Synopsis
The CFTC sued New York, alleging the state's lawsuits against prediction market operators like Coinbase and Gemini infringe on federal regulatory authority. New York's Attorney General argued these markets are gambling and violate state consumer protection laws, a stance criticized by the CFTC as overreach.Listen to this article in summarized format
In a complaint filed in Manhattan federal court, the CFTC said the litigation filed on April 21 by New York Attorney General Letitia James "intrudes on the exclusive federal scheme Congress designed" to oversee commodity derivatives markets, including prediction markets.
The CFTC filed similar lawsuits on April 2 against Arizona, Connecticut and Illinois.
In a joint statement, James and New York Governor Kathy Hochul, both Democrats, accused Republican President Donald Trump's administration of "prioritising big corporations" over the interests of consumers and New Yorkers.
"New York's gambling laws are designed to protect consumers, whether they are placing bets in a prediction market or a casino," they said. "When gambling platforms, including prediction markets, violate our laws, we will not hesitate to hold them accountable. We look forward to continuing to defend our laws in court."
Prediction markets let people wager on the outcome of events such as sports and elections, through so-called event contracts.
They have surged in popularity since their real-time probabilities proved more accurate than polling in predicting Donald Trump's victory in the 2024 U.S. presidential election.
James alleged Coinbase and Gemini should have obtained New York State Gaming Commission licenses to operate their prediction markets in the state.
She called the Manhattan-based companies' event contracts "quintessentially gambling" because event outcomes are outside bettors' control or amount to games of chance.
James also objected to Coinbase and Gemini opening their platforms to 18-to-20-year-olds, despite a state law setting a minimum age of 21 for mobile sports betting.
Gemini's parent, Gemini Space Station, is led by billionaire twins Tyler Winklevoss and Cameron Winklevoss, who are respectively chief executive and president.
Another operator of prediction markets, Kalshi, sued New York's gaming commission in October to preemptively block any ban on event contracts. That case remains pending.
