Coinbase Faces Nevada Lawsuit Over Unlicensed Sports Wagers

Nevada is also seeking court orders to halt related activity in the state. Separately, a Nevada judge granted a 14-day temporary restraining order against Polymarket operator Blockratize, blocking the platform from offering event-based contracts to Nevada residents while litigation proceeds. In both cases, state authorities argued the products constitute unlicensed wagering under Nevada law rather than regulated financial derivatives, and pointed out risks to betting integrity, consumer protection, and underage gambling safeguards. The rulings now only add to the pattern of state-level pushback, including similar actions in Tennessee.

Nevada Moves to Block Coinbase

The Nevada Gaming Control Board escalated its regulatory scrutiny of crypto-linked prediction markets by filing a civil enforcement action against Coinbase, alleging the company facilitated unlicensed sports wagering through its derivatives offerings. Court filings that were submitted on Monday to the First Judicial District Court of Nevada in Carson City name Coinbase Financial Markets as the defendant and accuse the firm of operating a de facto sports betting market without the required state authorization.

Alongside the lawsuit, the Board requested that the court issue a temporary restraining order and a preliminary injunction that would immediately halt Coinbase from “operating a derivatives exchange and prediction market” tied to sporting events in the state. Regulators argue that such activity falls squarely under Nevada’s gaming laws, which require strict licensing and oversight to protect consumers and preserve the integrity of the state’s gaming industry.

Nevada’s lawsuit against Coinbase

Mike Dreitzer, chair of the Nevada Gaming Control Board, said in a Tuesday statement that the enforcement action forms part of the Board’s responsibility to both maintain a lawful gaming environment and safeguard Nevada residents. He explained that the regulator views unauthorized sports wagering as a serious breach, regardless of whether it is offered through traditional sportsbooks or newer financial and crypto-based platforms.

The action comes less than a week after Coinbase announced the nationwide rollout of prediction markets across all 50 US states through a partnership with Kalshi. Kalshi operates under the oversight of the Commodity Futures Trading Commission (CFTC) at the federal level, but the Nevada case proves that state regulators can still intervene when they believe local gaming laws are being violated. 

While Kalshi’s contracts are structured as event-based derivatives, Nevada authorities are unconvinced that federal commodities regulation preempts state gaming enforcement.

Polymarket Blocked in Nevada

A Nevada state judge also temporarily ordered on-chain prediction market platform Polymarket to halt operations in the state, delivering a ruling that directly challenges the industry’s argument that federal commodities law overrides state gambling regulations. 

In a Thursday order, the court granted the Nevada Gaming Control Board a 14-day temporary restraining order against Polymarket operator Blockratize. The order bars Polymarket from offering event-based contracts to Nevada residents while litigation continues, with a preliminary injunction hearing scheduled for Feb. 11. The ruling effectively freezes Polymarket’s in-state activity during a critical phase of the case.

At this early stage, the judge sided with Nevada regulators, and found that Polymarket’s sports and other event-based markets more closely resemble unlicensed wagering than regulated financial derivatives. The court pointed to the risk of “immediate” and “irreparable” harm to Nevada’s ability to enforce betting integrity, prevent underage gambling, and uphold suitability standards if the platform were allowed to continue operating without a state gaming license. Those concerns, the judge said, outweighed Polymarket’s claims of federal preemption.

In doing so, the court rejected Blockratize’s argument that the Commodity Exchange Act grants exclusive jurisdiction to the CFTC over its contracts. Instead, the ruling suggests that even if event contracts fall under federal commodities law, states may still apply their own gambling statutes when consumer protection and licensing requirements are at stake.

Nevada’s move aligns with the pushback from state regulators against prediction markets. Tennessee recently ordered Kalshi, Polymarket, and Crypto.com’s North American Derivatives Exchange to halt sports event contracts for residents, void existing trades, and refund users. Tennessee regulators argued that the products constituted sports betting and raised concerns about age verification and responsible gaming safeguards.

The rulings also arrive during a wider legal clash over prediction markets’ status in the US. Kalshi, which operates as a CFTC-designated contract market, has spent months battling both state and federal challenges over whether its offerings are lawful derivatives or prohibited gambling. Meanwhile, Coinbase also entered the fray, suing regulators in several states in December and asking federal courts to affirm that prediction markets listed on CFTC-regulated venues fall under federal law rather than a patchwork of state gambling codes.