A federal regulatory agency has taken legal action against New York State, claiming state officials exceeded their jurisdiction when they went after companies operating prediction markets.
The Commodity Futures Trading Commission filed the federal lawsuit on Friday in Manhattan, challenging New York Attorney General Letitia James’ recent legal action against Coinbase Financial Markets and Gemini Titan. The federal agency argues that James’ April 21st lawsuit wrongfully interferes with federal oversight of commodity derivatives markets, including prediction platforms.
According to the CFTC’s court filing, the state’s legal challenge “intrudes on the exclusive federal scheme Congress designed” for regulating these markets.
This marks the latest in a series of similar federal lawsuits, with the CFTC having already sued Arizona, Connecticut and Illinois on April 2nd over comparable disputes.
New York officials fired back at the federal action. In a joint response, Attorney General James and Governor Kathy Hochul, both Democrats, criticized the Trump administration for “prioritizing big corporations” instead of protecting consumers and New York residents.
“New York’s gambling laws are designed to protect consumers, whether they are placing bets in a prediction market or a casino,” the officials stated. “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 platforms allow users to place wagers on various event outcomes, including sports competitions and political elections, using what are known as event contracts.
These betting markets have experienced tremendous growth in popularity after their real-time probability calculations proved more reliable than traditional polling methods in forecasting Donald Trump’s 2024 presidential election win.
James’ original lawsuit claimed that both Coinbase and Gemini should have secured proper licensing from the New York State Gaming Commission before operating their prediction platforms within state borders.
The attorney general characterized the companies’ event contracts as “quintessentially gambling” since participants cannot influence event outcomes and are essentially engaging in games of chance.
James also raised concerns about both companies allowing users aged 18 to 20 to access their platforms, which violates state regulations requiring mobile sports bettors to be at least 21 years old.
Gemini’s parent company, Gemini Space Station, operates under the leadership of billionaire brothers Tyler and Cameron Winklevoss, who serve as chief executive and president respectively.
Meanwhile, Kalshi, another prediction market operator, filed a preemptive lawsuit against New York’s gaming commission in October, seeking to prevent any potential prohibition on event contracts. That legal challenge continues to work its way through the courts.
