Coinbase Launches Prediction Markets, Faces Nevada Lawsuit

Coinbase rolled out prediction markets to users across all 50 U.S. states on Jan. 28, allowing customers to trade on outcomes of sports, political events, and economic indicators through a partnership with regulated platform Kalshi.

Coinbase users can now access event-based contracts directly through the exchange's app, funding trades with cash or USDC stablecoin held in existing accounts. All initial market liquidity flows from Kalshi, a Commodity Futures Trading Commission-regulated prediction market operator valued at $11 billion. Coinbase said it plans to support additional providers in the future.

The contracts allow users to take yes or no positions on specific outcomes, with prices fluctuating based on market sentiment. Minimum trade sizes start at $1, and positions are managed alongside cryptocurrency holdings and cash balances within the same interface.

"Prediction markets are the ultimate form of truth-seeking," Coinbase chief executive Brian Armstrong said in a social media post. "When there's skin in the game, the output is far more reliable."

Coinbase announced plans to enter the prediction market sector in December, acquiring The Clearing Company, a platform founded by Toni Gemayel, former head of growth at both Polymarket and Kalshi. Gemayel now serves as head of prediction markets at Coinbase.

The nationwide launch comes as prediction markets have experienced rapid growth. Kalshi and Polymarket collectively raised more than $2.3 billion in funding in late 2025, with individual valuations exceeding $11 billion and $9 billion, respectively.

Several traditional brokerages have also entered the prediction market space. Robinhood embedded Kalshi markets into its platform earlier this year as part of a non-exclusive partnership. Kalshi has engaged in talks with other major brokerages to expand its distribution.

Nevada Lawsuit

The news comes as the Nevada Gaming Control Board filed a civil lawsuit against Coinbase Financial Markets, alleging the company offered sports betting contracts in the state without a gaming license. The board is seeking a temporary restraining order and preliminary injunction to halt the platform's operations in Nevada.

The Nevada lawsuit, filed in District Court in Carson City on Monday, claims Coinbase's event contracts constitute wagering activity under state law and require proper licensing. Nevada Gaming Control Board Chairman Mike Dreitzer said in a statement that the action "reinforces" the agency's obligation to protect Nevada citizens and operate a thriving gaming industry.

The complaint alleges that Coinbase's operations create an unfair competitive advantage over licensed sportsbooks that must pay licensing fees, taxes, and maintain physical locations while complying with consumer protection requirements.

Coinbase maintains that prediction markets fall under federal CFTC jurisdiction rather than state gaming regulation. Ryan VanGrack, vice president of litigation at Coinbase, called the Nevada lawsuit a "state power grab" prohibited by Congress.

The company filed federal lawsuits in December against Connecticut, Michigan, and Illinois challenging each state's efforts to control or block prediction markets. Paul Grewal, Coinbase's chief legal officer, said the lawsuits would confirm that prediction markets fall under CFTC jurisdiction, not individual state gaming regulators.

Nevada's action against Coinbase follows a similar move last week against prediction market platform Polymarket. A Nevada court granted a 14-day temporary restraining order blocking Polymarket from offering event contracts to state residents, with a preliminary injunction hearing scheduled for Feb. 11.

The Nevada court rejected arguments that federal commodities oversight preempts state gambling statutes, finding that event-based contracts can constitute sports wagering under state law. The judge cited "immediate and irreparable harm" to the state's ability to regulate betting without a license.

Kalshi has faced regulatory challenges in multiple states over its sports-related contracts. The platform is currently involved in legal disputes with Nevada, Massachusetts, and Tennessee, among others. Tennessee's Sports Wagering Commission sent cease-and-desist letters to Kalshi, Polymarket, and Crypto.com in December, ordering the companies to remove sports-related markets accessible to Tennessee customers.

Massachusetts Attorney General Andrea Joy Campbell secured a preliminary injunction in January that may block Kalshi from offering sports and related event contracts in that state until it obtains a license from the Massachusetts Gaming Commission.

While Kalshi operates under CFTC oversight at the federal level, state regulators argue that sports-related contracts constitute gambling requiring state licenses.