Coinbase’s chief legal officer, Paul Grewal, said Wednesday the company removed New York Attorney General Letitia James’ prediction markets lawsuit from state court to federal court, arguing the case hinges on disputed questions of federal law over regulation of event contracts.
The move raises the stakes in a legal battle that could determine whether prediction markets are regulated as commodities at the federal level and clarify the scope of the US Commodities and Futures Trading Commission’s (CFTC) authority versus state gambling laws. That outcome would affect oversight of platforms such as Coinbase and Gemini.
“We have removed this action to federal court,” Grewal wrote on X, saying New York’s claims present “disputed and substantial questions of federal law” and are subject to “complete preemption.”
The removal responds to a Tuesday lawsuit by New York Attorney General Letitia James against Coinbase Financial Markets and Gemini Titan, which alleges their prediction market offerings violate New York gambling law by enabling bets on sports, entertainment and elections without a state gaming license, including by users aged 18–20. The suit seeks fines, forfeiture of alleged illegal profits, customer restitution and an injunction barring similar products in New York absent compliance with state law.
Cointelegraph has sought comment from Coinbase and a copy of the court filing.
State regulators have intensified scrutiny of prediction markets: 11 states have taken legal action in recent months as they attempt to assert jurisdiction. Grewal has argued on X that prediction markets are “federally regulated national exchanges” under the CFTC and that Coinbase will continue to press for federal oversight Congress intended.
Coinbase launched prediction markets across all 50 US states, including New York, on Jan. 28, offering trades on “any real-world outcomes” spanning sports, politics and culture.
The New York suit is part of a broader clash with the CFTC, which maintains it has exclusive jurisdiction over prediction markets registered as designated contract markets, such as Polymarket and Kalshi. On April 2 the CFTC filed three lawsuits against the gaming regulators of Illinois, Connecticut and Arizona, contending those states cannot apply their gambling laws or licensing requirements to event contracts listed on CFTC-regulated platforms. On April 8 the CFTC and the US Department of Justice asked a federal court to block Arizona from enforcing state gambling law against Kalshi’s event contracts, asserting those contracts fall under the CFTC’s exclusive authority.
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