New York Attorney General sues Coinbase, Gemini over prediction markets

New York Attorney General Letitia James has sued Coinbase Financial Markets and Gemini Titan, accusing both firms of running unlicensed prediction market businesses in violation of state gambling law. 

The lawsuits add a new legal challenge for crypto companies offering event-based contracts in the United States.

The state argues that both firms allowed users in New York to access prediction-style products without obtaining licenses from the New York State Gaming Commission. James said the cases seek fines, restitution, and the recovery of profits the state describes as illegal.

James said Coinbase and Gemini offered markets tied to events such as sports and elections without meeting state gambling rules. She also said the products were available to people between 18 and 21, even though New York law sets 21 as the minimum age for mobile sports betting.

In a statement, James said “Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution.” Her office said the lawsuits are meant to stop the companies from offering these products in New York unless they comply with state rules.

Meanwhile, Coinbase has challenged New York’s legal theory and said the case belongs in federal court. Chief Legal Officer Paul Grewal said the company had removed the action to federal court under federal statutes governing federal-question and federal-officer removal.

In a post on X, Grewal said ”We have removed this action to federal court pursuant to 28 U.S.C. §§ 1331, 1441, and 1442. New York’s claims necessarily raise disputed and substantial questions of federal law. They are subject to complete preemption. And New York cannot defeat federal-officer removal through artful pleading.”

That response builds on Coinbase’s broader position that prediction markets fall under federal oversight through the Commodity Futures Trading Commission. Gemini had not immediately responded to media requests for comment in the earlier reports.

Billions sought in claims against both firms

Court filings cited in reports show New York is seeking at least $2.2 billion from Coinbase and $1.2 billion from Gemini. The state says both companies ran unlicensed markets while avoiding the controls that apply to legal betting businesses in New York.

The size of the claims adds more pressure to an area of crypto that has expanded quickly over the past year. Prediction markets have drawn more users and more attention from regulators as platforms move deeper into sports, politics, and other event-based contracts.

Moreover, the lawsuits come as state and federal officials continue to clash over who controls prediction markets. The CFTC has argued that it has exclusive authority over these products, while several states say local gambling laws still apply.

That dispute has become one of the main legal questions facing the sector. Coinbase launched prediction markets in the United States through Kalshi, while Gemini entered the space through Gemini Titan. The new case shows that even as federal oversight develops, state enforcement remains active.