A preliminary injunction has been issued by a Nevada state court against Polymarket, marking yet another legal triumph for state regulators aiming to limit event-based trading platforms.
On May 29, Judge Jason Woodbury of the First Judicial District Court approved the Nevada Gaming Control Board’s request for a preliminary injunction, halting QCX LLC, which operates as Polymarket, from providing its services within the state. A formal written order is anticipated soon.
“We are very satisfied with Judge Woodbury’s decision and will continue our robust enforcement of Nevada laws to protect the integrity of gaming in our state,” stated Mike Dreitzer, Chairman of the Nevada Gaming Control Board.
This ruling puts Polymarket alongside two other prediction market operators that have faced similar scrutiny from Nevada regulators, namely Kalshi and Coinbase. The state regulators noted they have effectively restricted operations of all unlicensed prediction markets previously known to operate in Nevada.
Nevada has initiated enforcement actions against prediction market operators based on arguments that sports-event contracts and related event contracts qualify as wagering under state legislation, thus necessitating gaming licenses.
Prediction market operators contest this interpretation, asserting that they are federally permitted to operate across the U.S. due to regulation by the Commodity Futures Trading Commission (CFTC). They maintain that federal commodities law provides the CFTC exclusive jurisdiction over event contracts, thereby superseding state gaming laws.
Nevada’s challenges have been presented in state rather than federal courts, securing favorable rulings thus far. Courts have typically ruled in favor of the state, suggesting that event contracts likely meet the definition of gambling according to Nevada law and that regulators are expected to succeed in their cases.
This legal dispute extends beyond Nevada, with a consolidated federal appeal—including Kalshi, Robinhood, and Crypto.com—still under consideration by the Ninth Circuit Court of Appeals.
The appeal is anticipated to explore if the Commodity Exchange Act grants the CFTC exclusive power over event contracts and if federal law takes precedence over state efforts to enforce gaming regulations against prediction market operators.
During the April oral arguments, judges from the Ninth Circuit expressed skepticism towards claims that federal law entirely prohibits states from regulating sports-event contracts.
The panel probed whether such contracts essentially represent sports betting and questioned why states should be barred from enforcing their gambling laws if these contracts fall under traditional state regulatory scope.
The result of this appeal could have widespread implications for similar legal challenges throughout the United States.
Earlier this year, the Third Circuit Court of Appeals sided with Kalshi in its dispute against New Jersey, lending support to the argument that federal commodities law may override specific state gaming enforcement efforts.
Nonetheless, the Nevada ruling fortifies the state’s stance that contracts related to sports events are gambling activities subject to licensing by the state, establishing a broader legal confrontation concerning whether state regulators or federal commodities agencies provide primary oversight over prediction markets.