New York sues Kalshi, Coinbase, and Gemini over alleged illegal gambling
New York sued the prediction market platforms Kalshi, Coinbase, and Gemini earlier this year over allegations of illegal, unregulated gambling. The state's attorney general has joined a growing roster of state enforcers targeting federally registered event-contract platforms. Multiple verified lawsuits were filed in 2026, court reports and news coverage confirmed. The litigation frames CFTC-registered operations as unlawful gambling under state law.
Kalshi, Coinbase, and Gemini now face a state suit that treats their CFTC-registered contracts as illegal gambling. New York's action mirrors the playbook Connecticut and Missouri have already run against Polymarket and Kalshi. Each new state filing compounds legal spend faster than any single case resolves. Platforms must choose between costly geofences and fighting parallel preemption battles with no settled federal answer.
The Supreme Court has not yet agreed to hear any preemption petition, so the patchwork deepens. Traders hold positions whose legality shifts with state borders. The first platform to lose a federal preemption ruling becomes the template every state copies for shutdown letters. Operators burn resources on state defense that could have seeded product growth or waited for one clean federal resolution.