- ▸ New York Attorney General Letitia James has sued Coinbase Financial Markets and Gemini Titan, alleging their prediction market products amount to illegal gambling under state law.
- ▸ The lawsuits seek sweeping remedies under Executive Law § 63(12), including injunctions, disgorgement of profits, restitution, and potential liability for individuals tied to the platforms.
- ▸ The filings seek massive financial penalties, with claimed damages of at least $1.2 billion against Coinbase and $2.2 billion against Gemini.
- ▸ The actions escalate a broader state crackdown on prediction markets and could set up a decisive legal battle over whether event contracts are regulated as gambling or federally overseen derivatives.
New York Attorney General Letitia James has filed civil enforcement actions against Coinbase Financial Markets and Gemini Titan, accusing both companies of operating unlicensed gambling platforms through their prediction market offerings.
The lawsuits, filed in New York Supreme Court in Manhattan, center on so-called event contracts that allow users to trade on the outcomes of sports, elections, and other real-world events. State attorneys argue those products constitute illegal wagering under New York law, regardless of how the platforms characterize them.
In both cases, the Attorney General is seeking sweeping relief, including temporary and permanent injunctions to halt the businesses, along with restitution, disgorgement of profits, and financial penalties. The filings state that damages could reach at least $1.2 billion in the Coinbase case and $2.2 billion in the case against Gemini, subject to further accounting.
“Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution,” James said in a press release. “Gemini and Coinbase’s so-called prediction markets are just illegal gambling operations, exposing young people to addictive platforms that lack the necessary guardrails. My office is taking action to protect New Yorkers and stop these platforms from violating the law.”
The actions represent one of the most aggressive moves yet by a state regulator against prediction markets, escalating a growing legal conflict over whether such contracts fall under federal commodities law or state gambling prohibitions.
Lawsuits frame prediction markets as illegal gambling under New York law
In both cases, the Attorney General argues that the companies’ prediction market products constitute unlawful gambling, despite being marketed as financial instruments or event-based contracts.
According to the filings, the platforms allow users to stake money on the outcome of future contingent events, including sports, elections, and entertainment outcomes, with the expectation of receiving a payout based on the result. Under New York Penal Law, that activity falls within the definition of gambling, which includes risking something of value on a future event not under a participant’s control.
The state argues the companies operated without licenses from the New York State Gaming Commission, avoiding tax and regulatory obligations imposed on legal sportsbooks. The filings state that the platforms allowed users between the ages of 18 and 20 to trade, despite New York law requiring bettors to be at least 21 for mobile sports wagering.
The lawsuits were brought under New York Executive Law § 63(12), a broad enforcement statute that allows the Attorney General to pursue repeated or persistent illegal conduct and seek expedited relief. Using that authority, the state is asking the court to issue temporary restraining orders and preliminary injunctions to immediately halt the companies’ prediction market operations in New York.
The filings also cite multiple alleged violations of state law, including provisions of the New York Constitution that broadly prohibit gambling outside of limited authorized categories, as well as Penal Law statutes related to promoting gambling and possession of gambling records. In addition, the complaints reference the state’s Racing, Pari-Mutuel Wagering and Breeding Law, arguing that the platforms are effectively offering unlicensed sports wagering to New York residents.
Beyond injunctive relief, the attorney general is seeking an expansive set of remedies. These include restitution to users, disgorgement of profits derived from the alleged illegal activity, and civil fines that could total up to three times the revenue generated from the alleged illegal activity. The filings also raise the possibility of holding individuals associated with the companies liable for violations tied to the operation of the platforms.
Across both cases, the state repeatedly characterizes prediction market contracts as wagers in substance, arguing that labeling them as financial products does not exempt them from New York’s gambling laws.
New York actions build toward broader enforcement push
New York regulators have been signaling a crackdown on prediction markets for months, with the latest lawsuits following earlier actions targeting the industry’s expansion in the state.
In October, the New York State Gaming Commission issued a cease-and-desist order to Kalshi, alleging that the company’s sports event contracts violated state gambling laws. Kalshi responded by filing a federal lawsuit in the Southern District of New York, arguing that its contracts are federally regulated derivatives overseen by the Commodity Futures Trading Commission and therefore not subject to state gaming laws.
That case remains ongoing, with Kalshi seeking a preliminary injunction that would block New York from pursuing enforcement actions against the company while the dispute is litigated.
The outcome of that motion could prove pivotal. Earlier this month in an interview with Times Union, gaming attorney Daniel Wallach said the case “could prove the most significant” of Kalshi’s legal challenges if the court declines to grant the injunction, opening the door for state-level enforcement.
“Letitia James has the ability to bring down Kalshi like a house of cards, if she is able to avoid a preliminary injunction in federal court and then goes for the jugular in the state court system,” Wallach said.
Wallach has also emphasized the scale of New York’s enforcement powers, noting in a recent interview with The Capitol Forum that the state “stands unique among any jurisdiction in having the most wide-ranging and broad enforcement powers of any attorney general in the nation.” He pointed to the potential for nationwide disgorgement and personal liability for executives, outcomes that could carry significant consequences for platforms operating in the space.
Wallach today on X said that the pending injunction request explains why Kalshi was not included in the Attorney General’s latest lawsuits.
“The reason why Kalshi is not also being sued is due to the pending motion for preliminary injunction in the SDNY seeking to bar the New York Attorney General from filing civil or criminal enforcement proceedings against Kalshi,” Wallach wrote. “If the SDNY denies that motion, Kalshi is next.”
The sequence of events suggests the state’s actions against Coinbase and Gemini could represent an initial phase of a broader enforcement strategy, with further action potentially contingent on the outcome of the federal case.
State/federal clash over prediction markets intensifies
New York’s actions come amid a growing wave of state-level challenges to prediction market platforms, setting up a broader legal confrontation over who has authority to regulate the emerging industry.
Multiple states, including Arizona, Michigan, and Massachusetts, have taken action against platforms offering prediction markets, arguing that sports event contracts amount to unlicensed gambling under state law. In some cases, those efforts have escalated beyond civil enforcement, with Arizona pursuing criminal charges tied to the offering of such contracts.
At the same time, federal regulators have moved to defend their jurisdiction. The CFTC has filed lawsuits against three states, asserting that federally regulated exchanges fall under its exclusive authority and that state-level enforcement actions are preempted by federal laws.
That conflict has produced a patchwork of legal outcomes, with courts divided on whether prediction market contracts should be treated as financial derivatives or as wagers subject to state gambling laws. Some rulings have sided with states, while others, including a recent appellate decision involving New Jersey, have favored federal preemption arguments.
New York’s entry into the fight raises the stakes significantly. As one of the largest and most aggressive state enforcement jurisdictions, its use of broad powers under Executive Law § 63(12) could shape how other states approach prediction markets, particularly if courts uphold its ability to pursue restitution, disgorgement, and penalties tied to activity affecting New York residents or conducted through companies operating in the state.
The cases against Coinbase and Gemini now add another front to a rapidly expanding legal battle, one that could ultimately determine whether prediction markets are regulated as financial products under federal law or can be restricted as gambling under state regimes.
