Coinbase Goes to War With Nevada

Coinbase has filed a suit against the Nevada Gaming Control Board and the state’s attorney general after Nevada moved to block the crypto exchange from offering sports-related prediction markets.

The lawsuit, filed in federal court this week, is a combative response to enforcement action taken by Nevada regulators, so this is a little tit-for-tat. Nevada’s authorities argue that Coinbase’s event contracts meet the state’s legal definition of sports betting and therefore require a gaming license.

Nevada’s complaint claims Coinbase’s products function as wagers because uses real money to purchase contracts tied to the outcome of sporting events, receiving a payout only if the selected result occurs. Regulators say that places the contracts squarely within the scope of Nevada’s gaming laws.

Coinbase offers its event contracts through a partnership with Kalshi, a federally-regulated prediction market operator. Similar products have already caused a stir in multiple states, prompting Coinbase to challenge regulators in Connecticut, Illinois, Michigan, and now Nevada.

Federal Preemption at the Center of Coinbase’s Argument

In its filing, Coinbase has gone hard on federal preemption, arguing that state gaming laws cannot be applied to prediction markets overseen at the federal level. The exchange points to the Commodity Exchange Act and the authority granted to the Commodity Futures Trading Commission, which it says has exclusive jurisdiction over event contracts traded on designated clearing markets.

Coinbase argues that allowing individual states to regulate or prohibit these products would undermine Congress’s goal of maintaining uniform national oversight of futures and derivatives markets. The company also claims Nevada is overreaching when it goes after federally-regulated entities.

That argument, while central to Coinbase’s case, has yet to gain consistent traction in court. Severak states have taken action to prove that this is gambling, not a financial instrument.

Nevada Maintains a Hard Line

Nevada has emerged as one of the most aggressive states in opposing prediction markets tied to sporting events. With the largest and most established regulated sports betting industry in the US, state regulators have repeatedly argued that unlicensed sports derivatives threaten the integrity of Nevada’s gaming framework.

Last year, US District Judge Andrew Gordon ruled that Kalshi’s sports event contracts constituted gambling under Nevada law, effectively forcing the exchange to halt those offerings in the state. More recently, the NGCB initiated civil enforcement action against Polymarket, making similar claims about its sports-related products.

Nevada regulators have framed this as essential public policy to protect the regulated gaming industry that gives so much to the state.