- New York alleges Coinbase and Gemini ran unlicensed prediction markets, allowing underage users and violating gambling laws.
- Authorities seek fines, profit forfeiture, and restitution, claiming platforms bypassed taxes and state gaming approvals.
- Coinbase argues federal oversight applies, highlighting a broader clash between state gambling rules and federal regulation.
New York Attorney General Letitia James filed lawsuits on Tuesday against Coinbase and Gemini, accusing them of operating unlicensed prediction markets. The complaints allege users placed wagers on events like sports and elections without required state licenses. Authorities say the platforms exposed New Yorkers, including those under 21, to financial and personal risks.
State Claims Violations of Gambling Laws
According to James, Coinbase and Gemini allowed users aged 18 to 20 to participate, violating New York’s minimum gambling age. The filings also state that wagers involved events outside users’ control, meeting the legal definition of gambling. Furthermore, regulators say neither firm secured approval from the New York State Gaming Commission.
Notably, the lawsuits claim the platforms avoided taxes paid by licensed operators. These funds typically support education, youth programs, and gambling treatment services. Additionally, James said betting on games involving New York college teams breached state restrictions.
The attorney general is seeking penalties, profit forfeiture, and restitution for affected users. The filings also request fines reaching up to three times the alleged revenue.
Coinbase Defends Federal Oversight Framework
However, Paul Grewal disputed the claims, stating prediction markets fall under federal oversight. He said such platforms operate as national exchanges regulated by the Commodity Futures Trading Commission. Grewal added that the dispute is already before a federal court in New York.
Meanwhile, the legal clash reflects a broader jurisdiction conflict between state gambling laws and federal financial regulation. Several states, including Nevada and Washington, have taken similar actions against prediction market platforms.
Broader Enforcement and Industry Impact
James has continued enforcement efforts targeting crypto and online gambling activities. In January 2026, her office sued Valve over alleged gambling promotion in video games. Earlier actions also shut down multiple sweepstakes platforms offering cash-like rewards.
Separately, Coinbase confirmed changes to its derivatives offerings. The company said it suspended trading for certain perpetual futures contracts and settled open positions. It noted the move aims to maintain market quality and streamline product offerings.
