New York Sues Coinbase and Gemini for $3.4B Over Illegal Prediction Markets

The state of New York filed a pair of high-stakes lawsuits Tuesday against Coinbase and Gemini, arguing the crypto companies violated state gambling laws by offering prediction markets. The suits, filed Tuesday in a Manhattan state court, target not only sports-related wagers on Coinbase and Gemini, but also the firms' prediction markets related to entertainment and politics. New York Attorney General Letitia James also took issue in the lawsuits with the fact that both Coinbase and Gemini allow New Yorkers as young as 18 to place wagers on prediction markets, when the legal age to gamble in the state is 21. "Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and constitution," James said in a statement. "Gemini and Coinbase's so-called prediction markets are just illegal gambling operations, exposing young people to addictive platforms that lack the necessary guardrails." New York is seeking a minimum of $2.2 billion in damages from Coinbase, and at least $1.2 billion in damages from Gemini. New York is not the first state to sue prediction market platforms over alleged violation of state gambling laws. Numerous other states have already done so—even as prediction market platforms, backed by the Trump administration, argue the wagers they offer do not fall under state law. The platforms contend they instead offer event contracts, regulated at the federal level by the CFTC. But given its stature in the world of financial regulation, and its formidable resources, New York's entrance to the fray today is of particular note. It is also significant given the unique heft of New York disgorgement laws, which allow the state to collect company revenue ultimately deemed ill-gotten not just within New York, but nationwide. After New York filed its lawsuits against Coinbase and Gemini on Tuesday, Coinbase Chief Legal Officer Paul Grewal said the company "will continue to fight for the federal oversight of [prediction] markets that Congress intended." When reached for comment, Coinbase referred Decrypt to Grewal's X post. New York's attorney general is currently locked in a legal brawl with Kalshi, the country's largest prediction market platform. In the fall, the company preemptively asked a federal court in New York to intervene and prevent New York from suing Kalshi for violations of state gambling laws. The motion has not yet been decided. Should it fail, New York will likely sue Kalshi as well, given that it issued the company a cease-and-desist order in October. Experts widely anticipate that the jurisdictional battle over the regulation of prediction markets will ultimately be decided by the U.S. Supreme Court. A Gemini representative did not immediately respond to Decrypt's requests for comment. A spokesperson for the New York Attorney General's office referred Decrypt to James' statement and the lawsuit filings.