New York Goes After Coinbase, Gemini over Prediction Markets

New York’s attorney general’s office has gone after two prediction market platforms, specifically Coinbase Financial Markets and Gemini Titan. 

Lawsuits were filed on Tuesday by AG Letitia James, who delivered a familiar argument – these platforms operate at odds with state gaming statutes and are therefore a legitimate target for legal proceedings.

New York Files Complaints Against Two More Prediction Market Platforms

Petitions were filed in state court in Manhattan, arguing that the companies did not own a legitimate license from the New York State Gaming Commission (NYSGC) and were therefore not able to operate in the state. 

Prediction markets platforms, and especially Kalshi, have faced similar challenges all over the country, with attorneys general insisting that they are not allowed to run their businesses locally, citing these presumed violations.

Many have disagreed, including the companies involved, but also the Commodity Futures Trading Commission (CFTC), the regulatory body that oversees the sector, which has sued several states, among others, Illinois, over what it argued was an attempt by local gaming regulators to preclude state authority. 

Illinois has recently changed tack to a more focused approach to regulation, issuing a new “ethics rules” for government employees to follow, and avoid abusing privileged information to benefit from the outcomes of such market events.

AG James has been among the most outspoken critics of the sector, equating event contracts to “quintessentially gambling,” and went on to further cite Reuters to add:

“Gambling by another name is still gambling, and it is not exempt from regulation under our state ​laws and Constitution.” 

AG Letitia James

For their part, Gemini and Coinbase seem inclined to challenge the complaints, following in the footsteps of sector leader Kalshi, which has had successful cases argued across courts in the United States, although not everywhere. 

Connecticut and Arizona have also been targeted by counter-lawsuits by the CFTC, which is at last challenging gaming regulators’ attempts to regulate the sector. 

Calls for Tighter Regulation and Cautionary Approach Abound 

In New Jersey, a court sided with Kalshi, for example, that the gaming watchdog may not ban prediction markets, but a similar case was not as successful in Nevada, where a judge has pushed back. 

States have been generally reluctant about the overnight success that prediction markets have become over the past two years. The Massachusetts Gaming Commission (MGC) has specifically expressed concerns about underage individuals interacting with these platforms. 

On top of all of this, a group of Democratic lawmakers is urging federal regulators to strengthen oversight of prediction market platforms following controversial wagers tied to US military operations. 
The goal is to limit the opportunities for insider information affecting geopolitical plans, and potentially endangering US servicemen and women.