Coinbase shifts New York prediction markets fight to federal court
TL;DR
Coinbase has moved its legal battle with New York Attorney General Letitia James to federal court, arguing the case involves federal law on event contracts. This shift could impact the regulation of prediction markets under federal commodities law.
Key points
- Coinbase moved lawsuit from state to federal court
- Legal fight involves federal law on event contracts
- Case could impact prediction markets regulation
- New York AG alleges violations of state gambling law
- Coinbase and Gemini face scrutiny over prediction markets
Mentioned in this story
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prediction marketsCFTC
Coinbase’s chief legal officer, Paul Grewal, said Wednesday that the company had removed New York Attorney General Letitia James’ prediction markets lawsuit from state court to federal court, arguing that the case turns on disputed questions of federal law over how event contracts are regulated.
The move escalates a legal fight that could help define whether prediction markets fall under federal commodities regulation and the scope of the US Commodities and Futures Trading Commission’s (CFTC) or state gambling laws, with broader implications for the oversight of platforms like Coinbase and Gemini.
“We have removed this action to federal court,” wrote Grewal in a Wednesday X post, adding that New York’s claims raise “disputed and substantial questions of federal law” and are subject to “complete preemption.”
It comes in response to a Tuesday lawsuit filed by New York’s Attorney General Letitia James against Coinbase Financial Markets and Gemini Titan, alleging their prediction market offerings violate New York gambling law by allowing users to bet on sports, entertainment and elections without a state gaming license, including users between 18 and 20 years old.
Related: Kalshi, Polymarket face trading halt in Nevada after court rulings
The lawsuit seeks fines, forfeiture of alleged illegal profits and restitution for customers, while also asking the court to stop the companies from offering similar products in New York without complying with state law.
Cointelegraph has approached Coinbase for comment on the matter and a copy of the court filing.
Notice of Removal. Source: Paul Grewal
State regulators battle for prediction markets jurisdiction
State regulators have stepped up pressure on prediction market platforms in recent months, with 11 states having pursued legal action against them, seeking to assert control over federal regulators.
Q&A
Why did Coinbase move its lawsuit to federal court?
Coinbase moved the lawsuit to federal court to address disputed questions of federal law regarding the regulation of event contracts.
What are the implications of the Coinbase prediction markets case?
The case could define whether prediction markets are regulated under federal commodities law or state gambling laws, affecting platforms like Coinbase and Gemini.
What allegations did New York's Attorney General make against Coinbase?
New York's Attorney General Letitia James alleged that Coinbase's prediction market offerings violate state gambling laws by allowing unlicensed betting on various events.
