New York's Attorney General has filed a lawsuit against Coinbase Financial Markets and Gemini Titan, alleging that the companies' prediction markets operate as illegal gambling schemes.
Allegations of Illegal Gambling Operations
In complaints filed in a Manhattan state court, Attorney General Letitia James accused both Coinbase and Gemini of operating prediction markets without the necessary licenses from the New York State Gaming Commission. These platforms allow users to trade based on predicted outcomes for various events, including sports and elections.
According to the filing, James argued that because the outcomes are outside the bettors' control or constitute games of chance, the activities fall under New York's legal definition of gambling.
Violations of Age Restrictions
Beyond the licensing issues, the Attorney General also highlighted a violation concerning user age restrictions. James noted that both platforms permitted users aged 18 to 20 to participate, despite state law mandating a minimum age of 21 for mobile sports betting.
James stated, "Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution."
Relief Sought by the Attorney General
Through the lawsuit, Letitia James is seeking several remedies from the court, including:
- Recoupment of Illegal Profits: Recovering profits generated from the alleged illegal activities.
- Civil Fines: Imposing civil penalties equivalent to triple the amount of the illegal profits.
- Customer Restitution: Ensuring compensation for affected customers.
- Operational Bans: Seeking bans on the companies marketing their platforms on college campuses and restricting wagering to individuals under 21.
