NEW YORK, April 21 (Reuters) – New York’s attorney general sued Coinbase Financial Markets and Gemini Titan on Tuesday, claiming their prediction markets violate state laws against illegal gambling.
In complaints filed in a state court in Manhattan, Attorney General Letitia James said Coinbase and Gemini failed to obtain New York State Gaming Commission licenses to operate their markets, where people trade based on the predicted outcomes of events such as sports and elections.
James said Coinbase’s and Gemini’s so-called event contracts are “quintessentially gambling” because event outcomes are outside bettors’ control or amount to games of chance. She also objected to Coinbase and Gemini letting 18- to 20-year-olds use their platforms, despite a state law setting a minimum age of 21 for mobile sports betting.
“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.
Coinbase and Gemini did not immediately respond to requests for comment.
Gemini Titan’s parent, Gemini Space Station, is led by the billionaire twins Tyler Winklevoss and Cameron Winklevoss, who are respectively chief executive and president.
James is seeking to recoup illegal profits, civil fines equal to triple those profits, and restitution to customers.
She also wants to ban Coinbase and Gemini from letting people under 21 wager, or marketing their platforms on college campuses. Both defendants launched their prediction markets in mid-December and operate them in all 50 U.S. states, court papers show.
REGULATORS BATTLE OVER AUTHORITY
Prediction markets have surged in popularity since the 2024 U.S. presidential election, when their real-time probabilities proved more accurate than polling in predicting Republican Donald Trump’s victory over Democrat Kamala Harris.
Tuesday’s lawsuits come as federal and state regulators battle over who has authority over prediction markets.
On April 2, the U.S. Commodity Futures Trading Commission sued Arizona, Connecticut and Illinois to stop them from regulating prediction markets.
That agency cited its “exclusive regulatory authority” over commodity derivative markets, including prediction markets, and a desire to defend market participants against “overzealous state regulators.”
Four days later, the federal appeals court in Philadelphia sided with Kalshi in finding that the CFTC had exclusive oversight of its sports-related event contracts, and New Jersey gaming regulators could not ban them.
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