Nevada Sues Coinbase Over Unlicensed Sports Wagering in Prediction Markets
In a significant escalation of tensions between cryptocurrency innovation and state gambling regulations, the Nevada Gaming Control Board (NGCB) filed a civil enforcement action against Coinbase Financial Markets on February 2, 2026, in the First Judicial District Court in Carson City. The lawsuit accuses the major crypto exchange of offering unlicensed wagers on sporting events through its prediction markets platform, claiming these sports-event contracts amount to illegal gambling under Nevada law and require a state gaming license.
Prediction markets have gained traction in the crypto world, enabling users to trade contracts on real-world event outcomes—ranging from elections to sports results—much like futures markets, with payouts tied to whether the predicted event occurs. Coinbase expanded into this space recently via a partnership with Kalshi, a federally regulated designated contract market overseen by the Commodity Futures Trading Commission (CFTC). This allowed the platform to offer event contracts nationwide, including in Nevada, positioning them as financial derivatives rather than gambling.
Nevada regulators, however, view sports-linked contracts differently. The NGCB alleges that Coinbase’s offerings violate key sections of Nevada Revised Statutes, including provisions that prohibit unlicensed gambling and define wagering activities. The board is seeking a declaratory judgment confirming these violations, as well as a temporary restraining order (TRO) and preliminary injunction to immediately stop Coinbase from operating any derivatives exchange or prediction market involving sports betting in the state. This move echoes Nevada’s simultaneous action against Polymarket, where a judge granted a 14-day TRO on the same day, rejecting federal preemption arguments.
NGCB Chairman Mike Dreitzer underscored the state’s stance in an official statement: “The Board takes seriously its obligation to operate a thriving gaming industry and to protect Nevada citizens. The action taken yesterday reinforces this obligation.” The comment reflects Nevada’s long-standing policy of tightly controlling gaming to safeguard public welfare, the economy, and licensed operators amid the rise of digital alternatives.
Coinbase has consistently argued that its prediction markets fall under exclusive federal jurisdiction via the Commodity Exchange Act and CFTC oversight, not fragmented state gambling rules. In late 2025, the company filed preemptive lawsuits against regulators in Connecticut, Illinois, and Michigan to affirm this position. Chief Legal Officer Paul Grewal previously stated on X that “the law is unambiguous: Congress gave [the CFTC], and only the CFTC, authority over event contracts.” As of early February 2026, Coinbase had not issued a specific public response to the Nevada filing, though media outreach to the company went unanswered at the time of several reports.
This dispute highlights a broader regulatory conflict: while the CFTC has greenlit certain event contracts as derivatives, states like Nevada contend that sports-related ones infringe on their authority over wagering, potentially harming licensed sportsbooks and exposing users to unregulated risks. A preliminary injunction hearing in the Polymarket matter is set for February 11, 2026, and its result could sway the Coinbase case significantly.
Should Nevada succeed, platforms like Coinbase might need to restrict access for state residents or pursue costly gaming licenses, curbing growth in prediction markets celebrated for their predictive accuracy. Conversely, a favorable ruling for Coinbase could strengthen federal preemption claims and encourage wider adoption of event-based trading. As Nevada defends its multi-billion-dollar gaming industry, this litigation stands as a pivotal test of where digital finance ends and traditional gambling begins—potentially influencing prediction markets nationwide.
