New York Sues Coinbase, Gemini Titan for $3.4 Billion Over Prediction Markets
Posted on: April 22, 2026, 08:03h.
Last updated on: April 22, 2026, 08:03h.
- New York sues Coinbase and Gemini over alleged illegal prediction markets
- State seeks billions, claiming platforms operate as unlicensed gambling services
- Crypto firms argue contracts are federally regulated derivatives, not gambling
New York is the latest state to flex its legal muscles against the rapidly growing prediction market industry – and it wants billions. On Tuesday, New York Attorney General Letitia James sued Coinbase Financial Markets (COIN.O) and Gemini Titan for $1.2 billion and $2.2 billion, respectively, according to figures cited by Forbes.
The suit filed in the state supreme court alleges the platforms’ event contracts violate state laws against illegal gambling. It seeks to recover alleged illegal profits, along with civil penalties of up to three times those amounts and restitution to customers.
Shares in Coinbase tumbled by more than 7% on the news. Robinhood (HOOD), which is not named in the lawsuit, fell more than 5%.
‘Exposed to Risk’
James said that an investigation by the AG’s office into the two companies found that their services “constitute illegal, unlicensed gambling operations” which “expose New Yorkers – including those under the legal gambling age of 21 – to serious financial and personal risk.”
Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution,” said James in a statement. “Gemini and Coinbase’s so-called prediction markets are just illegal gambling operations, exposing young people to addictive platforms that lack the necessary guardrails. My office is taking action to protect New Yorkers and stop these platforms from violating the law.”
Prediction markets argue that the contracts they offer are financial derivatives, falling under the jurisdiction of the Commodity Futures Trading Commission (CFTC), and that federal commodities law preempts state gambling regulations.
“Prediction markets are federally regulated national exchanges, registered with the CFTC … Coinbase will continue to fight for the federal oversight of these markets that Congress intended,” wrote Coinbase’s chief legal officer Paul Grewal on X Tuesday, adding that the complaint had filed a notice to remove the case to federal court.
Why No Kalshi?
Notably absent from the lawsuit are Kalshi and Polymarket. Kalshi sued the New York Gaming Commission last year after receiving a cease-and-desist letter, arguing that the regulator’s attempt to shut it down violated federal law. That case is ongoing.
James’ lawsuit, along with a growing wave of state-level challenges across the U.S., is likely an early test case in a legal battle that could ultimately reach the US Supreme Court.
Prediction markets recorded over $44 billion in total trading volume in 2025, four times as much as the previous year, are estimated to exceed $325 billion in 2026.
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