Nevada Takes Legal Action Against Coinbase Over Unlicensed Betting Market

TLDR

• The Nevada Gaming Control Board claims Coinbase operates unlicensed prediction markets for sports and elections.
• Regulators argue Coinbase’s prediction markets fall under state gaming laws, not federal CFTC jurisdiction.
• Nevada officials point out that Coinbase’s app allows users below the state’s legal gambling age of 21 to participate.
• Coinbase is involved in a broader legal clash with multiple U.S. states over jurisdiction of digital betting markets.
• Nevada has previously taken action against platforms like Kalshi and Polymarket for similar issues, showing increasing state scrutiny.

The Nevada Gaming Control Board has filed a civil enforcement complaint against Coinbase Financial Markets. It claims that the platform is offering event-based contracts tied to sports and elections without a necessary state gaming license. The regulators have requested a permanent injunction, declaratory relief, and an emergency temporary restraining order.

Nevada’s Allegations Against Coinbase’s Market Activities

The Nevada Gaming Control Board argues that Coinbase’s prediction markets fall under state gaming regulations. The board claims that event-based contracts tied to sports outcomes and elections constitute wagering. According to Nevada law, such activities require a state-issued gaming license, which Coinbase lacks.

Coinbase began offering prediction market trading in the U.S. last month, partnering with Kalshi, a federally regulated market. Kalshi operates under the jurisdiction of the Commodity Futures Trading Commission (CFTC). However, Nevada regulators contend that the CFTC’s authority does not extend to sports betting or election-related contracts.

Nevada also highlights that Coinbase’s app allows users aged 18 and older to participate in prediction markets. This, they argue, is a violation of state law, as Nevada’s legal gambling age is 21. The regulators claim this exposes consumers to risks without the protections afforded by licensed sportsbooks.

Coinbase Faces Broader Legal Scrutiny

The legal battle in Nevada is part of a wider clash between Coinbase and various U.S. states. Recently, the exchange filed lawsuits against gaming regulators in Connecticut, Michigan, and Illinois.

In these cases, Coinbase argues that prediction markets should fall under the CFTC’s authority, not state gaming regulations. In response to these issues, Nevada officials assert that their primary responsibility is to protect consumers.

Nevada Gaming Control Board Chairman Mike Dreitzer emphasized the need for enforcement to ensure the integrity of the state’s gaming industry. He noted that new digital betting products create a challenge for traditional regulators.

Rising Tensions Over Prediction Markets

The legal dispute over Coinbase’s prediction market activities arrives amidst heightened state scrutiny. Nevada has previously taken action against Kalshi over sports-related contracts, resulting in a legal appeal.

More recently, the state issued a temporary restraining order blocking Polymarket from offering event contracts to residents. As federal and state regulators clash over the jurisdiction of digital betting markets, the pressure on platforms like Coinbase continues to rise.

In response to mounting concerns, Kalshi opened a Washington, D.C., office to advocate for policy change. As of now, the outcome of these ongoing legal battles remains uncertain.