Case 3:25-cv-02121-VDO Document 58-1 Filed 01/16/26 Page 12 of 29
definition of “an event or contingency associated with a potential financial, economic, or commercial consequence” is so broad that it necessarily includes betting on other casino games or class III gaming. This means that virtually all gaming activity across the country would be illegal unless offered on a DCM. The irony of this result is that the gaming conducted pursuant to tribal-state gaming compacts or state law provides significantly more consumer protection than the unregulated sports betting offered by Coinbase, which allows users as young as 18 years old to engage in practically limitless betting with very few, if any, guardrails. 5 In fact, Coinbase’s own CEO Brian Armstrong has actually encouraged insider trading on its platform and across the prediction market. See Will Gottsegen, The Polymarket Bets on Maduro Are a Warning , The Atlantic (Jan. 6, 2026), https://www.theatlantic.com/technology/2026/01/venezuela-maduro-polymarket-prediction- markets/685526/ (quoting Brian Armstrong’s statement, “If your goal is actually for the 99 5 This lack of responsible gaming measures and consumer protections, which are required by legal gaming operations, is dangerous and contrary to the public interest. Josh Sterling (a former CFTC employee and the lawyer representing Kalshi in sister cases) recently dismissed such responsible gaming concerns, stating: “People are adults, and they’re allowed to spend their money however they want it, and if they lose their shirt, that’s on them.” Jessica Welman, Kalshi’s lawyer goes hard at state-regulated gambling , SBCAmericas, (Jul. 11, 2025), https://sbcamericas.com/2025/07/11/kalshi-nclgs-sports-contract-debate/?amp. An apparent (and, if true, flagrant) incident of insider trading involving an event contract on Polymarket—one of Coinbase’s sports-betting contract competitors—even prompted a lawmaker to rush forward with legislation to address the CEA’s absence of consumer protections for this type of misconduct. See Alex Keeney, Do prediction markets have an insider trading problem? , Politico (Jan. 6, 2026), https://www.politico.com/newsletters/politico-nightly/2026/01/06/do- prediction-markets-have-an-insider-trading-problem-00713365 (Rep. Ritchie Torres announced plans to introduce legislation banning certain government officials from betting on prediction markets following an incident in which a Polymarket user made $400,000 in profit just days after creating an account solely to wager roughly $30,000 on the forced ouster of Venezuelan President Nicolás Maduro).
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