Nevada scored another legal victory against prediction markets on Thursday, with a state court granting a temporary restraining order against the controversial platform Polymarket. The order lasts for two weeks, which would prevent the site from offering Super Bowl contracts in Nevada this Sunday.
The Nevada Gaming Control Board filed suit on 16 January against Polymarket’s US affiliate, which currently operates on a limited basis compared to its fully fledged international product. Judge Jason Woodbury of Nevada’s First Judicial District Court issued the two-week TRO to allow for more deliberation as to whether the court will issue a preliminary injunction. Polymarket can appeal Woodbury’s order.
Once the court rules whether to issue a preliminary injunction, that decision can then be appealed up the court system. A hearing on the merits for an injunction is currently scheduled for 11 February.
In response to the TRO, Polymarket has suspended access to Nevada users. That action may be of significance down the road, as geofencing and partial access have been key legal issues in prediction market lawsuits around the US.
“Polymarket is challenging this temporary order in court,” a message on its platform says. “We love building with you and we hope to continue doing so in the near future. We’re committed to seeing this through and to reopening as soon as we’re allowed to do so.”
The NGCB declined to comment on pending litigation.
Prediction markets on the defensive after first-round win
Nevada’s legal battle against prediction markets has evolved greatly over the last year. Last March, the NGCB became the first state regulator to issue a cease-and-desist order to a prediction market operator when it did so with Kalshi.
Kalshi sued the NGCB and won a preliminary injunction, which was perhaps the first significant ruling in the state-level legal debate. By that time Kalshi had won its federal case against the Commodity Futures Trading Commission related to election betting and an appeal by the CFTC has since been dropped, leaving states as the key opponents. As the federal body that regulates prediction markets, the CFTC has since signalled an intent to wade back into the issue, only this time in support of the platforms.
Kalshi’s legal momentum lasted in Nevada until late November, when the injunction favouring it was dissolved by the same judge who originally granted it.
Judge Andrew Gordon changed his mind after months of review, particularly with regard to whether sports contracts fall under the definition of financial “swaps”. At the same time he denied an injunction to Robinhood, another predictions operator.
Polymarket had not begun its journey back to the US by the time the Kalshi saga started. That appears to be to its detriment, as Judge Woodbury cited Gordon’s arguments as being “persuasive” in his TRO. The order pertains to Polymarket’s limited US offering, not its larger international market.
Current platforms not legal, but could be eventually
Prediction markets are involved in lawsuits with several other major gaming states, including New Jersey, but Nevada’s case as the premier US gambling market remains significant.
The Nevada Resort Association, which represents the state’s casino industry, was approved as an intervener in the Kalshi suit. The association did not respond to a request for comment on Monday but has maintained that prediction markets represent irreparable harm to Nevada’s gaming stakeholders.
“There are no requirements for responsible gambling, they don’t pay any state income tax. So it looks a lot like gambling, and we’ll see,” Virginia Valentine, president and CEO of the association, told iGB last year. “Is it the future of gambling or is it the end of sportsbooks? I don’t know, but we’re going to be watching that very closely. I imagine that this will be in the courts for a while, so we’re just keeping a close eye on it.”
From a regulatory perspective, NGCB Chairman Mike Dreitzer has said that while prediction markets do not currently comply with state laws, the technology could come to Nevada if it checks the right boxes.
“I think you can absolutely take these new technologies, and if you do it right, you can absolutely fit them within the appropriate regulatory structure of Nevada and other states,” Dreitzer told iGB last month.