New York has filed lawsuits against Coinbase and Gemini over their prediction market offerings, marking the latest state action against crypto platforms facilitating event-based contracts tied to sports and entertainment outcomes.
The lawsuits, filed by New York Attorney General Letitia James on April 21, 2026, allege that Coinbase and Gemini are operating unlicensed gambling platforms under the guise of prediction markets, violating New York state law by allowing users to wager on the outcomes of future events such as sports games and entertainment awards.
According to the Attorney General’s office, the platforms function as bookmakers by enabling users to place bets on contingent events not under their control, with payouts tied to specific outcomes—a structure the suits describe as “quintessentially gambling.” The complaints further state that the companies advertised these products in ways that encouraged wagering behavior and allowed participation by individuals aged 18 to 21, despite New York law prohibiting mobile gambling for anyone under 21.
“As described above, what Respondent offers through its platform is quintessentially gambling: It allows a bettor to stake or risk money upon the outcome of a contest of chance or a future contingent event not under the bettor’s control or influence, upon an agreement or understanding that he will receive something of value in the event of a certain outcome,” the suit against Coinbase states, mirroring language used in the Gemini filing.
The legal actions follow an industry alert issued by the New York Attorney General’s office in February 2026, which warned that unlicensed entities offering sports-related event contracts over purported derivatives exchanges constitute illegal gambling under state law. That alert specifically named prediction markets as falling within the scope of prohibited activity when they involve wagering on sports or entertainment outcomes.
New York is not acting alone in its scrutiny of prediction markets. Nevada, Washington, and several other states have previously filed similar lawsuits against providers of event contracts, arguing that such products—particularly those tied to sports—are functionally indistinguishable from gambling and therefore require licensing under state gaming regulations.
The core of the legal dispute centers on whether prediction market contracts should be classified as federally regulated financial derivatives (like swaps) or as gambling instruments subject to state oversight. Plaintiffs in the New York cases contend that the platforms operate as unlicensed betting houses, while defendants maintain that their products are legitimate financial tools designed for hedging and speculation on real-world events.
Industry observers note that the outcome of these lawsuits could have significant implications for the future of decentralized finance and crypto-based forecasting platforms. If courts rule that prediction markets fall under state gambling laws, companies may be required to obtain licenses from state gaming commissions or restructure their offerings to comply with financial regulations—a shift that could limit accessibility and increase operational costs.
Both Coinbase and Gemini have yet to issue public responses to the filings as of the time of this report. However, representatives for similar platforms in past litigation have argued that their services do not constitute gambling since they involve financial contracts based on measurable economic or political indicators, even when those contracts reference events like sports matches or award shows.
The lawsuits are currently pending in New York state courts, with no trial dates set as of April 21, 2026. Legal experts suggest the cases may ultimately be appealed to federal courts, where the classification of prediction markets under the Commodity Exchange Act and state gambling laws could be definitively addressed.
For users and investors seeking clarity on the regulatory status of prediction markets, the New York Attorney General’s office maintains an online advisory page detailing prohibited activities under state gambling law, while the Department of Financial Services provides guidance on licensing requirements for financial platforms operating in the state.
As the legal landscape continues to evolve, stakeholders across the cryptocurrency, sports betting, and financial technology sectors are monitoring the New York cases closely, recognizing that their resolution may help determine whether prediction markets remain a viable innovation in decentralized forecasting—or become subject to the same restrictions as traditional wagering platforms.
Readers are encouraged to follow official court filings and regulatory updates for the latest developments in this unfolding story. Share your thoughts on the future of prediction markets in the comments below, and help spread awareness by sharing this article with others interested in the intersection of finance, technology, and regulation.