A Nevada court has issued a preliminary injunction against Coinbase on March 26, while Washington initiated a lawsuit against Kalshi the following day. These actions represent significant developments in the ongoing state-level challenges to prediction market platforms. Attention is now focused on April 3, when two hearings may provide further insights into the judicial stance on these matters.
The Nevada ruling prohibits Coinbase from offering or facilitating event-based contracts related to sports, elections, and other outcomes within the state. This decision stems from an enforcement action initiated by the Nevada Gaming Control Board (NGCB) in early February, which sought to classify Coinbase’s contracts as “unlicensed wagering” under state regulations.
The court dismissed Coinbase’s claims that the Commodity Exchange Act (CEA) grants it exclusive federal jurisdiction, stating that it does not confer exclusive authority over event contracts and does not supersede Nevada's gaming laws. The ruling indicated that the NGCB is likely to succeed in its case and that Coinbase's ongoing operations could inflict “immediate and irreparable harm” to Nevada’s gaming industry and the public.
Coinbase has been given sixty days to implement technological changes to comply with the injunction, which notably requires the platform to restrict access based on users' residency rather than their real-time location. This requirement may assist Kalshi in addressing compliance issues related to its own temporary restraining order in Nevada.
On the following day, Washington filed a lawsuit against Kalshi, accusing the platform of running an illegal gambling operation. The complaint asserts that Kalshi claims to have “cracked the code on legal betting in all 50 states” for both “sports markets” and “everything else,” arguing that its contracts fall under prohibited online gambling activities. The state contends that Kalshi is “openly violating Washington law” while expanding its services.
Furthermore, the lawsuit alleges that Kalshi is contributing to a surge in online gambling while profiting from these violations. Washington is pursuing injunctive relief, civil penalties, and disgorgement, framing the case as both a gambling enforcement action and a consumer protection issue.
In a familiar pattern, Kalshi has moved the case to federal court, claiming that the lawsuit raises federal questions under the CEA. The company asserts that it operates under exclusive federal jurisdiction as a designated contract market (DCM) by the Commodity Futures Trading Commission (CFTC) in accordance with the CEA.
It is worth noting that a federal judge in Nevada previously dismissed Kalshi’s similar claims in its case against the state, sending the complaint back to state court, which led to the NGCB obtaining a temporary restraining order.
Recent rulings indicate a growing momentum for states in their legal battles against prediction market platforms. Notable outcomes include:
- Preliminary injunctions granted: Nevada (Coinbase), Massachusetts (Kalshi)
- Temporary restraining orders granted: Nevada (Kalshi, Polymarket)
- Preliminary injunctions denied: Arizona (Kalshi), Maryland (Kalshi), Michigan (Polymarket), Ohio (Kalshi)
- Preliminary injunction losses for states: New Jersey (Kalshi), Tennessee (Kalshi)
- Other denials: Massachusetts (Robinhood), Nevada (Kalshi, Robinhood, Crypto.com)
While initial rulings were varied, recent decisions have increasingly favored state interests. The latest ruling brings the total to 13–2 in favor of states in key injunction and temporary restraining order cases.