An anonymous reader quotes a report from the Associated Press: New York is suing Coinbase and Gemini, two of the newest players in the prediction market industry, arguing that the companies' unregulated and unlicensed platforms are illegal gambling operations. Attorney General Letitia James' lawsuit, filed Tuesday in state court in Manhattan, seeks to bar the companies' platforms from operating in the state unless and until they obtain licenses from the state Gaming Commission.
"Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution," James said in a statement. "Gemini and Coinbase's so-called prediction markets are just illegal gambling operations, exposing young people to addictive platforms that lack the necessary guardrails." Both companies began as cryptocurrency trading platforms before branching into the prediction space, which has been dominated by Kalshi and Polymarket.
[...] New York's lawsuit alleges that the Coinbase and Gemini are seeking "to avoid the legal and financial consequences" of the state's close regulation of gambling "by offering what is quintessentially wagering under the guise of offering 'event contracts' on a 'prediction market.'" By operating without licenses, the lawsuit says, Coinbase's and Gemini's prediction market businesses aren't paying the same taxes as licensed casinos and mobile sportsbooks, which are taxed by the state at a rate of approximately 51% of gross revenues. In addition, the lawsuit says, Coinbase and Gemini allow users as young as 18, while state law prohibits wagering by anyone under 21.
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