New York Sues Coinbase, Gemini..."Prediction Market = Illegal Gambling?"

▲ U.S., Lawsuit/AI Generated Image

New York State has launched a full-scale lawsuit against Coinbase and Gemini, categorizing their prediction market businesses as illegal gambling.

According to foreign media on April 21 (local time), New York State Attorney General Letitia James determined that the prediction market platforms operated by Coinbase and Gemini violate state law as illegal gambling and filed a lawsuit in a Manhattan state court. These platforms are structured to facilitate trading based on the outcomes of sports, elections, and economic events.

James stated, “So-called prediction markets are gambling in nature and cannot evade the regulations of state law and the constitution.” New York State claims that the two companies operated services without a New York State Gaming Commission license and is demanding a halt to operations along with legal sanctions.

The lawsuit also includes the issue of underage users. Although the minimum age for mobile sports betting under New York law is 21, it was pointed out that these platforms allowed users aged 18 and older. Simultaneously, it was also alleged that they evaded the approximately 51% tax rate applied to legal gambling operators.

New York State is demanding the recovery of unjust profits, civil penalties up to three times that amount, user compensation, and restrictions on marketing on college campuses.

This lawsuit is proceeding amidst a conflict between state governments and federal regulatory agencies over the authority to regulate prediction markets. The Commodity Futures Trading Commission (CFTC) views prediction markets as derivatives and asserts federal jurisdiction, while New York State is approaching them as gambling regulation and maintaining a firm stance.

As the prediction market industry grows rapidly, this lawsuit is seen as a case that fully exposes the regulatory risks associated with the expansion of new businesses by cryptocurrency companies.

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