A preliminary injunction has been issued by a Nevada state court against Coinbase, prohibiting the company from offering event-based prediction contracts within the state, signifying escalating legal challenges related to the regulation of these platforms across the United States.
This ruling, released by the First Judicial District Court of Nevada on March 26, follows a temporary restraining order that was granted in February, indicating the court’s belief that Nevada’s case stands a good chance of success.
The case revolves around Coinbase’s collaboration with Kalshi, a regulated exchange that enables users to trade contracts connected to real-world results, spanning areas such as sports and elections. This partnership signifies Coinbase’s move beyond cryptocurrency trading into the rapidly expanding prediction markets.
The court dismissed a crucial argument presented by operators of prediction markets that the Commodity Exchange Act (CEA) provides exclusive regulatory authority to the Commodity Futures Trading Commission (CFTC).
Instead, it concluded that “given the existing legal framework,” the statute, “properly interpreted does not grant exclusive jurisdiction over event contracts traded via Coinbase’s platforms to the Commodity Futures Trading Commission.”
Legal authority Daniel Wallach commented in a LinkedIn post: “The Nevada state court judge issues a preliminary injunction against Coinbase prohibiting the offering of sports, election, and entertainment-related event contracts in Nevada, affirming that the CEA does not take precedence over Nevada’s gambling statutes.”
Wallach further mentioned that Coinbase must modify its operations to adhere to the ruling. “Coinbase will have 60 days to implement the necessary ‘technological enhancements’ to comply with this order. During this interim, the company will conduct screenings based on ‘residency,’ likely aiding Kalshi in avoiding contempt for not adhering to its own temporary restraining order.”
The injunction follows a similar legal win for Nevada against Kalshi itself. On March 20, the court issued a temporary restraining order that prevents the exchange from operating in the state, reflecting a united effort by regulators to target prediction market platforms run without state licenses.
Nevada’s initiatives are part of a broader trend across the nation, with over a dozen U.S. states involved in legal battles concerning prediction markets, which enable users to trade contracts based on real-world occurrences. State authorities argue these tools are akin to gambling and should be regulated by local gaming laws, while operators claim they are financial instruments subject to federal oversight.
Judicial opinions on this matter have been mixed. While decisions in Nevada and Massachusetts have sided with state regulation, a Tennessee court granted Kalshi a preliminary injunction halting the state from enforcing its gambling laws against the platform.
The industry has witnessed substantial growth in recent times. According to a report from market intelligence firm Blask, prediction markets have seen a 256% surge in their performance index by 2025, mainly driven by the approaching 2024 U.S. presidential election and further growth facilitated by the addition of sports-related contracts.
Amidst these conflicting rulings across different regions, legal professionals assert that the matter of whether federal law overrides state gambling regulations concerning prediction markets may ultimately be resolved by the U.S. Supreme Court.