New York Attorney General Letitia James wants Coinbase (NASDAQ:COIN) and Gemini Titan (NASDAQ:GEMI) to hand over every dollar of prediction market profits they made in the state, pay triple that in civil penalties, ban marketing on college campuses, and block anyone under 21 from trading event contracts.

James filed the complaints on Tuesday, calling the two exchanges’ prediction markets illegal gambling. Shares of Coinbase Global Inc. (NASDAQ:COIN) fell about 5%.

Coinbase Chief Legal Officer Paul Grewal told Benzinga that prediction markets are federally regulated national exchanges registered with the CFTC, and that the New York matter is already proceeding in federal court.

“Coinbase will continue to fight for the federal oversight of these markets that Congress intended,” Grewal said.

The State’s Case

James said neither company obtained a New York State Gaming Commission license to offer markets on sports, elections and other events.

The outcomes sit outside bettors’ control or amount to games of chance, she argued, meeting New York’s legal definition of gambling.

Both platforms also allowed 18- to 20-year-olds to trade, she said, though state law sets a minimum age of 21 for mobile sports betting.

“Gambling by another name is still gambling,” James said in a statement, adding that prediction markets are not exempt from state law.

James is seeking disgorgement of illegal profits, civil penalties at three times those profits, and restitution to customers. She is also asking the court to bar Coinbase and Gemini from serving anyone under 21 and from marketing to college students.

New York Joins A Growing Pile-On

John Oliver devoted his Sunday show to prediction markets, framing Kalshi and Polymarket as gambling sites operating in states where gambling remains illegal and name-checking Coinbase directly.

New York is the latest state to move against prediction market operators, joining Nevada, Washington, Illinois, Connecticut, Michigan and Massachusetts.

The Third Circuit sided with Kalshi over New Jersey on April 6, ruling the Commodity Exchange Act preempts state gambling law. The Ninth Circuit heard Nevada’s appeal Monday, with judges signaling they may rule the other way, according to Fortune.

Why It Matters For COIN

This comes at a bad time for Coinbase. The stock is down about 18% this year, after a painful few months for crypto, and reports Q1 earnings on May 7. Prediction markets are one of the few growth stories management has left to sell. New York is now suing over it.

Gemini did not immediately respond to Benzinga’s requests for comment.

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