Nevada Court Issues Temporary Restraining Order Against Polymarket
Las Vegas – A Nevada district court has granted the state Gaming Control Board a 14‑day temporary restraining order (TRO) that bars the on‑chain prediction‑market platform Polymarket from offering event‑based contracts to residents of the Silver State. The order, filed on Thursday, comes as part of a broader legal showdown over whether federal commodities law pre‑empts state gambling regulations.
What the Order Stipulates
The TRO, issued against Polymarket’s operating entity Blockratize, prohibits the platform from opening new sports‑related or other event‑driven markets to users located in Nevada. The court indicated that the restriction will remain in effect while the parties prepare for a preliminary injunction hearing scheduled for February 11.
In its reasoning, the judge highlighted the “immediate” and “irreparable” risk to the state’s ability to enforce betting integrity, prevent under‑age wagering, and uphold suitability standards if Polymarket were to continue operating without a Nevada gaming license.
Federal Pre‑emption Argument Rejected
Polymarket argued that its contracts fall under the Commodity Exchange Act (CEA) and are therefore subject to exclusive jurisdiction of the U.S. Commodity Futures Trading Commission (CFTC). The Nevada court rejected this position, concluding that the state’s gambling statutes remain applicable and that the CEA does not displace Nevada’s authority to regulate unlicensed wagering activities.
Context: A Growing Wave of State Enforcement
Nevada’s move is the latest in a series of state‑level actions targeting prediction‑market platforms:
- Tennessee (April 2024) – The state’s Sports Wagering Council ordered Kalshi, Polymarket, and Crypto.com’s North American Derivatives Exchange to cease offering sports‑event contracts to Tennessee residents and to refund existing trades, citing consumer‑protection concerns such as age verification and responsible‑gaming tools.
- Other jurisdictions – Kalshi, a CFTC‑designated contract market, has faced a mixed record in state courts, securing temporary protections in Connecticut and New Jersey while encountering adverse rulings in Nevada and Maryland.
- Federal litigation – In December, Coinbase sued regulators in Connecticut, Illinois, and Michigan, seeking a federal declaration that prediction‑market contracts listed on CFTC‑regulated venues are governed exclusively by the CEA, not by individual state gambling codes.
Analysis
The Nevada TRO underscores the uncertainty that prediction‑market operators face when navigating the intersection of federal commodities regulation and state gambling law. By denying the pre‑emption argument at this early stage, the court signals that state regulators may continue to assert jurisdiction over on‑chain wagering products, especially where the contracts resemble traditional sports bets.
For Polymarket, the immediate impact is a forced suspension of its Nevada user base and a potential loss of liquidity on its platform. The upcoming preliminary injunction hearing will likely explore whether the company can obtain a broader exemption based on its classification as a financial product rather than a gambling activity. A favorable ruling could carve out a limited path for prediction markets to operate under federal oversight, but a negative outcome would reinforce the need for state licensing or restructuring of contract offerings.
Industry observers see the Nevada case as a litmus test for the broader regulatory framework. If state courts consistently uphold their gambling statutes, prediction‑market platforms may need to pursue a dual‑licensing strategy—securing both CFTC approval for commodity‑type contracts and state gaming licenses for wager‑type offerings. Conversely, a decisive federal pre‑emption ruling could streamline operations but would likely encounter further challenges as states continue to prioritize consumer protection.
Key Takeaways
- Temporary restraining order: Nevada judges have temporarily barred Polymarket from providing event‑based contracts to state residents for 14 days, pending a preliminary injunction hearing on Feb 11.
- State vs. federal authority: The court rejected Polymarket’s claim that the Commodity Exchange Act pre‑empts Nevada gambling law, reaffirming the state’s power to regulate unlicensed wagering.
- Industry ripple effect: The decision aligns Nevada with recent Tennessee enforcement actions, highlighting a coordinated push by state regulators to curb on‑chain prediction markets deemed to be gambling.
- Potential outcomes: A ruling against Polymarket could pressure other platforms to obtain state gaming licenses or redesign their products; a favorable outcome might support the argument for federal pre‑emption.
- Broader legal landscape: Ongoing litigation, including Coinbase’s suit against multiple states, indicates that the clash between CFTC jurisdiction and state gambling statutes will continue to shape the future of crypto‑based prediction markets.
Cointelegraph reached out to Polymarket for comment; a response was not received at the time of publication.
Source: https://cointelegraph.com/news/nevada-polymarket-temporary-restraining-order?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
