Nevada Court Blocks Polymarket, Citing Precedent in Crypto Prediction Market Crackdown

Polymarket, the event-based prediction market platform, has been effectively shut out of Nevada following a state court's decision to grant a temporary restraining order (TRO) against it late Friday. The move signals a hardening regulatory stance against crypto-based prediction markets in the U.S.

The Nevada Gaming Control Board (NGCB) initiated the lawsuit in January, alleging that Polymarket's U.S. site—currently an invite-only platform focused on sports predictions—violates state gambling prohibitions. This lawsuit represents the first major state-level legal challenge Polymarket has faced since its carefully orchestrated return to the U.S. market in July 2023.

At the heart of the dispute is a recurring legal question: whether the federal Commodity Exchange Act (CEA), which governs certain prediction markets, can override, or "preempt," state-level gambling laws. Polymarket contends its contracts are swaps under the CEA and thus federally regulated, while Nevada regulators insist state law applies.

In his ruling, First Judicial District Court Judge Jason Woodbury found the federal preemption argument unconvincing, drawing directly from recent federal court decisions involving other prediction markets like Kalshi and Crypto.com. "The balance of convincing legal authority weighs against federal preemption in this context," Woodbury wrote, echoing reasoning used in those cases.

Legal observers note a pattern. Last November, a Nevada federal judge denied Crypto.com a similar injunction, ruling that sports event contracts did not qualify as "swaps" under the CEA because the definition of "occurrence" pertains to whether an event happens, not the specifics of its outcome (e.g., which team wins). That same logic was later applied to dissolve an injunction for Kalshi in a separate case. Judge Woodbury described this interpretation as "persuasive."

The judge also weighed the potential harms of allowing Polymarket to continue operating pending a full trial. He concluded that if the platform were ultimately found unlawful, its continued operation would cause "immediate, irreparable" damage to Nevada's gaming regulatory framework—harm that could not be undone by monetary compensation. Conversely, if Polymarket were later vindicated, any financial losses from the TRO could be remedied with damages.

Social media reports and user messages confirm that Polymarket has already geo-blocked access for users in Nevada. The platform displayed a message stating it is "challenging this temporary order in court" and remains "committed to seeing this through and to reopening as soon as we're allowed to do so."

While Polymarket can file an opposition to the TRO within the same court, it cannot immediately appeal to a higher court. The TRO will remain in place until the court decides on a preliminary injunction, which would extend the ban potentially for the duration of the lawsuit. A decision on a preliminary injunction, however, can be appealed to Nevada's appellate courts.

Reaction & Analysis

The ruling is a blow to the nascent U.S. regulated prediction market industry, which has argued that such platforms offer valuable hedging tools rather than mere gambling. "This isn't just about Polymarket; it's about stifling financial innovation," said David Chen, a fintech analyst at Verity Advisors. "Courts are applying a narrow, 20th-century definition to 21st-century technology, creating regulatory uncertainty that hurts consumers."

Others see it as a necessary enforcement of clear rules. Eleanor Vance, a professor of gaming law at Stanford, offered a more measured view: "The courts are consistently drawing a line. If the activity looks like a wager on a sports outcome under state law, the federal commodities framework doesn't automatically provide a shield. The onus is on Congress to clarify the statute if that's not the intent."

A more pointed critique came from Marcus Thorne, a crypto advocate and podcast host. "This is regulatory theater at its worst," Thorne said sharply. "Nevada happily runs a billion-dollar sportsbook industry but attacks a transparent, peer-to-peer prediction market. It's pure protectionism for legacy casinos, dressed up as consumer protection. They're afraid of a more efficient market."

Priya Sharma, a retail investor who uses prediction markets, expressed disappointment. "It's frustrating. Platforms like Polymarket let people put a price on real-world events in a way traditional markets don't. This feels like a step backward for access to alternative financial instruments," she remarked.