New York Sues Coinbase, Gemini Over Prediction Markets

New York Attorney General Letitia James filed lawsuits against Coinbase Financial Markets and Gemini Titan on April 21, 2026, saying their event-based prediction markets amount to illegal gambling. The complaints seek disgorgement of profits, civil penalties, restitution to users and injunctive relief.

The complaints describe “yes/no” contracts that allow customers to stake money on outcomes of real-world events, including elections, sports and economic indicators. New York’s office alleges the products operated without state gaming licenses required for wagers and that users aged 18 and older were permitted to participate despite the state’s 21-and-up betting age.

The filings state that when customers put money on outcomes they cannot control, the contracts are wagers rather than financial instruments. New York asks the court to classify the activity as unlawful gambling under state law and to require a full accounting of offers, amounts wagered, customer losses and related revenues.

The state seeks a range of remedies: disgorgement of allegedly ill-gotten gains, civil penalties of up to three times any profits, make-whole restitution for harmed customers and injunctions that could halt the products. The complaints also seek statutory penalties of $100,000 for each offer or attempted offer of sports wagering; the Attorney General’s office alleges it placed roughly 22,000 bets during its investigation.

Coinbase rejected the state’s theory of authority. Coinbase’s chief legal officer, Paul Grewal, said the company will press for federal oversight under the Commodity Futures Trading Commission rather than state regulation for prediction markets. Industry lawyers and some former regulators argue event-based contracts qualify as derivatives and therefore fall within CFTC jurisdiction, which they say would preempt state actions.

The New York complaints and some state authorities counter that financial structuring cannot change the economic reality of bets and that states retain the power to regulate or prohibit gambling within their borders. The filings ask for detailed records intended to quantify bets, customer losses and revenues to support disgorgement and penalty calculations.

The cases raise questions about whether federal commodities law preempts state gambling statutes, whether the contracts are commodities, and whether the platforms obtained required state licenses. Courts’ decisions on those issues will determine whether prediction markets fall under a single federal framework or remain subject to differing state rules and potential retroactive liability.

The lawsuits are expected to prompt rapid litigation over those threshold defenses and the scope of remedies sought.