Nevada Sues Coinbase Over Unlicensed Prediction Markets

Regulators in Nevada have filed a lawsuit against Coinbase, aiming to stop the crypto exchange from offering prediction markets they claim violate state gambling laws.

Key Takeaways

• Nevada Gaming Control Board filed a civil enforcement action against Coinbase for offering unlicensed sports wagering through prediction markets.
• Regulators argue the contracts constitute gambling, not federally regulated derivatives, and seek an injunction to halt operations.
• Coinbase launched prediction markets via Kalshi, a federally regulated exchange, but states like Nevada are asserting their own legal authority.
• The lawsuit follows similar enforcement actions against platforms like Polymarket and broader state-level crackdowns across the US.

What Happened?

Nevada’s gaming regulator has taken Coinbase to court over the company’s newly launched prediction markets, accusing it of operating an unlicensed sports betting platform. Although Coinbase partnered with Kalshi, a federally regulated platform overseen by the Commodity Futures Trading Commission (CFTC), Nevada insists these event contracts fall under state gambling rules.

The legal dispute deepens a growing clash between state-level gambling laws and federal oversight of crypto-related derivatives.

Nevada’s Legal Action Against Coinbase

The Nevada Gaming Control Board filed a civil enforcement complaint on Monday in the First Judicial District Court in Carson City, naming Coinbase Financial Markets as the defendant. The board requested a temporary restraining order, a preliminary injunction, and permanent relief to block Coinbase from offering what it calls illegal gambling services to Nevada residents.

Regulators say the prediction contracts available through Coinbase, including those related to sporting events and elections, require a state-issued gaming license. According to a Feb. 3 press release, the board “has deemed Coinbase’s operations to be unlawful in Nevada.”

Board Chairman Mike Dreitzer said in a statement:

Officials also raised concerns about age compliance, noting that Coinbase permits users as young as 18, while Nevada gambling law restricts participation to those 21 and older.

Federal vs. State Jurisdiction: A Regulatory Standoff

Coinbase introduced prediction markets nationwide last month through Kalshi, a CFTC-regulated designated contract market. Users can buy and sell yes/no contracts on real-world events directly through the Coinbase app. While Kalshi’s contracts are treated as financial derivatives under federal law, Nevada regulators argue these are effectively sports bets and election wagers, and thus fall under state gaming rules.

Coinbase counters that prediction markets are a federally regulated product, and on December 19, it filed lawsuits against regulators in Michigan, Illinois, and Connecticut. The exchange contends that allowing individual states to apply conflicting rules “undermines national market consistency.”

Not Just Coinbase: Polymarket and Others Also Targeted

Coinbase is not alone in facing scrutiny. Nevada courts recently granted a 14-day restraining order against Polymarket operator Blockratize, barring the decentralized prediction platform from offering contracts to residents. Regulators said the platform posed an “immediate” and “irreparable” risk to the integrity of Nevada’s betting environment, including consumer protection and underage gambling safeguards.

In both the Coinbase and Polymarket cases, Nevada courts rejected arguments that federal commodities law preempts state gambling statutes. The rulings suggest that even if an event contract is federally regulated, states may still enforce local gaming laws, especially where consumer risk is concerned.

Similar state-level actions have occurred elsewhere. Tennessee regulators recently ordered Kalshi, Polymarket, and Crypto.com’s North American Derivatives Exchange to halt sports contracts and void existing bets, citing concerns over unlicensed gambling and age verification.

CoinLaw’s Takeaway

I find this story fascinating because it highlights how state and federal laws are on a collision course when it comes to modern financial products like prediction markets. In my experience watching the evolution of crypto and fintech regulation, this kind of legal tug-of-war is exactly what stifles innovation while confusing the public. Coinbase’s move to offer prediction markets through a federally approved partner like Kalshi might seem compliant on the surface, but states like Nevada are making it clear they won’t be sidelined.

The bigger takeaway here is that crypto companies can no longer assume federal approval shields them from state-level enforcement. Until there’s more legal clarity, we’re going to see a lot more courtroom battles and regulatory patchwork. And in the meantime, platforms like Coinbase are caught in the middle.

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