Prediction market platform Polymarket has been forced to restrict users in Nevada from accessing it following a court order issued by the state.
The Nevada Gaming Control Board (NGCB) filed a civil enforcement action against Blockratize Inc., the company behind Polymarket, on January 16.
Judge Jason D. Woodbury granted the restraining order on Thursday, which will initially prevent Polymarket from accepting users in Nevada for 14 days. A hearing will then take place on February 11, during which Polymarket can argue its case and seek to have the restriction removed.
Judge Woodbury, however, stated that the NGCB is “reasonably likely to prevail on the merits of the underlying case.”
The judge said that the argument that the Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over prediction markets does not entail that companies are exempt from state gambling laws. In his ruling, he stated, “The question of federal preemption… is nuanced and rapidly evolving. At the moment, the balance of convincing legal authority weighs against federal preemption in this context.”
The ruling is in line with other states that have increasingly rejected the claims that prediction markets on sports, politics, and other events are fair and legal in all 50 states. Last week, a judge in Massachusetts issued an injunction against Kalshi, ordering the platform to block access to users in the state.
Polymarket Joins Other Platforms in Exiting Nevada
Kalshi continues to fight against withdrawing from any state. It has appealed the decision in Massachusetts and is fighting legal battles in Nevada and several other states.
Polymarket, however, has complied with the order. The company posted a note on its app stating, “Trading not allowed in Nevada. Tap to learn more”.
It then confirms that access will be restricted in the state for at least two weeks, but notes that it is challenging the judgment. The company states, “Polymarket US is challenging this temporary order in court. 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 access as soon as we’re allowed to do so. We’ll keep you updated as the situation develops.”
Crypto.com has already withdrawn from Nevada, while FanDuel and DraftKings surrendered sports betting licenses in the state before launching their own prediction markets platforms.
Polymarket Quickly Facing Legal Scrutiny After US Relaunch
Polymarket only reentered the US market at the end of last year following a three-year absence. The CFTC ordered the company to block US users from accessing the platform in 2022 because it did not hold a valid license. It also issued a $1.4 million fine.
Favorable court rulings for Kalshi enabled the platform to offer markets on the presidential election, and Donald Trump’s victory paved the way for greater leniency towards prediction markets.
The tide appears to be turning against platforms due to adverse court rulings. However, the CFTC, which governs companies, has refrained from placing restrictions on platforms.
CFTC Vows to Clarify Rules
The CFTC has allowed Kalshi and others to expand into sports. It also ended its legal battle against Polymarket and granted the company access to the US through the acquisition of the licensed exchange QCEX.
Newly appointed CFTC chair Michael Selig announced last week that he would introduce clearer rules for licensed companies.
Selig stated, “For too long, the CFTC’s existing framework has proven difficult to apply and has failed our market participants. That is something I intend to fix by establishing clear standards for event contracts that provide certainty to market participants.”
He added, “Where jurisdictional questions are at issue, the Commission has the expertise and responsibility to defend its exclusive jurisdiction over commodity derivatives.”
This could mean that the agency attempts to fight against state regulators, such as the NGCB. It could also see legal battles in federal courts over the future of prediction markets.
Despite recent adverse court rulings, Polymarket and Kalshi continue to expand their partnerships. Polymarket signed a deal with MLS last week. Americans are becoming increasingly aware of the company due to its sponsorship of high-profile events, such as the Golden Globes.
The rapid expansion of platforms may be slowed in certain states, with judges following the recent rulings in Massachusetts and Nevada.
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Prediction market platform Polymarket has been forced to restrict users in Nevada from accessing it following a court order issued by the state. The Nevada Gaming Control Board (NGCB) filed a civil enforcement action against Blockratize Inc., the company behind Polymarket, on January 16. Judge Jason D. Woodbury granted the restraining order on Thursday, which will
The post Polymarket Blocks Nevada Users After Court Rules Platform Constitutes Illegal Gambling appeared first on CasinoBeats.