A Nevada state court denied a temporary injunction against Coinbase's prediction market, while the company filed a federal lawsuit challenging the state's regulatory authority.
A Nevada state court has rejected an attempt by the Nevada Board of Gambling Control to immediately block Coinbase's newly launched prediction markets, marking a setback for the state regulator in its efforts to prevent the cryptocurrency exchange from offering event-based trading products under local gambling laws. Coinbase's chief legal officer, Paul Grewal, said the court has decided to hold a hearing next week, where the company will be allowed to present its arguments.
On Monday, NGCB filed a civil enforcement lawsuit in the First District Court of Justice in Carson City, alleging that Coinbase provided unlicensed gambling services through sports betting and other outcome-based contracts. The lawsuit argues that such contracts, including bets on sporting events and elections, fall under the strict provisions of state gambling laws and require licenses typically reserved for casinos and sports bookmakers.
Coinbase challenges state authority.
To block the activity, Nevada state authorities filed requests for an emergency temporary injunction and a preliminary injunction to restrict residents of the state from accessing these products. Coinbase responded to the request, arguing that the scope of the order from Nevada was too broad and would effectively prohibit the issuance of any event contracts governed by the requirements of the Commodity Futures Trading Commission in the state, including contracts that determine financial or commodity outcomes.
The company also defended itself in court by arguing that the regulatory agency's allegations lacked supporting evidence, and stressed that no harm was caused, as Kalshi, which had chosen Coinbase Custody to store its USDC , was still able to directly supply those products to consumers in Nevada while the proceedings were underway.
More importantly, Grewal said the cryptocurrency exchange has filed a lawsuit in the U.S. District Court for the District of Nevada, challenging the state's enforcement measures on the grounds that they violate federal law. According to him, Congress has granted the CFTC exclusive authority over these listed contracts and retains the power to issue rules.
The CEO stated that the Commodity Exchange Act grants the CFTC exclusive authority over swaps and event contracts traded on regulated exchanges, and that Nevada's attempt to classify these instruments as state-regulated gambling is invalidated by Congressional regulations on Derivative .
NGCB's move to push for regulation comes just weeks after Coinbase launched its prediction market product nationwide, operating through a partnership with the CFTC-regulated Kalshi exchange, as part of a larger strategy to expand beyond traditional cryptocurrency trading.
This large-scale rollout is facing increasing scrutiny from state regulators, who are concerned that unlicensed gambling could undermine consumer protections and the protection of licensed gambling businesses at the state level.
The legal dispute between NGCB and Coinbase arose after a 14-day temporary injunction issued by a Nevada judge just days earlier, requiring Polymarket to halt certain event markets in Nevada. In addition to Nevada, several other US states have also opposed prediction markets.
A report from January indicated that the Tennessee Sports Betting Board had notified several prediction market platforms, including Kalshi and Polymarket, to cease issuing sporting event betting contracts to residents of the state.
While regulatory measures for prediction markets are increasing, Coinbase recently followed Kalshi's lead by suing regulators in Connecticut, Illinois, and Michigan, arguing that prediction markets regulated by CFTC requirements should be under federal oversight, not state oversight.
