NY attorney general sues Coinbase, Gemini for illegal gambling via prediction markets

New York Attorney General Letitia James has filed a lawsuit against Coinbase and Gemini, claiming their prediction market offerings amount to illegal gambling under state law. The Predict.fun FDV above $50M one day after launch market sits at 15% YES, down from 30% a week ago.

Market reaction

The Predict.fun market took the hardest hit, with odds halving from 30% to 15% over the past week. Regulatory risk is now the dominant factor for traders betting on new platform launches in this space.

Why it matters

This lawsuit is part of a broader enforcement push against unlicensed gambling activities, including prediction markets. It follows previous enforcement actions against Gemini and raises the risk profile for both operators and investors. The litigation could deter new entrants, shrink liquidity, and slow market growth across the sector.

What to watch

At 15¢, a YES share on Predict.fun’s FDV pays $1 if it exceeds $50M, a potential 6.67x return. That price implies the market sees a low probability of clearing regulatory obstacles quickly enough. Key signals: any public legal strategy from Coinbase or Gemini, and movement on Senate Bill S8889, which could reshape the legal framework for prediction markets in New York.

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