Coinbase's prediction markets draw fire from Nevada regulator over alleged unlicensed sports betting

Coinbase is facing a civil lawsuit from Nevada’s gaming regulator, which alleges the crypto exchange has offered unlicensed sports betting through its prediction market products in violation of state law.

The Nevada Gaming Control Board filed the suit this week seeking to halt Coinbase’s event-based contracts tied to sporting outcomes, arguing they constitute wagering that requires a state gaming license, according to the complaint.

Coinbase’s prediction markets platform allows users to trade contracts linked to real-world events across sports, politics, and other categories. Nevada regulators contend that contracts referencing sports results fall under the state’s gambling statutes regardless of how they are structured or labeled.

The lawsuit landed weeks after Coinbase rolled out its prediction markets nationwide through a partnership with Kalshi, making the products available in all 50 U.S. states.

At the time, Coinbase argued that such contracts are regulated event markets overseen at the federal level, rather than traditional gambling. Coinbase also previously sued regulators in Michigan, Illinois, and Connecticut over similar enforcement efforts, saying state gaming rules conflict with federal commodities law.

Nevada’s filing directly challenges that position, asserting that sports-linked contracts remain subject to state oversight. 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, according to the filing.

"Nevada’s lawsuit, filed without meaningful notice or opportunity for Coinbase to engage, is the type of state power grab that Congress explicitly prohibited when granting the CFTC exclusive jurisdiction over event contracts," Ryan VanGrack, VP of Litigation at Coinbase, told The Block. "It is also a manufactured emergency. This is a blatant attempt to end-run the Federal Courts’ consideration of these issues and underscores the need for consistent rules that protect consumers and ensure equal access to these markets - regardless of where you live in America."

Prediction markets spin up despite regulatory clashes

The case adds to mounting regulatory pressure on prediction market operators.

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.

Despite the pushback, prediction markets continue to gain momentum.

Polymarket has expanded further to Solana through a decentralized exchange integration, Kalshi has opened a new Washington office to bolster its lobbying efforts, and Cboe has signaled interest in reviving all-or-nothing contracts tied to event outcomes.

Crypto-native platforms have also joined the race, with Crypto.com spinning out its prediction markets app and Hyperliquid testing its own event-based products.

Updated to include Coinbase's statement on the lawsuit.