Coinbase will have to stop offering event contracts in Nevada for the time being after a district court judge granted the state’s gaming regulator a preliminary injunction to prevent the delivery of event contracts.
Last month, the Nevada Gaming Control Board (NGCB) filed a lawsuit against Coinbase Financial Markets, Inc., seeking a permanent injunction and declaratory relief to prohibit Coinbase from offering sports, entertainment and political event contracts in Nevada.
In response, Judge Kristin Luis granted the NGCB’s request for a temporary restraining order (TRO) in February. On March 26, Luis followed that decision by awarding the regulator a preliminary injunction. The judge’s latest ruling upholds that Coinbase cannot offer sports-related, election-related or entertainment-related event contracts in Nevada, as the company is not excused from abiding by state gaming laws.
Coinbase is partnered with Kalshi as a futures commission merchant registered with the Commodity Futures Trading Commission (CFTC), enabling the company to host event contract trading.
CEA argument from Coinbase fall short
The order required Coinbase to temporarily pull its event contracts off the market in Nevada, despite the company arguing that its registration with the CFTC and the Commodity Exchange Act (CEA) allowed it to offer them, including on sports.
Coinbase’s argument was denied by the district court judge, who determined that the CEA “does not vest exclusive jurisdiction over event contracts through Coinbase’s platform.” As a result, the NGCB has the authority to “prosecute the enforcement action.”
The judge also determined that Coinbase’s presence in Nevada would “cause immediate and irreparable harm to Nevada’s ‘comprehensive regulatory structure’ and ‘strict licensing standards.’” The ruling iterates the NGCB’s duty to “protect the public and advance Nevada’s interest in administering a reputable gaming industry with integrity.”
Coinbase has 60 days to implement “technological enhancements” to adhere to the injunction.
Coinbase battling other gaming regulators
Nevada isn’t the only court battleground for Coinbase, as the company filed lawsuits in Connecticut, Michigan and Illinois.
Coinbase alleges that cease-and-desist orders sent by state gaming regulators to Kalshi in those respective markets compromise the company’s planned business activities in those states. In its suits, Coinbase says it expects the state gaming regulators in Connecticut, Michigan and Illinois to “imminently bring enforcement action.”
Coinbase partner Kalshi receives bad news in Nevada
Coinbase received an unfavorable ruling in Nevada less than two weeks after Kalshi was ordered to temporarily stop its delivery of sports event contracts in the Silver State.
Earlier this month, a district court judge granted the NGCB’s request for a TRO against Kalshi, which requires the company to no longer offer “sports, election and entertainment-related contracts” in Nevada for 14 days. It also prohibits Kalshi from accepting trading on those events from any person under the age of 21.
Kalshi began a legal dispute with the NGCB after the regulator sent a C&D order to the prediction market for offering sports contracts. Kalshi responded by suing the NGCB in federal court and was initially granted an injunction to keep its products online in Nevada during court proceedings, before a federal court judge later dissolved that injunction.
The NGCB then filed suit against Kalshi in state court, submitting an ex parte application for an immediate TRO against Kalshi. The application did not require Kalshi’s arguments to be heard in court. The NGCB also requested a permanent injunction against Kalshi for an extended event contract ban.
A hearing on the permanent injunction will be held on April 3 as the TRO expires. If the injunction is granted, Nevada will be the first state to explicitly ban Kalshi’s offerings.
