Nevada Court Blocks Polymarket Over Gambling Law Dispute

A Nevada judge has temporarily blocked access to the Polymarket prediction platform for state residents, raising fresh legal concerns for crypto-based event contracts in the United States.

Key Takeaways

• Nevada court issued a 14-day restraining order blocking Polymarket, citing violation of state gambling laws.
• State regulators argue Polymarket operates illegally without a Nevada gaming license, while Polymarket claims federal oversight.
• The ruling aligns with broader regulatory pressure on prediction markets, including actions against Kalshi and others.
• A hearing is set for February 11 to determine if the ban should continue.

What Happened?

A Nevada state court has temporarily banned Polymarket from offering any event-based contracts to users within the state. The decision follows an enforcement action by the Nevada Gaming Control Board (NGCB), which argues that Polymarket’s operations constitute illegal gambling. While Polymarket contends it operates under federal jurisdiction via the Commodity Futures Trading Commission (CFTC), the court sided with state regulators, at least for now.

Polymarket Faces Temporary Ban in Nevada

The legal clash began on January 16, when the NGCB filed a civil enforcement action against Blockratize Inc., the parent company of Polymarket. Days later, Judge Jason D. Woodbury issued a temporary restraining order barring Polymarket from serving users in Nevada for 14 days.

According to the court, Polymarket poses an “immediate and irreparable” threat to Nevada’s tightly controlled gambling ecosystem. The judge said that the NGCB is “reasonably likely to prevail” in its case and dismissed the idea that federal oversight overrides state law.

Judge Woodbury wrote:

“

The question of federal preemption… is nuanced and rapidly evolving. At the moment, the balance of convincing legal authority weighs against federal preemption in this context.

Judge Woodbury

This ruling reflects growing pressure on crypto prediction markets from state regulators, especially around the line between derivatives and gambling.

State vs. Federal Jurisdiction

Polymarket’s defense hinges on its classification as a derivatives exchange governed by the CFTC, not a gambling operator. The company argues that its users are trading financial contracts, not placing bets.

However, Nevada regulators claim that Polymarket’s contracts mimic sports and event wagering, especially because users can buy “yes” or “no” shares on outcomes ranging from political elections to sporting events. In their view, such mechanics demand a state gaming license.

“The resulting harm in evasion of Nevada’s ‘comprehensive regulatory structure’ is immediate, irreparable,” the judge emphasized in his ruling.

Similar Legal Battles Hit the Sector

Polymarket is not alone. Kalshi, another major player in the prediction market space, has also faced legal battles. A judge in Massachusetts recently ordered Kalshi to block users in that state, echoing Nevada’s stance.

Meanwhile, platforms like FanDuel, DraftKings, and Crypto.com have either exited or limited operations in Nevada due to regulatory concerns. This signals a larger trend where states are tightening enforcement even as the federal CFTC remains relatively permissive.

Notably, Polymarket only reentered the US market in late 2023 after resolving prior issues with the CFTC, which fined it $1.4 million in 2022. The company was allowed back through its acquisition of the licensed exchange QCEX.

CFTC Promises Regulatory Clarity

In a parallel development, newly appointed CFTC chair Michael Selig has acknowledged the regulatory confusion and pledged to improve it. He announced plans to introduce clearer rules for event contracts, hoping to provide certainty for market participants.

Selig said:

“

The CFTC’s existing framework has proven difficult to apply and has failed our market participants. That is something I intend to fix.

Michael SeligChair – CFTC

Selig also defended the agency’s exclusive jurisdiction over commodity derivatives, suggesting that future battles between federal and state regulators may land in higher courts.

Industry Pushes Forward Despite Legal Headwinds

Despite the court order, Polymarket continues to fight back. In an in-app message, the company informed users that trading is “not allowed in Nevada” and added that it is challenging the temporary order.

Polymarket has also been growing rapidly, inking a partnership with Major League Soccer (MLS) and sponsoring high-profile events like the Golden Globes, further increasing its visibility.

Still, these state-level rulings may slow its momentum. The next hearing on the Nevada case is scheduled for February 11, where Polymarket hopes to overturn the restriction.

CoinLaw’s Takeaway

In my experience, this case isn’t just about Polymarket. It’s a stress test for the future of crypto-powered prediction markets in the US. The way states like Nevada and Massachusetts are cracking down sends a message that federal approval alone may not be enough. I find it concerning that even platforms operating under CFTC guidelines can still be blocked if they don’t comply with local rules. Until the state vs. federal turf war is resolved, users and platforms will remain in limbo. If you’re building or investing in this space, watch these court dates closely.

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