Nevada regulators have taken their most assertive step yet against online sports prediction markets, filing a civil enforcement lawsuit aimed at halting Polymarket’s operations within the state. The move positions Nevada at the forefront of a growing regulatory pushback that could have wide-ranging implications for prediction market platforms operating in the US.

Last week, the Nevada Gaming Control Board (NGCB) filed suit seeking an injunction to stop Polymarket from offering sports event contracts to users in Nevada. The board argues that these contracts amount to unlicensed sports wagering and therefore violate state gaming laws designed to protect the integrity and economic stability of Nevada’s tightly regulated gambling industry.

In its filing, the NGCB said it is seeking both a declaration that Polymarket’s activities are unlawful under Nevada law and a court order barring the company from continuing to operate in the state. Regulators emphasised that gaming activities must be licensed, supervised and subject to state oversight—standards they contend Polymarket does not meet.

Escalating scrutiny of prediction markets

The lawsuit marks the first time Nevada has directly pursued court action against a sports prediction market operator, rather than relying on informal regulatory pressure or warning letters. It comes amid increasing scrutiny of platforms that allow users to trade on the outcomes of sporting events while operating outside traditional sports betting frameworks.

Polymarket, which facilitates trading on event outcomes using a prediction market model, recently relaunched in the US on a limited basis following approval from the Commodity Futures Trading Commission (CFTC). The relaunch underscored both the platform’s growing popularity and the unresolved tension between federal commodities regulation and state gambling laws.

Legal experts suggest Polymarket may seek to move the case to federal court, arguing that prediction markets fall under federal jurisdiction. However, Nevada appears to be on firm legal ground. Previous rulings by US District Court Chief Judge Andrew Gordon have upheld the state’s authority to regulate gambling activities conducted within its borders, even where federal regulatory regimes are implicated.

The case against Polymarket differs in important ways from the high-profile legal battle involving Kalshi, another prediction market operator. Kalshi’s dispute centres on whether federal commodities law pre-empts state gambling restrictions, a question now being tested through appeals in the Ninth Circuit.

By contrast, Polymarket faces what analysts describe as a steeper legal challenge. Its position on federal pre-emption is considered weaker, raising the likelihood that Nevada’s gaming laws will be upheld if the case proceeds in state court. The NGCB’s action may also signal a shift in enforcement strategy. Rather than issuing cease-and-desist orders, Nevada is opting for litigation, a move that could encourage other states to pursue similar hardline approaches.

Polymarket faces a more stringent standard for federal pre-emption than other prediction market operators.

Outlook

If Nevada succeeds, the ruling could reshape how prediction markets operate across the US. Other states may follow Nevada’s lead, increasing compliance requirements and curtailing the availability of unlicensed prediction products. That could narrow options for bettors while raising costs and regulatory complexity for operators seeking to scale nationally.

The outcome of Nevada’s lawsuit, alongside Kalshi’s ongoing appeal, is likely to play a pivotal role in defining the regulatory boundaries between state gaming oversight and federally regulated prediction markets. For now, the case underscores the increasingly fraught legal environment facing platforms operating at the intersection of finance, technology and sports betting.