Regulations
By Jean-Luc Maracon
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Federal Turf War Gets Messy. The lawsuit creates a direct collision with the CFTC.
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Money and Age Limits Drive the Case. New York's lawsuit reveals a pretty big financial angle.
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New York just went after two of crypto's biggest names. Hard.
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Attorney General Letitia James filed suit against Coinbase and Gemini in Manhattan, claiming their prediction market services are basically unlicensed gambling operations.
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The timing matters. Prediction markets have grown fast over the past year, letting users bet on everything from elections to economic data releases.
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The lawsuit creates a direct collision with the CFTC. The federal regulator claims exclusive authority over prediction markets, classifying them as commodity derivatives under…
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It's not the first clash. Companies like Kalshi are already fighting similar battles in Massachusetts and Michigan.
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So you've got states, companies, and federal regulators all fighting over who gets to set the rules. The legal bills are piling up.
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New York's lawsuit reveals a pretty big financial angle. Licensed sportsbooks in the state pay 51% of gross revenues in taxes. That's a massive cut.
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The state wants profits forfeited, users compensated, and penalties up to triple whatever Coinbase and Gemini made from these markets. That could add up fast.
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There's also an age problem. The platforms let anyone 18 or older participate. New York's gambling laws set the bar at 21.
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The core legal question is whether an event contract is a derivative or a bet. That distinction matters a lot. If it's a derivative, federal law applies.
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A New York courtroom will decide. The ruling could reshape how prediction markets operate across the country. Other states are watching closely.
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Read also: New York AG Hits Coinbase and Gemini With Illegal Gambling Lawsuits Over Prediction Markets
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Companies considering entry into U.S. prediction markets are probably rethinking their plans. The regulatory landscape just got murkier.
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