Nevada Sues Coinbase, Alleging Unlicensed Sports Betting

Nevada's gaming regulator has filed a civil lawsuit against Coinbase, alleging its prediction market products constitute unlicensed sports betting under state law.

What's the Scoop?

• The Lawsuit: The Nevada Gaming Control Board filed suit this week seeking to halt Coinbase's event-based contracts tied to sporting outcomes. Regulators argue these contracts require a state gaming license regardless of how they are structured or labeled.
• Coinbase's Position: Coinbase maintains that prediction market contracts are federally regulated event markets overseen at the federal level, not traditional gambling. The company has previously sued regulators in Michigan, Illinois, and Connecticut over similar enforcement efforts, arguing state gaming rules conflict with federal commodities law.
• Recent Rollout: The lawsuit comes weeks after Coinbase launched prediction markets nationwide through a partnership with Kalshi, making the products available in all 50 states.
• What Nevada Wants: Regulators are seeking a declaration that Coinbase's contracts violate state law and an injunction barring the exchange from offering them to Nevada residents without a license.
• Broader Context: Kalshi recently won a temporary block on a Tennessee order targeting sports contracts, while Polymarket has faced restrictions in the U.S. and overseas, including a recent block in Portugal tied to election betting.

Bankless Take:

Coinbase and Kalshi have built their strategy around the argument that event contracts are CFTC-regulated commodities products, not gambling even though sports-related markets account for 90% of Kalshi’s notional volume. Sports betting also remains the largest category for notional volume in Polymarket too, though only accounting for ~40%. Nevada asserts that sports-linked contracts fall under state gaming statutes no matter how they're classified federally. Further, it seems that Nevada is scoring some early wins, with a Nevade state court issuing a temporary restraining order against Polymarket that’s forced it to withdraw from the state for at least two weeks. Obviously, Nevada has an angle here — wanting to keep gambling “in house.” But the outcome matters beyond Nevada. If states can successfully enforce gambling laws against prediction markets, the "available in all 50 states" claim becomes hollow. Meanwhile, the prediction market sector keeps expanding, with Polymarket and Kalshi duking it out for top platform, Crypto.com spinning out its own app, and Hyperliquid testing event contracts.