NY sues Coinbase, Gemini

New York Attorney General Letitia James sued Coinbase and Gemini on April 21, saying their prediction markets are illegal gambling under state law. (ag.ny.gov) James filed the cases in Manhattan state court against Coinbase Financial Markets and Gemini Titan, accusing both companies of offering bets on sports, elections and entertainment without licenses from the New York State Gaming Commission. (cnbc.com) The attorney general is seeking fines, forfeiture of illegal profits and restitution for customers. She also asked the court to stop the companies from allowing 18- to 20-year-olds to wager and from marketing on college campuses. (cnbc.com) Prediction markets let users buy contracts tied to yes-or-no outcomes, usually priced between 1 cent and 99 cents, with a $1 payout if the event happens. The Commodity Futures Trading Commission says these products are “event contracts” and says they have traded in regulated U.S. markets for more than two decades. (cftc.gov, cftc.gov) That basic product design is now at the center of a jurisdiction fight. Coinbase moved the New York case to federal court on April 22, saying the dispute turns on federal commodities law and the Commodity Futures Trading Commission’s authority over event contracts. (msn.com) The federal regulator has been making that argument in its own cases. On April 2, the Commodity Futures Trading Commission sued Arizona, Connecticut and Illinois, saying Congress gave it “exclusive jurisdiction” over lawful event contracts listed by registered exchanges. (cftc.gov) Coinbase’s prediction markets are offered through Coinbase Financial Markets, which says on its site that it is a registered futures commission merchant with the Commodity Futures Trading Commission and a member of the National Futures Association. Coinbase’s live listings on April 23 included contracts on Congress, the Trump administration and the Federal Reserve chair. (coinbase.com) Gemini and Coinbase did not get the same framing from New York. James said the platforms “fit the legal definition of gambling” in New York because the outcomes are outside bettors’ control or turn on chance, and she said the companies avoided state licensing and taxes paid by licensed casinos and mobile sportsbooks. (ag.ny.gov) The case lands after months of fast growth and fast backlash in prediction markets. The Commodity Futures Trading Commission issued two March 2026 advisories reminding exchanges of their duties as the products spread, and its enforcement division pointed to fraud and misuse of nonpublic information cases tied to Kalshi contracts. (cftc.gov, cftc.gov) What happens next will help decide whether these contracts are treated like state-regulated bets, federally regulated derivatives, or some mix of both. For users, that could change which markets stay on the screen, which states get blocked, and how clearly platforms have to tell people who is eligible to trade. (cftc.gov, ag.ny.gov, msn.com)