A legal confrontation between Coinbase and Nevada regulators is heating up after a state court declined to immediately suspend the company’s new prediction market product.
The ruling, issued on Wednesday, denied the Nevada Gaming Control Board’s (NGCB) request for an emergency restraining order that would have halted Coinbase’s event-based contracts for users in the state.
The exchange is now set to face a preliminary injunction hearing next week, where both sides will present more extensive arguments.
The outcome could determine whether Coinbase must temporarily block Nevada residents from accessing its prediction markets while the broader lawsuit proceeds.
The case stems from a civil enforcement action filed by the NGCB on Feb. 2 in the District Court for Carson City.
In its complaint, the board accused Coinbase of offering unlicensed sports wagers through its prediction market feature and asked the court to issue both a restraining order and an injunction to block further access.
“The Board has deemed Coinbase’s operations to be unlawful in Nevada,” the agency said in a Feb. 3 press release. “Entities offering such contracts must be licensed.”
Board chairman Mike Dreitzer added that the lawsuit reinforces the state’s responsibility to regulate gambling and protect the public.
Coinbase fights back
Coinbase, which partnered with CFTC-regulated prediction market Kalshi to launch the feature nationwide in January, has rejected the state’s characterisation as it argues that its products are federally regulated derivatives and not subject to state gambling laws.
In filings submitted Tuesday, Coinbase called the NGCB’s emergency request overly broad, claiming it would bar not only sports contracts but also financial and commodity-linked instruments that fall under federal jurisdiction.
The company emphasised that Kalshi itself remains accessible to Nevada users and continues to offer the same contracts independently, under CFTC oversight.
Chief Legal Officer Paul Grewal confirmed on X that Coinbase has also initiated legal proceedings in federal court to prevent Nevada from enforcing its restrictions.
“Congress gave CFTC exclusive jurisdiction over these listed contracts,” he wrote. “And it’s Congress that calls the shots.”
Coinbase’s argument rests on the Commodity Exchange Act, which the company says grants the Commodity Futures Trading Commission sole authority over event contracts listed on regulated exchanges.
According to Coinbase, Nevada’s attempt to apply its gambling laws to these federally regulated instruments violates the Supremacy Clause of the Constitution and disrupts the national regulatory framework for derivatives.
While the emergency block was denied, next week’s hearing on the preliminary injunction carries greater weight.
A ruling in favour of the NGCB would likely require Coinbase to geofence Nevada residents, echoing a similar 14-day restraining order recently imposed on prediction market rival Polymarket.
State-level resistance threatens future of prediction markets
Beyond Nevada, a number of other US states are pushing back against prediction markets.
In January, Tennessee’s Sports Wagering Council issued cease-and-desist orders to multiple platforms, including Kalshi and Polymarket, demanding they suspend sports-related markets for users in the state.
Coinbase, anticipating such state-level opposition, preemptively filed lawsuits in December against Michigan, Illinois, and Connecticut.
The company argues these legal challenges are part of a fragmented regulatory response that contradicts federal oversight and threatens to splinter the national market.
The coming weeks may prove pivotal, not just for Coinbase, but for how prediction markets are regulated across the United States.
With state regulators and federal oversight bodies asserting overlapping claims, the clash may ultimately set a precedent for the legal boundaries of emerging event-based financial products.
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