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New York Attorney General Letitia James sued Coinbase and Gemini Titan, saying both run illegal gambling platforms while the companies present them as CFTC-regulated derivatives exchanges. The state seeks at least $2.2 billion from Coinbase and $1.2 billion from Gemini. After the lawsuit surfaced, Coinbase shares fell about 6 percent, and New York joined a widening group of states challenging prediction market providers.
The complaint says neither the New York State Gaming Commission nor any state betting authority licensed the companies for sports wagering or other gambling activity. Prosecutors say both platforms let users bet on sports, entertainment events, and political developments, classifying the products as gambling under state law.
The state argues that users cannot control those outcomes, so the contracts fit the classic definition of gambling rather than a lawful market product. It also says both firms admitted users aged 18 or older, despite New York’s 21-year-old floor for mobile sports betting.
James also says the platforms took wagers on games involving New York college teams, which state law bars. She wants access blocked for users under 21, and all college-campus marketing stopped.
The financial demands extend beyond the headline figures. New York seeks all alleged illegal profits, treble damages tied to revenue, and compensation for affected customers. The complaint says the cited $3.4 billion stands only as a minimum.
Coinbase rejected the claims at once. Paul Grewal, the company’s chief legal officer, said on X that prediction markets are federally regulated national exchanges registered with the CFTC. He said the issue is already before a New York federal court, and Coinbase will keep fighting for federal oversight.
Gemini declined to comment. Its Gemini Titan unit received a CFTC license as a designated contract market in December 2025, and the US platform launched a week later. Meanwhile, Coinbase sued Connecticut, Michigan, and Illinois in December 2025 to head off state action.
That dispute now stretches across several states. New York became at least the seventh state to act against prediction market providers. On April 2, 2026, the CFTC and the US government sued Illinois, Connecticut, and Arizona to defend federal jurisdiction.
The legal pressure grew again on April 20, 2026, one day before New York filed its case. The Third Circuit ruled for Kalshi against New Jersey, saying sports contracts on CFTC-registered markets preempted state gambling law. At the same time, the Ninth Circuit continued hearing Nevada’s case, raising the prospect of conflicting rulings.
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Traders on prediction markets now place the odds of a Supreme Court case by the end of 2026 at 64 percent. The fight also carries major business stakes. Kalshi generated $25 million in fee revenue during four days of March Madness, and sports betting made up more than 85 percent of its volume.
Kalshi now carries a $22 billion valuation, while Polymarket stands at $20 billion. On March 23, 2026, Senators John Curtis and Adam Schiff introduced the Prediction Markets Are Gambling Act. The bill would remove sports and casino event contracts from CFTC jurisdiction.
New York’s lawsuit against Coinbase and Gemini Titan has pushed the prediction market dispute into a deeper legal fight over gambling law and federal oversight. With at least $3.4 billion at stake, the case now stands as a major test for how these platforms will operate across the United States.
