A Nevada state court has rejected regulators’ call for an emergency order to stop Coinbase’s new market for predictions on events. The court has scheduled an upcoming hearing for Coinbase to respond to this situation, according to Paul Grewal, the chief legal officer at Coinbase.

The Nevada Gaming Control Board had submitted a civil enforcement action claiming that Coinbase is conducting unauthorized betting on sports events and requested a restraining order along with a preliminary injunction to impede these products for individuals in Nevada.

Coinbase’s Stand Against State Regulations

In a legal document filed on Tuesday, Coinbase argued that the restrictions requested by Nevada would exceed the domain of sports betting and hinder their ability to offer any Commodity Futures Trading Commission (CFTC) regulated event contracts within the state.
Coinbase preliminary opposition. Source: Paul Grewal

The exchange emphasized that there is no credible danger of irreparable damage since Kalshi, a CFTC-registered market that lists contracts from Coinbase, remains available to Nevada users while legal proceedings are ongoing.
Grewal mentioned that Coinbase has escalated the matter to federal court in Nevada in an effort to block the state’s action, asserting that the CFTC holds exclusive authority over these listed contracts.

“Congress has granted the CFTC exclusive jurisdiction over these exchange-listed contracts,” he noted. “It’s Congress that directs the regulations.”

Furthermore, Coinbase contests that the Commodity Exchange Act endows the CFTC with “exclusive jurisdiction” over swaps and event contracts on regulated exchanges and claims that Nevada’s attempt to classify these instruments as state-controlled gambling is overridden by the federal derivatives legal structure.

This legal battle arrives shortly after a Nevada court mandated a temporary restraining order on Polymarket, directing it to halt some event markets within the state. Nevada is not alone in its scrutiny of prediction markets; Tennessee has similarly directed platforms like Kalshi and Polymarket to discontinue sports event contracts for its residents. In December, Coinbase pursued legal action against regulators in Connecticut and Illinois, reaffirming that prediction markets situated on CFTC-regulated venues fall under federal oversight.

Related:

Crypto.com launches standalone prediction market platform ‘OG’

Coinbase’s legal contention

Cointelegraph supports unbiased, clear journalism. This article is produced in alignment with Cointelegraph’s guidelines meant to ensure precise and timely reporting.