Nevada Court Issues Temporary Ban on Polymarket Amid Intensifying Legal Dispute

Posted on by

TLDR

  • A Nevada court has temporarily stopped Polymarket from providing sports and event contracts to residents of the state.
  • A 14-day temporary restraining order has been issued, with a hearing scheduled for February 11.
  • Polymarket maintains its contracts are under federal authority, a position the court has rejected.
  • Nevada authorities allege Polymarket’s unlicensed business weakens the state’s rigorous gaming rules.
  • The court stressed the immediate and irreparable damage Polymarket’s actions inflict on Nevada’s regulatory framework.

A state judge in Nevada has issued a temporary order preventing Polymarket from offering sports and event contracts to its residents. This action came in response to a petition from state regulators seeking to suspend the platform’s activities amid an ongoing legal dispute. The court has set a hearing for February 11, following the imposition of a two-week temporary restraining order.

Court Ruling Temporarily Stops Polymarket Operations

Judge Woodbury issued the temporary restraining order, which suspends Polymarket’s operations within Nevada. The ruling follows alarms raised by the state’s gaming regulators regarding Polymarket’s lack of a license. Regulators assert that the company’s activities breach Nevada’s stringent licensing requirements.

The court’s decision rested on the premise that unlicensed operators could damage Nevada’s regulatory system. The judge stated, “The resulting harm in evasion of Nevada’s ‘comprehensive regulatory structure’ is immediate, irreparable.” Polymarket’s operations were considered a threat to the integrity of the state’s closely managed gaming sector.

Polymarket argues that federal agencies, specifically the Commodity Futures Trading Commission (CFTC), hold sole jurisdiction over its contracts. The firm states it functions as a federally recognized contract market. It insists its operations are governed by federal statute, not state law, and should be supervised at that level.

Nevertheless, the court was not persuaded by Polymarket’s preemption defense. Judge Woodbury observed that the legal issue of federal preemption in this area is still developing. “The balance of convincing legal authority weighs against federal preemption in this context,” Woodbury remarked.

Nevada’s Regulatory Concerns

The Nevada Gaming Control Board worried that Polymarket’s unlicensed platform could escape adequate supervision. A key concern for the board was the possibility of the platform accepting wagers from people with the ability to affect the results of events. Regulators also highlighted the difficulty of stopping minors from purchasing event contracts.

Polymarket defended itself by characterizing its service as a financial platform rather than a gambling one. The company contended that its contracts are not conventional sports wagers. However, the court accepted Nevada’s position that any entity providing such services to state residents must comply with the state’s gaming laws.