New York's Attorney General Letitia James has sued Coinbase Financial Markets and Gemini Titan, alleging their prediction markets constitute illegal gambling under state law.
In court filings, James asserted that both companies failed to secure necessary licenses from the New York State Gaming Commission to operate these markets, where users trade based on the predicted outcomes of events like sports and elections.
The Attorney General characterized the platforms' "event contracts" as inherently gambling, citing outcomes beyond user control and similarities to games of chance. She also raised concerns about both companies allowing individuals aged 18-20 to participate, contravening a state law that sets the minimum age for mobile sports betting at 21.
"Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution," James stated.
Coinbase and Gemini have not yet responded to requests for comment. Gemini Titan's parent company, Gemini Space Station, is led by the Winklevoss twins, Tyler and Cameron.
James is seeking to recover illicit profits, impose treble civil fines, and provide restitution to customers. She also aims to prevent individuals under 21 from using the platforms and restrict their marketing on college campuses. Court documents indicate both entities launched their prediction markets in mid-December and operate nationwide.
This legal action occurs amidst ongoing debates between federal and state regulators regarding oversight of prediction markets. The U.S. Commodity Futures Trading Commission (CFTC) has previously asserted its exclusive authority over such markets, leading to legal challenges from states seeking to regulate them.