Coinbase, Gemini face New York illegal gambling lawsuit
Table of contents
- New York Attorney General Letitia James filed lawsuits against Coinbase and Gemini on April 21, alleging their prediction market platforms are illegal, unlicensed gambling operations.
- The complaints argue both companies allowed users aged 18 to 20 to access platforms, below New York’s minimum gambling age of 21, and permitted wagering on college games involving New York teams.
- The AG is seeking forfeiture of illegal profits, restitution to consumers, and civil fines equal to three times profits from the operations.
New York Attorney General Letitia James has filed lawsuits in Manhattan state court against Coinbase Financial Markets, Inc. and Gemini Titan LLC, alleging their prediction market platforms constitute illegal, unlicensed gambling in violation of state law.
The actions, filed April 21, mark the latest escalation in an intensifying national battle between state regulators and prediction market operators over jurisdictional authority.
Unlicensed and underage
The Office of the Attorney General contends that both Coinbase and Gemini are running gambling operations without licenses from the New York State Gaming Commission.
Neither company has paid the state taxes required of licensed casinos and mobile sportsbooks, which are subject to a rate of approximately 51% of gross revenue.
The OAG’s investigation found both platforms accessible to users between the ages of 18 and 20, despite New York law setting a minimum age of 21 for mobile sports betting. The suits also allege that both companies allowed wagering on college games involving New York teams, which is prohibited under state law.
The AG is seeking court orders requiring the companies to forfeit illegal profits, pay restitution to harmed consumers, and pay civil fines equal to three times profits from the operations.
James is also seeking bans on underage access and marketing around the platforms in college campuses.
Attorney General Letitia James said:
“Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution. Gemini and Coinbase’s so-called prediction markets are just illegal gambling operations, exposing young people to addictive platforms that lack the necessary guardrails.”
Federal vs. state authority
Both companies launched their prediction market products in mid-December 2025, operating them across all 50 US states.
Coinbase entered the space after filing lawsuits of its own in Connecticut, Michigan and Illinois to block those states from regulating its prediction business.
Coinbase Chief Legal Officer Paul Grewal pushed back on the New York action, arguing federal oversight applies. In a post on X, he said:
“Prediction markets are federally regulated national exchanges, registered with the CFTC. This issue is proceeding in New York federal court as we speak. Coinbase will continue to fight for the federal oversight of these markets that Congress intended.”
Gemini Predictions, launched by the Winklevoss-founded exchange after receiving a Designated Contract Market license from the CFTC in December 2025, did not comment on the suit.
New York is not acting in isolation. Nevada, Washington and other states have filed similar actions against prediction market operators, arguing that sports-related contracts are bets subject to state gambling law rather than federally regulated commodity swaps.
On April 2, the US Commodity Futures Trading Commission intervened directly, suing Arizona, Connecticut and Illinois to block those states from policing prediction markets, citing its exclusive regulatory authority.
A federal judge subsequently halted Arizona’s enforcement efforts, finding the CFTC had demonstrated a reasonable probability of success.
Meanwhile, Kalshi, one of the sector’s leading operators, is not a defendant in the New York suits. The company preemptively sued the New York State Gaming Commission in October 2025, seeking a federal ruling that state gambling laws do not apply to its platform. That case remains active in the Southern District of New York.
What comes next
With conflicting rulings accumulating across multiple appeals courts, the question of whether state gambling authorities or federal commodities regulators hold jurisdiction over prediction markets is widely expected to reach the US Supreme Court.
For operators already in the space, the New York actions deepen legal exposure in one of the country’s most commercially significant markets and raise fresh questions about whether the sector’s rapid expansion has outpaced its regulatory framework.
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