Nevada Gaming Control Board Sues Coinbase Over Unlicensed Sports‑Event Wagers
Carson City, Nev. – The Nevada Gaming Control Board (NGCB) filed a civil enforcement action on Tuesday against Coinbase Financial Markets, alleging that the exchange has been offering illegal wagers on sports‑event contracts. The suit seeks a temporary restraining order and a preliminary injunction aimed at halting Coinbase’s operation of a derivatives exchange and prediction‑market platform that, according to regulators, functions as an unlicensed sportsbook.
What triggered the lawsuit?
The filing follows Coinbase’s recent announcement that it would roll out prediction‑market products across all 50 U.S. states through a partnership with the regulated exchange Kalshi. While Kalshi is overseen by the U.S. Commodity Futures Trading Commission (CFTC) at the federal level, the NGCB argues that state licensing requirements still apply to any platform that enables Nevada residents to place wagers on sporting outcomes.
Details of the enforcement action
- Court: First Judicial District Court, Carson City
- Plaintiff: Nevada Gaming Control Board
- Defendant: Coinbase Financial Markets (a subsidiary of Coinbase Global)
- Relief sought: A temporary restraining order and a preliminary injunction to stop the “derivatives exchange and prediction market” that facilitates sports bets.
Mike Dreitzer, chair of the NGCB, emphasized the board’s commitment to safeguarding Nevada’s gaming industry and protecting consumers. He said the legal step reinforces that responsibility.
Parallel cases in the state
Coinbase’s predicament mirrors a recent Nevada ruling against Polymarket, another prediction‑market platform. A state court granted a temporary restraining order that barred Polymarket from offering event‑based contracts to Nevada residents, citing the potential for “immediate and irreparable” harm to regulatory oversight.
Both cases illustrate how state regulators are asserting authority over crypto‑based wagering platforms, even when those platforms operate under federal CFTC supervision.
Regulatory backdrop
Kalshi, the partner behind Coinbase’s prediction‑market launch, holds a CFTC‑approved derivatives exchange license. However, the CFTC’s jurisdiction does not preempt state gambling laws. Nevada, along with several other states, maintains its own licensing regime for sports betting and related activities. The lack of a uniform national framework leaves crypto‑centric platforms vulnerable to a patchwork of state enforcement actions.
Potential implications for Coinbase and the broader crypto market
- Operational disruption in Nevada – If the court grants the injunction, Coinbase will be forced to suspend its sports‑event contracts for Nevada users, potentially affecting market liquidity and user engagement in that state.
- Legal precedent – A ruling in Coinbase’s favor could embolden other state regulators to pursue similar actions against crypto‑based prediction markets, creating additional compliance hurdles.
- Strategic reassessment – Coinbase may need to redesign its product offering to ensure compliance with state gambling statutes, possibly by limiting participation to users in jurisdictions where the service is expressly permitted.
- Impact on Kalshi partnership – While Kalshi remains regulated at the federal level, the partnership could face scrutiny if Nevada’s outcome influences other states to adopt comparable stances.
- Investor sentiment – Ongoing legal uncertainty may weigh on Coinbase’s stock and the broader perception of crypto‑enabled wagering platforms as a high‑risk regulatory segment.
Key takeaways
- Nevada’s Gaming Control Board has moved to block Coinbase from offering unlicensed sports wagers, seeking both a temporary restraining order and a preliminary injunction.
- The action follows Coinbase’s nationwide rollout of prediction markets in partnership with Kalshi, a CFTC‑regulated exchange, highlighting the tension between federal oversight and state gambling laws.
- Similar enforcement against Polymarket underscores a growing trend of state-level crackdowns on crypto‑based betting platforms.
- Outcomes of the Nevada case could set a precedent that influences how other states regulate prediction markets and may compel platforms to tailor services to meet diverse licensing requirements.
- Coinbase and its partners may need to adjust product offerings or seek additional state licenses to continue operating in jurisdictions where gambling regulations are strict.
Coinbase has not yet responded to requests for comment.
Source: https://cointelegraph.com/news/nevada-enforcement-action-coinbase-wagering?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
