New York State Attorney General Letitia James has sued Coinbase and Gemini for allegedly illegally offering people the ability to bet on events such as sports and elections.
In a statement on Tuesday, James said the two companies ran afoul of New York laws through their prediction market platforms and is seeking fines, restitution, and for both firms to forfeit profits that the state says are illegal.
"Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution," said AG James in the 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."
Gemini and Coinbase did not immediately respond to a request for comment from The Block.
James took particular issue with the platforms allowing people between the ages of 18 and 21, but New York State law says that a person has to be 21 years old to participate in mobile sports betting."
The state is seeking a minimum of $2.2 billion from Coinbase and $1.2 billion from Gemini, according to court documents.
In a statement on X, Coinbase Chief Legal Officer Paul Grewal said that prediction markets are federally regulated by the CFTC.
"This issue is proceeding in New York federal court as we speak," Grewal added. "Coinbase will continue to fight for the federal oversight of these markets that Congress intended."
Earlier this year, Coinbase (COIN) rolled out its prediction markets offering across the U.S., through the predictions platform Kalshi. Kalshi is regulated by the Commodity Futures Trading Commission. Late last year, Gemini (GEMI) was cleared to enter the prediction market arena by the CFTC, called Gemini Titan.
Prediction markets have been caught in a sort of regulatory limbo, with CFTC Chairman Michael Selig saying that those platforms belong in his agency's "exclusive jurisdiction." However, states say that platforms are violating local gaming and gambling laws, particularly related to sports-related bets.
The issue has increasingly moved into the courts. Earlier this month, the CFTC sued Illinois, Arizona, and Connecticut over their actions to shut down what the agency calls "federally regulated designated contract markets."
Updated at 6:10 p.m. UTC on April 21 to add claim amounts
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