New York sues Coinbase and Gemini, seeking to halt unlicensed prediction
market businesses
[April 22, 2026] By
MICHAEL R. SISAK
NEW YORK (AP) — New York is suing Coinbase and Gemini, two of the newest
players in the prediction market industry, arguing that the companies'
unregulated and unlicensed platforms are illegal gambling operations.
Attorney General Letitia James' lawsuit, filed Tuesday in state court in
Manhattan, seeks to bar the companies' platforms from operating in the
state unless and until they obtain licenses from the state Gaming
Commission.
“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. “Gemini and Coinbase’s so-called prediction markets are just
illegal gambling operations, exposing young people to addictive
platforms that lack the necessary guardrails.”
Messages seeking comment were left for Coinbase and Gemini. Both
companies began as cryptocurrency trading platforms before branching
into the prediction space, which has been dominated by Kalshi and
Polymarket.
Gemini, founded by brothers Cameron and Tyler Winklevoss, launched
Gemini Predictions in December. Coinbase started its prediction markets
service in January.
“Crypto was just the beginning,” Gemini’s website said Tuesday, next to
a prediction box offering bets on such things as the winner of that
day's Chelsea-Brighton Premier League soccer match, when Kevin Warsh
will be confirmed as the chairman of the Federal Reserve, and what the
price of oil will be Friday.
New York's lawsuit alleges that the Coinbase and Gemini are seeking “to
avoid the legal and financial consequences" of the state's close
regulation of gambling “by offering what is quintessentially wagering
under the guise of offering ‘event contracts’ on a ‘prediction market.’”
By operating without licenses, the lawsuit says, Coinbase's and Gemini's
prediction market businesses aren't paying the same taxes as licensed
casinos and mobile sportsbooks, which are taxed by the state at a rate
of approximately 51% of gross revenues. In addition, the lawsuit says,
Coinbase and Gemini allow users as young as 18, while state law
prohibits wagering by anyone under 21.
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 Kalshi sued the state Gaming
Commission in October after the commission sought to bar the
company's prediction market business from operating in the state. In
the case, which is ongoing, Kalshi argues that, as a federally
designated derivatives exchange, it is subject to the exclusive
jurisdiction of the federal regulator, the Commodity Futures Trading
Commission.
Coinbase made the same argument in December when it
sued Connecticut, Michigan and Illinois to block those states from
attempting to regulate its prediction business. Earlier this month,
the Commodity Futures Trading Commission sued Arizona, Connecticut,
and Illinois to block them from policing prediction markets.
Last week, a federal judge halted Arizona’s regulatory efforts —
which have included criminal charges against Kalshi — finding that
the federal commission had demonstrated a reasonable chance of
success in showing that the act preempts Arizona law.
In February, James issued what her office described as a consumer
alert warning, saying that prediction markets operating without the
supervision of the state Gaming Commission were putting New Yorkers
“at significant financial risk.” Some users who say they've lost
money on the sites have filed lawsuits against them.
James herself has been the subject of prediction market wagering.
Last year, as the Trump administration was scrutinizing the
Democrat's real estate transactions, Polymarket saw $18,700 in
trades on the question: “Will Letitia James be charged with a crime
by December 31?”
James was indicted in October, but a judge dismissed the case a
month later, concluding that the prosecutor who brought the charges
at President Donald Trump’s urging was illegally appointed by the
Justice Department. James had denied wrongdoing.
Meanwhile, Kalshi has seen $12,660 in trades on the outcome of this
year's election for New York attorney general. As of Tuesday, 93% of
users were predicting James to win a third term.
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