A recent U.S. federal court decision has intensified the possibility that Nevada regulators might attempt to halt prediction-market trading within the state. According to Cointelegraph, the ruling involves a dispute concerning Polymarket’s parent company, Blockratize, which has been sent back to state court. The federal judge dismissed claims that U.S. regulation under the Commodity Exchange Act (CEA) and the Commodity Futures Trading Commission (CFTC) completely overrides state gaming laws for prediction markets. The judge determined that the CEA’s savings clause does not entirely eliminate state authority, and the companies involved have not provided sufficient grounds to prevent Nevada’s actions at this stage.
This decision allows the Nevada Gaming Control Board to continue its civil enforcement case in state court, potentially seeking an injunction to restrict Nevada residents from accessing event contracts offered by Polymarket or Kalshi. In response, Polymarket’s parent company has filed a motion requesting a brief administrative stay of the court’s remand order, aiming to temporarily freeze the court ruling or enforcement action as an emergency measure. Prediction markets are facing increasing pressure from state regulators, including Kalshi, which has been contesting Nevada’s gaming regulator since 2025. On Tuesday, a federal judge also remanded Nevada’s civil enforcement action against Kalshi back to state court, exposing Kalshi to a potential temporary restraining order that could prevent it from offering event contracts in the state.
The legal challenges are unfolding amid growing scrutiny over insider trading concerns within prediction markets. Cointelegraph reported that suspected insider wallets gained $1.2 million by betting on the outcome of blockchain investigator ZachXBT’s probe into Axiom. ZachXBT released the investigation on Thursday, accusing Axiom employee Broox Bauer and others of engaging in insider trading activity since early 2025. Insider trading issues were initially highlighted in January when a Polymarket account profited $400,000 by betting on a contract predicting Venezuelan President Nicholas Maduro’s capture, wagering the funds just hours before U.S. forces apprehended him during a military operation. Additionally, in February, Israeli authorities arrested and indicted two individuals suspected of using confidential information related to Israel’s actions against Iran for insider trading on Polymarket.