Crypto exchange Coinbase has gained breathing room in Nevada as the state court refused to immediately shut down its new prediction market feature. Regulators had pushed for an emergency temporary restraining order (TRO), but the judge declined to grant it and instead set a hearing for next week to review the matter in detail.
The legal dispute began when the Nevada Gaming Control Board filed a civil enforcement action, claiming the crypto exchange was offering unlicensed wagers linked to sports event contracts. In response, Coinbase is now challenging the case in both state and federal court, arguing that the requested order could also block other federally regulated event contracts tied to financial and commodity outcomes.
Court Seeks Coinbase Hearing as Nevada Dispute Escalates
A Nevada state court has refused regulators’ request to immediately stop Coinbase’s new prediction market feature through an emergency temporary restraining order (TRO). Instead of granting the request, the court scheduled a hearing for next week to give Coinbase a chance to respond.
The Nevada Gaming Control Board (NGCB) filed a civil case in Carson City on Monday, claiming that Coinbase was offering unlicensed wagers tied to sports event contracts. The regulator asked the court for a TRO and a preliminary injunction to block Nevada residents from accessing the product.
In an X post earlier today, Coinbase’s Chief Legal Officer, Paul Grewal, stated,
“Yesterday the Nevada Gaming Control Board tried to get a NV state court to stop us ex parte from listing there any event contracts, sports-related or otherwise, without any opportunity for us to be heard. Today that court said no, after we argued that due process requires at a minimum that we get a chance to be heard.”
What’s Coinbase’s Argument?
In response to Nevada’s lawsuit, Coinbase went to the federal court, asserting that Nevada’s request goes beyond just sports betting. The company stated that the order could stop the exchange from offering all CFTC-regulated “event-contracts” in the state, including those linked to financial and commodity markets.
In addition, Coinbase argued that there is no real harm with its prediction markets. According to the exchange, prediction markets like Kalshi are under the jurisdiction of the CFTC. While this completely compliant Kalshi provides Coinbase with the listed contracts, the exchange can still offer the same products to users in Nevada while the case continues.
While Nevada’s enforcement action conflicts with the federal law, the exchange took the matter to the federal court to block it. This comes on the heels of Coinbase’s previous lawsuit against three U.S. states for allegedly overstepping their authority over prediction markets. Coinbase believes that the CFTC has the complete power to control and regulate prediction markets.
Prediction Markets Face Growing Scrutiny
Prediction market platforms like Polymarket are facing increased scrutiny in the US. Recently, CryptoMoonPress reported that the US criticized Polymarket for refusing to pay out wagers tied to a potential US invasion of Venezuela. It is also worth noting that the incident comes shortly after another Nevada judge ordered Polymarket to pause some of its event markets in the state for 14 days.
As CryptoMoonPress reported, Portugal blocked Polymarket over allegations of illegal election betting. In January, Tennessee’s Sports Wagering Council told platforms like Kalshi and Polymarket to stop offering sports event contracts to people living in the state.
