Nevada regulators have filed a civil enforcement action against Coinbase, escalating state-level scrutiny of prediction markets as the products gain traction across US financial and crypto platforms. The Nevada Gaming Control Board said Coinbase may be offering unlicensed sports wagering through its event-based contracts, prompting authorities to seek a temporary restraining order and preliminary injunction to halt the activity within the state.
In a February 3 statement, the board said entities offering wagers on sporting events in Nevada must be licensed under state gaming law. Regulators argued that Coinbase’s prediction markets fall within that definition, describing the exchange’s operations as unlawful under existing statutes. The enforcement action was filed in the District Court for Carson City, with officials emphasizing consumer protection and regulatory integrity as central motivations.
Coinbase launched its prediction market feature nationwide last month through a partnership with Kalshi, allowing users to trade yes-or-no contracts tied to real-world outcomes directly within the Coinbase app. Kalshi is regulated at the federal level by the Commodity Futures Trading Commission, positioning its contracts as derivatives rather than traditional gambling products. Coinbase has relied on that framework to argue that the offering falls under federal jurisdiction.
State and Federal Regulatory Tensions
The Nevada case underscores the growing tension between federal derivatives oversight and state gaming regulation. While the CFTC has approved Kalshi’s event contracts, several states have challenged whether those products violate local gambling laws when tied to sports or political outcomes. Nevada previously filed suit against Kalshi itself, and that litigation has continued through multiple procedural stages.
Other jurisdictions have taken similar steps. Regulators in Connecticut, California, and New York have raised objections to prediction market operators, while Nevada courts recently granted a temporary restraining order against an operator linked to Polymarket. The actions reflect concern among gaming authorities that prediction markets blur the line between financial instruments and sports betting.
Coinbase has responded by taking an aggressive legal stance. In December, the exchange filed lawsuits against Michigan, Illinois, and Connecticut, arguing that prediction markets are federally regulated instruments and that state-level enforcement creates inconsistent rules for national platforms. The company has said fragmented oversight undermines market efficiency and discourages innovation in regulated financial products.
Competitive and Market Implications
The legal challenge arrives as prediction markets experience rapid growth and increasing institutional interest. Trading volumes across leading platforms have surged over the past year, drawing attention from exchanges, brokers, and policymakers. Traditional financial firms are exploring event-based contracts as a new asset class, while crypto-native platforms see them as a bridge to mainstream participation.
For Coinbase, the Nevada action introduces near-term legal risk and potential operational constraints, particularly if other states follow suit. More broadly, the dispute highlights unresolved questions about how prediction markets should be classified and regulated in the US financial system. Until those issues are clarified, platforms operating at the intersection of crypto, derivatives, and gaming are likely to face continued legal uncertainty.