New York Attorney General Letitia James is taking legal action against Coinbase over the company’s alleged operation of illegal gambling in the Empire State.
According to court documents, James is suing Coinbase for allegedly running an illegal gambling operation in New York through its delivery of event contracts. The AG alleges that Coinbase facilitates illegal gambling by operating in the state without a gaming license from the New York State Gaming Commission. As a result, James is seeking a court order to require Coinbase to pay a monetary penalty, forfeit “illegal profits,” and pay restitution.
“Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution,” said James in a press release.
Coinbase did not yet respond to a request for comment.
What Coinbase is accused of doing in New York
In the suit, the AG directly points to Coinbase’s sports event contracts, which she considers illegal gambling activity as the company does not hold a gaming license. James provides specific examples of how the event contracts resemble online sports wagering.
“For example, Respondent has offered bettors the ability to wager on whether the New York Knicks would win a basketball game by over 6.5 points or who would win the February 8, 2026, Super Bowl or college basketball games, such as the February 14, 2026, game between St. John’s University and Providence College,” reads the complaint.
James points to the definition of gambling under New York Penal Law for her reasoning as to why Coinbase’s sports event contracts constitute illegal gambling activity as it operates without a state gaming license.
Under New York law, a person “engages in gambling when he stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence, upon an agreement or understanding that he will receive something of value in the event of a certain outcome”.
Age limits also a problem, lawsuit says
James also takes issue with Coinbase’s age limits for event contract trading.
The company allows users ages 18 and older to trade event contracts, violating New York’s laws on gambling. The Empire State currently only allows New Yorkers ages 21 and older to gamble.
New York also prohibits wagering on in-state college teams. Meanwhile, Coinbase offers sports contracts in New York that include games featuring state colleges and universities.
Coinbase is also allegedly breaking New York laws by not paying taxes on revenue derived from event contracts. In New York, licensed operators are taxed at a 51% rate on gross gaming revenue. The tax rate is one of the highest rates for online wagering in the U.S.
The tax revenue from online sports wagering in New York is allocated toward public school funding, youth sports programs and problem gambling education and treatment.
Gemini is also being sued by New York AG
In addition to Coinbase, James is also suing cryptocurrency exchange platform Gemini.
New York’s AG is levying the same allegations against the company following its launch of Gemini Predictions in December 2025. That month, an affiliate company of Gemini received approval from the Commodity Futures Trading Commission (CFTC) as a designated contract market. The approval allows Gemini to supply event contracts.
Meanwhile, Coinbase is partnered with Kalshi as a CFTC-approved futures commission merchant (FCM). Its classification as an FCM allows the company to host event contracts.
“Gemini and Coinbase’s so-called prediction markets are just illegal gambling operations, exposing young people to addictive platforms that lack the necessary guardrails,” James continued. “My office is taking action to protect New Yorkers and stop these platforms from violating the law”.
Gemini and Coinbase are the only event contract providers to be included in legal proceedings initiated by James. It is uncertain whether the AG will take legal action against other prediction markets that offer sports contracts, including Kalshi and Polymarket.
James’s suits against Coinbase and Gemini come after she sent a consumer alert warning in February that prediction markets offer bets that are “masquerading as event contracts.”
The warning was sent ahead of the Super Bowl, with James also cautioning that the advertisement and promotion of unlicensed wagering violates state gambling laws.
Coinbase also facing legal pressure in Nevada
Coinbase recently received unfavorable news in its legal dispute in Nevada against the state’s gaming regulator.
Last month, a district court judge granted the Nevada Gaming Control Board’s (NGCB) preliminary injunction to prevent Coinbase from offering event contracts in the state.
The NGCB sued Coinbase seeking a permanent injunction and declaratory relief to prohibit Coinbase from offering sports, entertainment and political event contracts in Nevada. A judge granted the NGCB’s request for a temporary restraining order in February, before the gaming regulator was awarded a preliminary injunction.
Coinbase argued that its registration with the CFTC and the Commodity Exchange Act (CEA) allowed it to offer event contracts. The judge denied the argument after determining that the CEA “does not vest exclusive jurisdiction over event contracts through Coinbase’s platform.” As a result, the NGCB is allowed to “prosecute the enforcement action”.
Coinbase was given 60 days to deploy “technological enhancements” required to adhere to the injunction. Coinbase is also in legal disputes in Connecticut, Michigan and Illinois.
The company filed suits in the states alleging that cease-and-desist orders Kalshi received from state gaming regulators compromise the company’s planned business activities in those states. Coinbase expects enforcement action in those markets.
