oversight.

“We believe the CFTC has clear authority here,” Grewal wrote on X (formerly Twitter). “We will defend the right of Americans to access these tools and will fight for clarity at the federal level.”

Gemini declined to comment on the lawsuit.

CFTC Enters the Fray

CFTC Chairman Mike Selig has been vocal in arguing that prediction markets, including sports contracts, fall under his agency’s “exclusive jurisdiction.” The CFTC has filed lawsuits against several states — including Arizona, Connecticut, and Illinois — to block them from prosecuting prediction market providers. The agency has also moved to intervene in Nevada’s case, siding with the companies.

Kalshi Avoids the Ax — For Now

Notably absent from Tuesday’s lawsuits was Kalshi, one of the largest prediction market operators. Last fall, Kalshi preemptively sued the New York State Gaming Commission, asking a federal court to rule that state gambling laws don’t apply to its platform. That case is still pending in the Southern District of New York.

What’s at Stake?

The outcome of these lawsuits could reshape the future of prediction markets in the U.S. If states prevail, companies like Coinbase and Gemini could be forced to shut down their prediction market products in those jurisdictions — or face hefty fines and potential criminal charges.

If the CFTC wins, it would cement federal authority over these markets, potentially opening the door for broader adoption of prediction markets as a legitimate financial tool.

For now, the battle lines are drawn — and the stakes couldn’t be higher for the future of crypto, gambling, and the blurry line between the two.

Tags: New York AG, Letitia James, Coinbase, Gemini, prediction markets, gambling, CFTC, federal jurisdiction, sports betting, crypto regulation, legal battle, Supreme Court, Kalshi, unregulated markets, betting platforms, digital gambling, state vs federal law

Viral Sentences:

• “Gambling by another name is still gambling.”
• “Prediction markets are federally regulated national exchanges.”
• “New York law is clear: gambling by another name is still gambling.”
• “These platforms are operating illegal gambling operations.”
• “We will not allow them to skirt our laws and exploit New Yorkers.”
• “The future of crypto, gambling, and the blurry line between the two.”
• “The outcome of these lawsuits could reshape the future of prediction markets in the U.S.”
• “The battle lines are drawn — and the stakes couldn’t be higher.”
• “This move by New York is part of a broader, multi-state crackdown on prediction markets.”
• “The issue has now reached multiple federal appeals courts and is widely expected to land before the U.S. Supreme Court.”

,