New York Attorney General Letitia James filed suits against Coinbase and Gemini Tuesday, claiming the prediction market apps provide illegal gambling services within the state. In an official statement, James says that an investigation into the two companies found that they are running prediction markets that “put New Yorkers at risk.”
According to the Attorney General, the products offered by Coinbase and Gemini circumvent underage gambling laws in New York by allowing individuals who are between the ages of 18-20 to place bets on “a wide range of future events, from sports games to elections to award shows.” While many prediction market entities claim their services should fall under federal oversight, states including New York argue that CFTC regulation does not allow a company to bypass state laws regarding gambling.
New York sports betting laws also prohibit any wagers on in-state collegiate teams, or prop bets related to any college-level sports contest. “Gemini and Coinbase are violating New York laws that forbid any betting on games in which New York college teams participate,” says Attorney General James.
The state is seeking $2.2B in compensatory damages from Coinbase, and another $1.2B from Gemini. That combined amount represents the largest potential claim against prediction market apps to date, but is dependent on the eventual outcome of the lawsuits.
The suits also claim the investigation began in December 2025, with members of the OAG placing a total of 34,000 bets on the apps (22,000 on Coinbase and 12,000 on Gemini, respectively). Since June of last year the Attorney General has taken formal action related to gambling activity. First against sweepstakes casinos and subsequently video game developer Valve in January.
Kalashi, a prediction market app that offers event contract trades to customers in the United States, was noticeably absent from any mention within the lawsuit. The distinction that Kalshi does not offer sports betting (or “bets” of any manner) could be one factor that has allowed the company to avoid civil liability in this specific case.
Earlier this year, Kalshi’s affiliate, Kinetic Markets, received CFTC approval to act as a Futures Commission Merchant (FCM) to offer margin traders to Kalshi account holders. The regulatory green light has enabled Kalshi to move into the perpetual futures markets realm, with plans to launch “perps” on Monday, April 27th.
The legal friction between prediction market apps and individual states continues to heat up in multiple jurisdictions across the country. The eventual classification of prediction market activity as “gambling” or as “trading” could ultimately determine how and where each app is regulated in the United States.
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