Key Points
- Attorney General Letitia James filed legal action against Coinbase and Gemini for operating prediction markets without state approval
- Both platforms allegedly ran gambling products in violation of New York gaming regulations
- Legal demands include profit recovery, user restitution, and restrictions on access for individuals under 21
- Multiple states, including Nevada and Washington, have pursued comparable legal actions against prediction platform operators
- Federal regulators at the CFTC maintain they hold exclusive authority over prediction markets, leading to jurisdictional disputes
On April 21, 2026, New York’s Attorney General Letitia James initiated legal proceedings against Gemini Titan and Coinbase Financial Markets, alleging both cryptocurrency platforms operated prediction market services without obtaining required state licenses.
According to the legal filings, neither company secured the necessary authorization from the New York State Gaming Commission prior to launching their prediction market offerings to state residents.
In her official statement, James declared: “Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution.”
The legal documents characterize platform participants as “bettors” and define “each contract is a bet.” State attorneys allege both services permitted users aged 18 to 21 to participate, which contradicts New York statutes prohibiting mobile gambling access for anyone below 21 years of age.
Prosecutors are pursuing the return of profits deemed unlawful, compensation for affected users, and permanent restrictions preventing anyone under 21 from using these services.
Paul Grewal, Chief Legal Officer at Coinbase, responded to the lawsuit on X, asserting that “prediction markets are federally regulated national exchanges.” He indicated the company would advocate for federal regulatory authority over the industry.
Gemini has chosen to withhold public comment.
Escalating Conflict Between State Authorities and Federal Oversight
New York represents the latest jurisdiction to challenge prediction market operators. Nevada, Washington, and additional states have launched similar legal challenges, contending that sports-focused prediction contracts constitute wagers rather than federally supervised financial instruments.
These disputes are currently under review in various appellate courts and may ultimately require resolution by the U.S. Supreme Court.
Meanwhile, Commodity Futures Trading Commission Chairman Mike Selig has maintained that prediction markets, including those involving sports outcomes, belong under the CFTC’s “exclusive jurisdiction.”
The federal agency has initiated lawsuits against Arizona, Connecticut, and Illinois to prevent these states from prosecuting prediction market companies. The CFTC has also intervened in Nevada litigation to support platform operators.
Legal Strategies of Competing Platforms
Kalshi, among the most prominent prediction market platforms, was excluded from this week’s legal actions. The company previously initiated litigation against the New York State Gaming Commission during the previous fall, requesting federal court determination that state gambling statutes do not govern its operations. That proceeding remains active in the Southern District of New York.
Polymarket has adopted comparable legal tactics, filing suit against Massachusetts while arguing the state holds no regulatory authority over prediction markets already sanctioned by the CFTC.
The lawsuits targeting Coinbase and Gemini were formally filed on April 21, 2026, with both cases currently proceeding through the judicial system.
