TLDR New York AG Letitia James sued Coinbase and Gemini, calling their prediction markets illegal gambling operations The lawsuits seek to shut down the platforms in New York and recover profits, damages, and penalties The suit invokes the federal Wire Act of 1961 for the first time against a prediction market platform Kalshi was not included in the lawsuits due to its pending federal court case against New York regulators Coinbase has moved to transfer the case to federal court, arguing federal law overrides state gambling rules
New York Attorney General Letitia James filed lawsuits against Coinbase and Gemini on Tuesday. The suits accuse both crypto exchanges of running illegal gambling operations through their prediction market platforms.
The cases were filed in a Manhattan state court. They seek to permanently block both companies from operating unlicensed gambling businesses in New York.
The filings also ask for restitution, disgorgement of profits, damages, and financial penalties. James said that “gambling by another name is still gambling.”
She argued that prediction markets offered by both companies are “just illegal gambling operations.” She added that these platforms expose young people to addictive products without proper safeguards.
The Wire Act Argument
The New York AG’s office brought a new legal angle to the fight. According to gaming attorney Daniel Wallach, the suit appears to invoke the federal Wire Act of 1961 for the first time against a prediction market.
The New York AG’s Office becomes the first law enforcement agency in the country to accuse a prediction market platform of violating the federal Wire Act by offering sports-event contracts across state lines. pic.twitter.com/xCd3WbLHM6
— Daniel Wallach (@WALLACHLEGAL) April 21, 2026
The Wire Act makes it illegal to use wire communications to send bets on sporting events across state lines.