Nevada also seeks court orders that would stop related activities in the state. A Nevada judge also granted a temporary restraining orders against Polymarket operator Blockratize. This order prevented the platform offering event-based contract to Nevada residents during litigation. State authorities in both cases argued that the products were unlicensed gambling under Nevada law, rather than financial derivatives regulated by Nevada. They also cited risks for betting integrity, underage gaming protections and consumer protection. These rulings are part of a pattern that has seen states push back, such as similar actions taken in Tennessee.
Nevada Blocks Coinbase
Nevada Gaming Control Board has intensified its scrutiny over crypto-linked prediction market by bringing a civil action against Coinbase. The board claims that the firm facilitated illegal sports betting through its derivatives. In court filings submitted Monday at the First Judicial District Court of Nevada, Carson City, Coinbase Financial Markets was named as the defendant. The firm is accused of running a de-facto sports betting marketplace without state approval.
The Board also requested that the court grant a temporary injunction and an order of restraint to prevent Coinbase from operating a “derivatives exchange” and a prediction market tied to sports events within the state. The regulators argue that this activity is covered by Nevada gaming laws which mandate strict licensing to protect the consumer and maintain the integrity of Nevada’s gambling industry.
Nevada’s lawsuit against Coinbase
Mike Dreitzer said that in a statement released on Tuesday, the Board is responsible for maintaining a legal gaming environment as well as protecting Nevadans. The regulator has stated that unauthorized sports betting is a grave breach. This applies to both traditional sportsbooks and newer platforms based on financial or cryptography.
This action was taken less than one week after Coinbase had announced that it would be rolling out prediction markets in all 50 US States through a partnership between Kalshi and Coinbase. The Commodity Futures Trading Commission oversees Kalshi at the federal-level, but Nevada’s case shows that state regulators have the power to intervene if they feel local gambling laws are violated.
Nevada authorities do not believe that the federal commodity regulation overrides state gambling enforcement, even though Kalshi’s contract is structured as an event-based derivative.
The Polymarket in Nevada is Blocked
The Nevada State Judge also ordered the on-chain betting market Polymarket to temporarily cease operations within the state. This ruling directly challenged the argument of the gambling industry that the federal commodities laws override state gambling regulations.
The court issued a temporary restraining against Polymarket’s operator Blockratize on Thursday. Polymarket is prohibited from providing event-based contracts for Nevada residents as long as litigation continues. A preliminary injunction will be heard on February 11. This ruling freezes Polymarket’s activity in Nevada during an important phase of the litigation. A preliminary injunction hearing is scheduled for February 11.
The judge, at this stage of the case, sided with Nevada regulators and determined that Polymarket’s markets for sports, other events, and financial derivatives are more similar to unlicensed betting than regulated financial products. Nevada would suffer “immediate and irreparable harm” if Polymarket were to operate without a gaming license. The state’s ability enforce gambling integrity, stop underage betting, and maintain suitability standards could be affected. The judge concluded that these concerns outweighed Polymarket’s claim of federal preemption.
The court thus rejected Blockratize’s claim that the Commodity Act granted exclusive jurisdiction over Blockratize’s contracts to the CFTC. The ruling indicates that, even though event contracts are covered by federal commodities laws, each state may apply its own gambling statutes to protect consumers and license requirements.
Nevada has taken a similar stance to other states that have been pushing back against prediction markets. Tennessee ordered Kalshi’s North American Derivatives Exchange, Polymarket and Crypto.com to stop sports event contracts, cancel existing trades and refund customers. Tennessee regulators claimed that these products were sports gambling and expressed concerns over age verification, responsible gaming and safeguards.
These rulings come at a time when there is a much wider dispute in US law over the status of prediction markets. Kalshi has been battling state and federal lawsuits for months over its offering, which is a CFTC designated contract market. Coinbase, meanwhile, entered the fray in December, suing state regulators and asking for federal court affirmation that predictions markets on CFTC regulated venues are governed by federal law, not a patchwork gambling code.