In a significant legal development, the Nevada Gaming Control Board (NGCB) has filed a lawsuit against Coinbase Financial Markets, accusing the cryptocurrency exchange of operating unlicensed sports prediction markets. This move, announced on February 2, 2026, seeks to prevent Coinbase from offering wagers on sports events through its prediction market platform. The complaint requests the court to issue a temporary restraining order and a preliminary injunction, halting Coinbase’s operations in Nevada.

The NGCB argues that Coinbase’s sports-related event contracts fall under the definition of gambling under Nevada law, which requires operators to obtain a state gaming license. The board emphasized that its primary duty is to ensure a secure and regulated gaming environment for Nevada residents. “The action taken yesterday reinforces this obligation,” stated Mike Dreitzer, Chairman of the NGCB, as reported by Cointelegraph.

The Legal Conflict Between State and Federal Oversight

Coinbase launched its prediction markets product last month, offering event-based contracts in partnership with Kalshi, a federally regulated exchange overseen by the U.S. Commodity Futures Trading Commission (CFTC). While Kalshi is regulated at the federal level, Nevada and other states have asserted that these prediction markets must comply with local gambling laws, including obtaining state-specific licenses.

This legal battle represents a growing clash between state gambling laws and the federal regulation of event-contract platforms. The lawsuit follows similar legal actions against other prediction market platforms, such as Polymarket and Kalshi, which have faced legal challenges in Nevada and other states. Nevada regulators argue that these platforms, despite being federally regulated, are still required to adhere to state laws governing gambling activities.

Coinbase’s sports prediction markets allow users to wager on outcomes like professional sports games, including college basketball and football. The platform, which is available to residents across the U.S., has faced increasing scrutiny at the state level. The NGCB’s lawsuit contends that these platforms, despite their association with financial speculation, effectively operate as unlicensed sports betting platforms in violation of state law.

Nevada’s legal action comes on the heels of similar disputes with Kalshi and Polymarket. In a recent case, a Nevada court issued a temporary restraining order against Polymarket, preventing the platform from offering event contracts related to sports betting to state residents. Nevada’s stance on these platforms highlights the growing regulatory concerns about the convergence of cryptocurrency-based financial products and traditional gambling activities.

Broader Regulatory Concerns and Legal Precedents

The legal issues surrounding Coinbase’s prediction markets are not isolated to Nevada. Other states, such as Massachusetts and Tennessee, have also issued bans or taken legal actions against Kalshi for offering event contracts related to sports betting without the proper state licenses. In December 2025, seven users filed a class-action lawsuit against Kalshi, accusing the platform ofmisleading customers and offering illegal sports wagers.

Legal experts suggest that this increasing wave of state-level legal actions could lead to a complex patchwork of regulations that cryptocurrency exchanges and event-contract platforms must navigate. These platforms, which operate across state lines, could face significant challenges in maintaining compliance with various state laws, potentially forcing them to alter or restrict their offerings in certain jurisdictions.

If the Nevada court rules in favor of the Gaming Control Board, Coinbase could be forced to shut down its sports prediction markets for Nevada residents, setting a legal precedent for other states to follow. The outcome of this case will likely influence how other states approach the regulation of crypto-based gambling products, especially as the line between financial speculation and gambling becomes increasingly blurred.

For Coinbase, the lawsuit represents a serious operational and reputational challenge. If Nevada’s legal action succeeds, other state regulators may follow suit, forcing the company to either seek state licenses for its prediction markets or potentially withdraw the service from various jurisdictions. The broader cryptocurrency industry, particularly platforms offering event-based contracts, is also watching the case closely, as it could have widespread implications for the regulatory future of digital assets in gambling contexts.