New York Attorney General Letitia James lodged lawsuits Tuesday against crypto exchanges Coinbase and Gemini, alleging they run prediction markets contracts that breach state gambling statutes. The complaints target “yes/no” event contracts that let users wager on outcomes ranging from economic data releases to election results, treating each contract as a bet.

James’ filings arrive amid a broader clash between federal and state regulators over jurisdiction of digital‑asset platforms. While the suits focus on Coinbase and Gemini, they notably omit other major players such as Kalshi and Polymarket, which dominate the rapidly expanding event‑contract market. By characterising every contract as gambling, the state seeks to impose New York’s strict licensing regime on the sector.

The legal thrust could reshape revenue streams for exchanges that have integrated prediction markets into their product suites. If courts side with James, Coinbase and Gemini may need to suspend or re‑engineer these offerings, potentially curbing user engagement and prompting a shift toward compliant derivatives. Investors will watch the outcome for signs of regulatory pressure on crypto business models.

New York’s action also signals to other states that aggressive enforcement of gambling laws against crypto platforms is viable. Even if the suits falter, the attorney general’s office retains the option to target additional prediction‑market operators. For now, Coinbase and Gemini face immediate legal costs and the prospect of re‑structuring a growing segment of their services.