Coinbase’s chief legal officer, Paul Grewal, said the company has removed New York Attorney General Letitia James’ lawsuit over its prediction markets from state court to federal court. Coinbase argues the dispute raises significant federal questions about the regulation of event contracts and is subject to complete preemption by federal law.
The transfer escalates a wider fight over whether prediction markets should be regulated as commodities at the federal level and how far the Commodity Futures Trading Commission’s (CFTC) authority extends compared with state gambling statutes. Its outcome could shape oversight for platforms including Coinbase and Gemini.
In a post on X, Grewal said New York’s claims involve “disputed and substantial questions of federal law” and that Coinbase will press for the federal oversight Congress intended. The removal follows a Tuesday suit by Attorney General James targeting Coinbase Financial Markets and Gemini Titan, which alleges the platforms’ prediction market offerings violated New York gambling law by allowing bets on sports, entertainment and elections without a state gaming license and by permitting participation by users aged 18–20. The suit seeks civil penalties, forfeiture of alleged profits, customer restitution and an injunction barring similar products in New York unless they comply with state law.
Cointelegraph has sought comment from Coinbase and requested a copy of the court filing.
Regulators in multiple states have increased scrutiny of prediction markets in recent months: at least 11 states have taken legal action asserting jurisdiction over event contracts. Coinbase launched its prediction markets nationwide, including in New York, on Jan. 28, offering trades on a wide range of real-world outcomes covering sports, politics and culture.
The New York lawsuit is part of a larger clash involving the CFTC, which says it has exclusive jurisdiction over prediction markets that operate as designated contract markets. The CFTC has pointed to platforms such as Polymarket and Kalshi as examples of markets falling under its regulatory authority. In early April the CFTC filed suits against gaming regulators in Illinois, Connecticut and Arizona, arguing those states cannot impose gambling rules or licensing requirements on event contracts listed on platforms overseen by the CFTC. On April 8, the CFTC and the Department of Justice asked a federal court to block Arizona from enforcing its gambling law against Kalshi’s event contracts, asserting those contracts are within the CFTC’s exclusive domain.
The litigation will test lines between federal commodities law and state gambling regulation and could determine which agencies set the rules for prediction-market products in the United States.