Nevada wins in court, Washington sues Kalshi, and April 3 hearings loom for prediction markets.
A Nevada court granted a preliminary injunction against Coinbase on March 26, followed by a lawsuit from Washington against Kalshi the next day, marking the latest developments in state challenges to prediction market platforms. Attention now turns to April 3, when two hearings could further clarify how courts are approaching these cases.
Nevada Secures Preliminary Injunction Against Coinbase
On March 26, a Nevada state court granted state regulators a preliminary injunction against Coinbase, prohibiting the platform from offering or facilitating event-based contracts tied to sports, elections, and other outcomes within the state.
The ruling follows an enforcement effort that began in early February, when the Nevada Gaming Control Board (NGCB) filed a civil action seeking to block Coinbase’s contracts as “unlicensed wagering” under state law.
The court rejected Coinbase’s arguments that the Commodity Exchange Act (CEA) grants exclusive federal jurisdiction. It found that it “does not vest exclusive jurisdiction over event contracts” and therefore does not preempt Nevada gaming law.
It concluded that the Nevada Gaming Control Board “is reasonably likely to prevail on the merits of the underlying case” and Coinbase’s continued operations could cause “immediate and irreparable harm” to the state, its gaming industry, and the public.
Coinbase has sixty days from the order to make technological enhancements to comply with it. Notably, the order requires Coinbase to block users based on residency rather than real-time location. That language could help Kalshi answer questions about whether it’s complying with its recent temporary restraining order (TRO) in the state.
Washington Sues Kalshi, Company Moves Case to Federal Court
The following day, Washington filed a lawsuit against Kalshi, alleging the platform is operating an illegal gambling business.
According to the complaint, Kalshi advertises that it has “cracked the code on legal betting in all 50 states” for “sports markets” and “everything else.” It argues that the platform’s contracts fall squarely under prohibited online gambling. The filing states the platform is “openly violating Washington law” while continuing to expand its offerings.
The complaint further alleges Kalshi is “driving an explosion of online gambling activity, while openly violating Washington law, and turning a profit in the process.” Washington is seeking injunctive relief, civil penalties, and disgorgement, positioning the case as both a gambling enforcement action and a consumer protection matter.
As in other similar cases, Kalshi immediately removed the case to federal court. It argues that the lawsuit raises questions under the CEA and falls within federal jurisdiction.
Kalshi maintains that its platform is “subject to exclusive federal jurisdiction as a designated contract market (DCM) by the Commodity Futures Trading Commission (CFTC) pursuant to the CEA.”
Notably, a federal judge in Nevada rejected Kalshi’s identical claims in its case against the state, returning the complaint to state court, prompting NGCB to obtain a TRO.
States Gaining Momentum in Recent Rulings
Nevada’s win against Coinbase marked the latest ruling in favor of the states against prediction market platforms. Key outcomes to date include:
- Preliminary injunction granted: Nevada (Coinbase), Massachusetts (Kalshi)
- Temporary restraining orders granted: Nevada (Kalshi, Polymarket)
- Preliminary injunction denied: Arizona (Kalshi), Maryland (Kalshi), Michigan (Polymarket), Ohio (Kalshi)
- Preliminary injunction losses for states: New Jersey (Kalshi), Tennessee (Kalshi)
- Other denials: Massachusetts (Robinhood), Nevada (Kalshi, Robinhood, Crypto.com)
While early rulings were mixed, more recent decisions have increasingly favored states. With the latest ruling, courts have now sided 13–2 in favor of states in key injunction and TRO decisions.
April 3 Hearings Could Prove Decisive
Attention now turns to the April 3 hearings in Nevada and Arizona.
In Nevada, a hearing is scheduled on the state’s request for a permanent injunction against Kalshi, following the earlier TRO.
If the court grants that request, Nevada would become the first state to ban Kalshi’s sports, entertainment, and election contracts. If it rejects the request, Kalshi could resume serving Nevada residents pending federal appeals.
Meanwhile, in Arizona, a federal judge will rule on both Kalshi’s request for a preliminary injunction against the state and on whether the federal court should even hear the case or defer under the Younger abstention doctrine, given the state’s ongoing criminal proceedings against the platform.
Together, the developments could have a significant impact. If the courts side with the states, not only will the score further tilt in their favor, but Kalshi would also have to exit Nevada while being exposed to criminal charges in Arizona state court.
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