Empire State Regulator Takes Aim at Crypto Giants in Lawsuit Targeting Unlicensed Betting Platforms
In a significant development, New York State Attorney General Letitia James has taken a firm stance against unregulated cryptocurrency activities, filing lawsuits on April 21, 2026, against prominent platforms Coinbase Financial Markets and Gemini Titan. The lawsuits, as reported by Reuters, allege that these companies have been operating unlicensed gambling services within New York's borders, thereby violating state laws.
At the heart of the matter lies the issue of prediction market offerings, which, according to the allegations, were made available to New York residents without obtaining the necessary approvals from the New York State Gaming Commission. Attorney General James emphasized that regardless of the terminology used, gambling is subject to regulation under state laws and the Constitution, stating, "Gambling by another name is still gambling." The legal filings refer to participants in these platforms as "bettors" and classify each transaction as "a bet," further solidifying the argument that these activities constitute gambling.
Moreover, the complaints highlight that both platforms allowed individuals between the ages of 18 and 21 to participate, which directly contravenes New York's statutes prohibiting anyone under 21 from accessing mobile betting applications. In response to these allegations, James's office is seeking multiple remedies, including the recovery of unlawfully gained profits, compensation for affected users, and the prohibition of access to these services for individuals under the age of 21.
Coinbase has responded to the lawsuit through its Chief Legal Officer, Paul Grewal, who argued on X that prediction markets are subject to federal regulation as national exchanges. Grewal indicated that the company would advocate for federal oversight of the industry. Conversely, Gemini has not made a public statement regarding the lawsuit.
This legal action is part of a broader trend where states, including Nevada and Washington, are pursuing similar strategies, arguing that prediction contracts focused on sports outcomes should be classified as gambling rather than federally supervised financial instruments. These disputes are currently being reviewed by federal appellate courts and may ultimately be decided by the U.S. Supreme Court.
On the federal level, Commodity Futures Trading Commission (CFTC) Chairman Mike Selig has reaffirmed that prediction markets, including those related to sports outcomes, fall under the CFTC's exclusive jurisdiction. The CFTC has taken legal action against several states, including Arizona, Connecticut, and Illinois, to prevent enforcement actions against prediction market operators. The agency has also moved to intervene in Nevada litigation in support of market providers.
Notably, Kalshi, a major player in the prediction market space, was absent from the recent legal filings. However, Kalshi had previously initiated its own lawsuit against the New York State Gaming Commission, seeking a federal court determination that state gambling regulations do not apply to its operations. This litigation remains active in the Southern District of New York. Another platform, Polymarket, has pursued a similar legal strategy, filing a lawsuit against Massachusetts and arguing that states lack the authority to regulate prediction markets authorized by the CFTC.
The lawsuits against Coinbase and Gemini, formally filed on April 21, 2026, are now proceeding through the judicial system, marking a significant milestone in the ongoing debate over the regulation of cryptocurrency and prediction markets.