New York Attorney General Letitia James filed suit against Coinbase Financial Markets and Gemini Titan on Tuesday, alleging their prediction markets operate as illegal gambling platforms in violation of state law.
James claims both crypto exchanges are running unlicensed gambling operations without proper state authorization. The lawsuit also targets prediction markets that allow betting on outcomes involving New York college sports teams, which state law explicitly prohibits.
"Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution," James said in a statement.
The action marks New York's escalating regulatory crackdown on prediction markets. These platforms, which allow users to bet on event outcomes ranging from political elections to sports results, have gained prominence in the crypto sector but face mounting legal scrutiny.
Coinbase and Gemini have positioned their prediction market products as forecasting tools rather than gambling platforms. The distinction has become a focal point for regulators questioning whether crypto-based prediction markets circumvent traditional gambling restrictions.
The lawsuits reflect broader tension between crypto innovation and state gambling regulations as prediction markets expand their user bases.
Polymarket has partnered with blockchain analytics firm Chainalysis to deploy detection tools designed to identify insider trading patterns on its prediction market platform.
The Securities and Exchange Commission has postponed releasing an 'innovation exemption' that would permit crypto firms to trade tokenized versions of U.S. stocks, according to sources cited by Bloomberg.
Prediction market platform Polymarket has applied for regulatory approval from the CFTC and NFA to offer margin trading in the United States. The feature would allow users to place bets with less capital upfront.
Circle Internet Group received regulatory approval to establish a national digital-currency trust bank, enabling it to offer institutional custody services for its stablecoin operations.