New York Attorney General Letitia James has filed a lawsuit against Coinbase and Gemini, claiming the two companies engaged in illegal gambling in the state with their prediction market products.
The lawsuits, which were filed on April 21, allege that the companies permitted New York users to make bets on sports, elections, entertainment events, and other results without licenses as mandated by the state law.
James claimed that the companies made such products available to their users who were above 18 years, although the New York laws mandated individuals to be 21 years old to participate in mobile sports betting.
The office is pursuing court orders that would force Coinbase and Gemini to give up profits, fines, and restitution to customers. The case contributes to the increased dispute between the state gambling regulations, and the federal treatment of prediction markets.
Prediction markets face New York suit
The attorney general’s office said its investigation found that Coinbase and Gemini ran prediction market platforms that met New York’s legal definition of gambling.
According to the state, users were able to bet money on uncertain future events that were outside their control, including sports, elections, and award shows.
James said these products operated without approval from the New York State Gaming Commission. The state argues that this allowed both firms to bypass licensing rules and avoid the tax obligations that apply to licensed casinos and mobile sports betting operators. New York said those taxes support public schools, youth sports programs, and gambling education and treatment services.
”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.”
The lawsuits also claim that both platforms violated New York rules that ban betting on games involving New York college teams. James’ office said it is asking the court to impose fines equal to three times the profits the companies made from the alleged illegal conduct.
Age limits at issue
A key point in the lawsuits is the claim that Coinbase and Gemini made these markets available to users between the ages of 18 and 20.
New York law allows mobile sports betting only for those 21 and older. The attorney general said offering prediction markets to younger users exposed them to financial and personal risks.
The state tied that argument to broader concerns about gambling harm. James’ office cited research from the National Institutes of Health that found early exposure to gambling can raise the risk of depression, anxiety, mood swings, and financial stress.
Moreover, it also cited research from the American Psychological Association stating that 32 percent of people with a gambling disorder experience suicidal ideation.
The attorney general’s office said these risks become more serious when products are easy to access online. James said her office has warned consumers in the past about gambling-related harm and has also urged businesses to comply with state law. The new lawsuits continue that line of enforcement.
In January 2026, James filed a lawsuit against Valve, allegeing that the video game company encouraged gambling by utilizing games played by children and teenagers.
In June 2025, her office reported taking action against 26 internet sweepstakes casinos that were providing slots, table games and sports betting with virtual coins which could be redeemed into cash and prizes.
Coinbase cites federal oversight
Coinbase has already pushed back against the state’s position. In a statement posted on X, Coinbase Chief Legal Officer Paul Grewal said prediction markets are federally regulated by the Commodity Futures Trading Commission. He said the legal question is already being addressed in federal court in New York.
”This issue is proceeding in New York federal court as we speak.” Grewal noted. ”Coinbase will continue to fight for the federal oversight of these markets that Congress intended.”
That response points to the wider legal debate over whether prediction markets fall under state gambling law or federal commodities law.
Earlier this year, Coinbase rolled out its prediction market offering across the United States through Kalshi. Kalshi operates under CFTC oversight. Gemini also entered the space after the CFTC cleared its prediction market effort, known as Gemini Titan, late last year.
The legal dispute reflects the current split between state and federal views. Some states have argued that sports-related event contracts violate local gambling laws.
Federal regulators, however, have taken the position that designated contract markets fall within the CFTC’s authority.
Prediction markets under pressure
Prediction markets have drawn more legal and regulatory attention in recent months as more firms enter the sector. CFTC Chairman Michael Selig has said these platforms fall within the agency’s ”exclusive jurisdiction,” a view that supports federal oversight of approved event contracts.
At the same time, state officials have continued to challenge those products, especially when they involve sports-related outcomes. The conflict has already reached the courts.
On April 2, the CFTC sued Illinois, Arizona, and Connecticut over actions taken by those states against what the agency described as federally regulated designated contract markets.