A Nevada court has issued a temporary restraining order (TRO) against Polymarket, a prediction market platform, halting its operations in the state for at least two weeks. The order, granted on January 29th by Judge Jason D. Woodbury, prevents Polymarket from offering event contracts to Nevada residents. This legal action highlights the ongoing tension between state gaming regulators and the burgeoning prediction market industry, and potentially tests the extent of the Commodity Futures Trading Commission's (CFTC) regulatory control.
The Nevada Gaming Control Board (NGCB) initiated the lawsuit against Blockratize Inc., Polymarket's corporate entity, arguing that its event contracts constitute wagering under Nevada law and thus require a state gaming license. Since Polymarket lacks such a license, the NGCB contended that its operations undermine the state's ability to regulate wagering integrity, prevent underage participation, and exclude unsuitable individuals. Judge Woodbury sided with the NGCB, stating that allowing unlicensed prediction markets to operate would cause "immediate, irreparable" harm to Nevada's regulatory structure. He also found that the Commodity Exchange Act does not grant the CFTC exclusive jurisdiction over Polymarket's contracts, supporting the NGCB's position.
Polymarket, founded in 2020, allows users to make predictions on the outcomes of various world events. Users can gain or lose money depending on the accuracy of their predictions. Polymarket argues that its contracts fall under federal oversight, with the CFTC having exclusive jurisdiction. The company asserts that it operates as a federally designated contract market and is subject to federal, not state, law. However, Judge Woodbury did not find Polymarket's argument convincing.
This isn't the first time Polymarket has faced regulatory scrutiny. In January 2022, the CFTC fined Polymarket $1.4 million and issued a cease and desist order for regulatory violations, including failing to register as a Swap Execution Facility. Despite this, the CFTC has signaled a more open approach to prediction markets recently. The agency launched an Innovation Advisory Committee in early 2026, inviting executives from both regulated and crypto-native platforms like Polymarket and Kalshi to discuss modern market structure, AI, and blockchain. Furthermore, the new CFTC chairman, Michael S. Selig, announced the withdrawal of a proposed ban on political and sports-related event contracts, indicating a willingness to establish "clear standards" for prediction markets.
The Nevada court's decision comes at an unfortunate time for Polymarket, with Super Bowl LX just days away. The temporary restraining order will prevent Polymarket from offering Super Bowl contracts to Nevada residents, potentially impacting its revenue and visibility. The order is temporary and will be reviewed at a preliminary injunction hearing on February 11. Polymarket can appeal Judge Woodbury's order.
This case is part of a broader global trend of increasing regulatory scrutiny of prediction markets and event-based trading platforms. Regulators in various jurisdictions are pushing back against these platforms, arguing that some markets amount to unlicensed gambling. The Nevada order highlights how state gaming authorities are asserting control and could significantly impact the future of prediction markets in the United States. It remains to be seen whether other states will follow Nevada's lead or if the CFTC will successfully assert its authority as the primary regulator of prediction markets. The legal battle could ultimately reach the U.S. Supreme Court.