Hassan Maishera
TL;DR
-
New York Attorney General Letitia James sued Coinbase and Gemini, alleging both platforms operated unlicensed prediction markets.
-
The lawsuits claim the platforms enabled illegal gambling for New York users under 21 years old.
New York Attorney General Letitia James has filed lawsuits against Coinbase and Gemini, accusing the crypto exchanges of operating unlicensed prediction markets that functioned as illegal gambling platforms under state law.
The complaints, filed Tuesday in Manhattan state court, allege that both companies allowed users to wager on future event outcomes without the required gaming licenses or adequate consumer safeguards.
James said the platforms’ prediction markets amounted to “illegal gambling operations,” arguing they exposed younger users to risky, addictive financial products without proper protections.
Lawsuit Alleges Underage Access and Unlicensed Gambling
According to the filings, Coinbase and Gemini allegedly permitted users aged 18 to 20 to participate in prediction markets, despite New York’s minimum gambling age of 21. The lawsuits also claim both platforms enabled wagers on outcomes involving New York college sports teams—activities prohibited under state gambling rules.
The attorney general further accused the two companies of failing to obtain approval from the New York State Gaming Commission. Hence, they are operating outside the legal framework that governs licensed betting services in the state.
Licensed gambling operators in New York are required to contribute tax revenue that funds public services such as education, youth sports programs, and problem gambling support. The lawsuits argue that Coinbase and Gemini avoided these obligations while still profiting from the alleged activity.
The attorney general’s filings also cite research linking early exposure to gambling with higher risks of financial instability and mental health issues, particularly among younger participants.
James is seeking court orders requiring both companies to:
-
Disgorge profits earned from the alleged activities
-
Provide restitution to affected users
-
Pay penalties of up to three times the revenue generated
This latest development comes as Polymarket and Kalshi, the two leading prediction marketplaces, are taking measures to curb insider trading. Kalshi has introduced new screening tools to block political candidates from trading on their own elections, expanding existing restrictions that already apply to elected officials.
Meanwhile, Polymarket updated its governing documents across both its decentralized platform and its CFTC-regulated U.S. exchange, introducing clearer rules around insider trading and enforcement.
