New York Attorney General Letitia James has opened what may become one of the biggest state fights yet over prediction markets, suing Coinbase and Gemini and accusing both companies of running illegal online gambling operations. The paired cases were filed in New York Supreme Court and ask judges for heavy financial penalties that could ripple across a fast-growing corner of crypto finance.
State lawyers say residents were allowed to stake money on sports, elections, and entertainment results without the gaming licenses New York requires for legal wagering. In the attorney general’s view, calling those products market contracts does not change what they are.
James said the companies cannot sidestep gambling law by changing labels, and that “New Yorkers deserve the protections that come with legal, regulated gaming.” Her office said it wants the court to force both firms to surrender profits, compensate consumers, and “pay fines equal to three times the profits the companies made through their illegal actions.”
The filings also ask for permanent court orders stopping the businesses from continuing in New York.
New York AG launches sweeping state investigation against Coinbase and Gemini
The complaints address how much direct testing state investigators say they carried out themselves. According to the filings, investigators placed about 22,000 bets on Coinbase and another 12,000 bets on Gemini over roughly two and a half months.
The complaints indicate investigators tracked how accounts were opened, how wagers were entered, what fees were charged, and how payouts moved back to users.
The timing matters because New York already runs one of the country’s most tightly controlled sports betting systems. Licensed mobile sportsbooks operate under strict rules, identity checks, and tax rates that have produced more than $1 billion a year for the state. Officials argue prediction markets cut around that structure while avoiding the same safeguards.
James has recently tied the spread of prediction markets to concerns often raised about sports betting expansion, especially risks for young men and vulnerable consumers. State Sen. Joseph Addabbo Jr., a key Albany voice on gaming issues, previously told ReadWrite that federally regulated event-contract platforms may be pushing into territory traditionally overseen by states.
The allegations against Gemini Titan and Coinbase
The Gemini complaint says Gemini Titan LLC rolled out Gemini Predictions in December 2025 and made the product available across the country, including New York. Prosecutors cite Gemini’s own statement that it was “now live across all 50 U.S. states.”
State lawyers say users could take positions on outcomes ranging from the Super Bowl to college basketball and reality television, including “Survivor Season 50.”
The petition argues Gemini “seeks to avoid the legal and financial consequences of New York’s close regulation of gambling by offering what is quintessentially wagering under the guise of offering ‘event contracts’ on a ‘prediction market.’” The state also claims the platform allowed users between ages 18 and 21 to participate, despite New York restricting sports wagering to those 21 and older.
The Coinbase case follows the same blueprint. Prosecutors say Coinbase entered the prediction market business in December 2025 and later said its products were “live in all 50 states.”
According to the complaint, users could wager on whether the New York Knicks would cover a point spread, who would win the Super Bowl, and college basketball games involving New York schools such as St. John’s.
The state also points to promotional marketing, including a “$1,000,000 Bitcoin prize pool” linked to correct Super Bowl picks.
Legal analyst Daniel Wallach said the lawsuits may mark the first time a U.S. law enforcement agency has accused a prediction market operator of violating the federal Wire Act through sports-event contracts offered across state lines.
The claim appears in both cases. New York argues the companies used interstate communications systems to transmit bets or information that helped wagers. The state included that federal angle because New York courts have previously said violations of federal law can qualify as illegality under Executive Law § 63(12), the statute James is using here.
Wallach noted that a 1999 New York decision, People v. World Interactive Gaming, recognized alleged Wire Act violations within that framework.
What the cases could change
Another eyebrow-raising feature of the Gemini matter is who is handling it. The lead attorneys named for the attorney general’s office are Brent Tomer and Alejandra de Urioste, both former trial lawyers at the Commodity Futures Trading Commission.
They previously helped lead the CFTC’s 2022 enforcement case against Gemini, which later ended in a $5 million settlement. After layoffs at the federal agency, they joined the New York attorney general’s office.
Their presence adds technical experience because the CFTC is the federal regulator most associated with derivatives markets and event contracts. This could matter if the defense argues these products belong under federal commodities law rather than state gambling law.
Wallach also said the Coinbase and Gemini filings may signal future pressure on Kalshi, the federally regulated exchange that has become central to the national fight over sports-event contracts.
He said New York may have held off because of pending litigation involving a request for a preliminary injunction. Once that issue is resolved, he said, pressure on Kalshi could rise, creating a domino effect.
Featured image: Gemini Titan / Coinbase / Pexels
The post New York lawsuits target prediction market giants Coinbase and Gemini in major showdown appeared first on ReadWrite.
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