A Nevada state court has issued a preliminary injunction against Coinbase, preventing the company from providing event-based prediction contracts within the state. This ruling highlights the increasing legal challenges surrounding the regulation of such platforms in the U.S.
The decision, made by the First Judicial District Court of Nevada on March 26, follows a temporary restraining order that was granted in February. The court's ruling suggests that Nevada is likely to prevail in its legal case.
The core of the dispute revolves around Coinbase's collaboration with Kalshi, a regulated exchange that enables users to trade contracts linked to real-world events, including sports and elections. This partnership signifies Coinbase's foray beyond cryptocurrency trading into the burgeoning prediction markets sector.
The court dismissed a significant argument from prediction market operators, which claimed that the Commodity Exchange Act (CEA) grants exclusive regulatory authority to the Commodity Futures Trading Commission (CFTC). Instead, the court stated that, “based on the current state of the law,” the statute does not confer exclusive jurisdiction over event contracts traded on Coinbase’s platforms to the CFTC.
Legal expert Daniel Wallach commented on LinkedIn, stating, “The Nevada state court judge has issued a preliminary injunction preventing Coinbase from offering sports, election, and entertainment-related event contracts in Nevada, asserting that the CEA does not override Nevada’s gambling laws.”
Wallach further noted that Coinbase would need to modify its operations to adhere to the ruling. The company will have 60 days to implement necessary “technological enhancements” to comply with the order. During this interim period, Coinbase will conduct screenings based on users' residency, which may help Kalshi avoid any contempt charges for not adhering to its own temporary restraining order.
This injunction follows a similar legal victory for Nevada against Kalshi itself. On March 20, a court issued a temporary restraining order that barred the exchange from operating within the state, indicating a concerted effort by regulators to target prediction market platforms that lack state licenses.
Nevada's actions are part of a wider national trend, with over a dozen U.S. states embroiled in legal disputes concerning prediction markets. These markets allow users to trade contracts associated with real-world events, and state authorities argue that such offerings resemble gambling, thus falling under local gaming laws. Meanwhile, operators contend that they are financial instruments regulated at the federal level.
Judicial opinions on this matter have been mixed. While rulings in Nevada and Massachusetts have leaned towards state regulation, a court in Tennessee granted Kalshi a preliminary injunction that prevents the state from enforcing its gambling laws against the platform.
The prediction markets sector has seen rapid growth in recent years. A report from market intelligence firm Blask indicated that prediction markets experienced a 256% increase in their performance index in 2025, with early growth driven by the 2024 U.S. presidential election and further expansion supported by the introduction of sports-related contracts.
As conflicting rulings arise across different jurisdictions, legal experts suggest that the question of whether federal law supersedes state gambling regulations in prediction markets may ultimately be resolved by the U.S. Supreme Court.