New York Attorney General Letitia James has launched a fierce legal assault against renowned cryptocurrency exchanges Coinbase and Gemini. In a move that could set important precedents for the future of prediction markets, these lawsuits were filed on April 21, 2026, accusing both companies of operating illegal gambling services without requisite licenses from the New York State Gaming Commission.
The core of the allegations centers around the assertion that Coinbase and Gemini offered prediction markets—which the state classifies as unlicensed gambling products—without adhering to the regulatory framework in New York. According to court records, users of these platforms were classified as “bettors,” a designation that plays into the state’s legal definition of gambling.
In a pointed statement, James remarked, “Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution.”
The lawsuits indicate that users aged 18 to 21 were permitted to engage with these platforms, contravening New York laws that prohibit anyone under 21 from participating in mobile gambling operations. The state’s legal actions are designed not only to recover alleged illegal profits accrued by the companies but also to enforce a ban on users under the age of 21 from accessing any associated products.
In defense, Coinbase’s Chief Legal Officer, Paul Grewal, responded on social media, asserting that prediction markets fall under federal jurisdiction as national exchanges. He emphasized Coinbase’s commitment to contesting the state’s assertions and advocated for regulatory clarity at the federal level. Meanwhile, Gemini opted not to comment on the ongoing litigation.
A Growing Legal Battle Between States and Federal Regulators
This isn’t just an isolated incident. New York joins states like Nevada and Washington, which have also advanced similar lawsuits against various prediction market operators, claiming that sports-related prediction contracts constitute bets rather than federally governed financial instruments. As these legal battles unfold, they are likely to progress through multiple judicial channels, possibly culminating in a showdown at the U.S. Supreme Court.
At the federal level, the Commodity Futures Trading Commission (CFTC) has declared its position on the matter through its Chairman, Mike Selig, who insists that prediction markets fall within the CFTC’s exclusive regulatory jurisdiction. The agency is actively involved in combating state-level litigation, having filed actions against states like Arizona, Connecticut, and Illinois to prevent them from imposing their own regulations on prediction market providers.
Where Other Platforms Stand
Interestingly, Kalshi, a prominent player in the prediction market arena, has not been named in the recent lawsuits. The firm previously took legal action against the New York State Gaming Commission last fall, seeking a federal ruling to assert that New York’s gambling laws should not apply to its operations. This case remains under consideration in the Southern District of New York.
Similarly, Polymarket has pursued legal channels by filing a lawsuit against Massachusetts, challenging the state’s authority over prediction markets recognized by the CFTC.
The legal disputes involving Coinbase and Gemini are now in the courts and are poised to be a touchstone for future regulatory stances on prediction markets. As the situation evolves, stakeholders across the cryptocurrency landscape will be keenly watching for signs of how this battle between state and federal jurisdictions might shape the future of digital assets and betting platforms.
