Nevada judge issues ban on Polymarket contracts, escalating regulatory conflict with the industry

The Nevada federal court recently issued a ruling that challenges the rapid growth of prediction markets in the United States. The judge supported the position of the local Gaming Control Board, ruling that the sports and event markets on the Polymarket platform are unlicensed gambling and not regulated financial instruments. This decision imposes a 14-day interim ban on all event contracts for residents of the state, fundamentally changing the understanding of how government regulations can interact with federal law.

Legal Turn: How the Court Justified Its Decision

In the judge’s view, if the platform continues to offer contracts without the appropriate gambling license, it will critically impair the state’s ability to ensure market integrity, protect minors from gambling, and comply with standards of compliance. This approach reflects a long-standing conflict: federal laws often view prediction markets as financial derivatives, while state regulators classify them as gambling. Nevada’s court ultimately chose the latter, setting a new precedent.

Wave of Rulings Across the US

Nevada is not alone in this course. Tennessee previously issued similar directives, ordering Polymarket and its competitor Kalshi to cease providing services to their residents. This indicates a systematic approach by US regulators to restrict prediction markets that lack prior state sanctioning. Each new ruling complicates operational situations for platforms that must navigate a patchwork of disparate requirements.

What This Means for the Industry

The court’s decision questions the prevailing view in the crypto community: that federal commodity regulation supersedes local gambling restrictions. If this precedent holds, prediction platforms may face fragmentation across states, forced to adapt their services or cease operations in certain regions altogether. The judge explicitly stated that failure to comply with licensing requirements will result in irreparable legal consequences, prompting Blockratize (operator of Polymarket) to seek solutions in the coming weeks.