Polymarket hit with a two-week Nevada ban
Crypto Reporter
Shalini Nagarajan
Crypto Reporter
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A Nevada state judge has temporarily barred Polymarket from offering sports and event contracts to residents, handing state regulators an early victory in a quick battle over who gets to police prediction markets.
The order targets Blockratize, the entity behind Polymarket, along with related defendants listed as QCX LLC, Polymarket US and Adventure One QSS, Inc., which also trades as Polymarket.
Judge Woodbury granted a renewed earlier request for a 14-day temporary restraining order, and the court set a hearing on the preliminary restraining order for February 11.
The controversy came as Washington warmed to the idea that prediction markets needed more transparent safeguards.
Just last week, CFTC Chairman Michael Selig said the U.S. derivatives regulator is preparing a new handbook for valuation markets, as platforms like Polymarket and Kalshi make billions in moves by letting traders make yes-or-no bets on everything from politics to pop culture.
State gaming laws are opposed to federal claims
Polymarket has argued that the contracts fall under federal regulation, “under the ‘special jurisdiction' of the Commodity Futures Trading Commission, a federally appointed contracts market that operates.”
While Nevada law and licensing standards still apply to residents, the state board has pushed back.
In granting the temporary injunction, the court was convinced that, at least for the time being, federal law prevented Nevada from taking action. Judge Woodbury wrote, “The question of federal preemption . . . is a complex and rapidly evolving one. Currently, the balance of legal authority weighs against federal preemption in this context,” calling the reasoning persuasive in earlier related litigation.
Unlicensed operators are seen as a threat to regulatory integrity
The ruling also hinged heavily on the board's claim that an unlicensed operator could erode Nevada's ability to operate a tightly regulated gaming market. Judge Woodbury said, “The harm caused by evasion of Nevada's ‘comprehensive regulatory framework' and ‘strict licensing standards' is immediate, irreparable and not adequately remedied by compensatory damages.”
The court pointed to practical enforcement loopholes that Nevada said it could not close without a court order, including the disallowance of limited wagers from influencers on sporting events and devices that bar minors from buying event contracts.
The decision is the first sign of a wider battle between state gaming regulators and platforms that offer event contracts as financial products.
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