Nevada’s gaming authorities have initiated a civil enforcement lawsuit against the prediction market platform Polymarket, claiming the company is engaging in unlawful, unlicensed sports betting activities within the state, as stated in a recent court document.

The Nevada Gaming Control Board has filed this lawsuit in Carson City District Court, aiming for a court ruling and a restraining order to put an end to Polymarket’s sports contracts in Nevada.

Regulators contend that these contracts constitute unregulated wagering, breaching state gaming regulations designed to uphold the integrity and financial stability of Nevada’s gaming sector.

This legal action signifies a new enforcement approach by the board, which noted that prior cease-and-desist directives to prediction market entities had been disregarded. Platforms maintained that they fall under federal regulation, thereby claiming exemption from state gaming laws.

This lawsuit represents the first direct legal dispute by Nevada regulators against Polymarket, which recently re-entered the U.S. market following authorization from the Commodity Futures Trading Commission (CFTC).

Legal analysts predict that Polymarket may attempt to transfer the case to federal court, asserting that prediction markets are under federal jurisdiction. Nonetheless, Nevada has historically prevailed in defending its jurisdiction in similar cases, with previous judgments by Chief Judge Andrew Gordon siding with state regulators.

This situation is distinct from ongoing litigation with Kalshi, where federal-state conflicts are more pronounced. Nevada is the second state to pursue a state-court lawsuit against a prediction market, following a similar action by Massachusetts against Kalshi last September.

Numerous U.S. states permitting regulated sports betting have expressed concerns that prediction markets featuring sports-related contracts effectively function as sportsbooks without the necessary state licenses. A favorable ruling for Nevada could lead other states to pursue legal action instead of issuing warnings, potentially increasing regulatory scrutiny on prediction market operators nationwide.