One of the world’s foremost prediction markets, Polymarket, was handed a legal setback when a federal judge issued a temporary restraining order that will prohibit the prediction platform from offering event contracts in Nevada for 14 days until a permanent ruling is issued.
Polymarket Withdraws
Polymarket is making a careful and calculated return to the US market after being allowed back last year following a settlement with the Joe Biden-era Commodity Futures Trading Commission (CFTC) in 2022. Since that time, the CFTC has adopted a more pro-prediction market stance under the Trump administration, but the agency has taken a laissez-faire approach to the prediction markets, vis-à-vis offering sports event contracts.
Although Polymarket relaunched its USA platform in December 2025, it has not been offering NFL contracts, focusing its sports event contracts on the NBA, NHL, college basketball, as well as other sports, in addition to political events. However, it has been operating in Nevada, but after Judge Jason D. Woodbury’s ruling in favor of the state last week, Polymarket has vacated the Nevada market, at least temporarily.
“An unlicensed participant beyond the Board’s control, such as Polymarket, obstructs the Board’s ability to fulfill its statutory functions,” Woodbury wrote in his decision. “The resulting harm in evasion of Nevada’s ‘comprehensive regulatory structure’ and ‘strict licensing standards’ is immediate, irreparable, and not sufficiently remediable by compensatory damages.”
Legal Limbo
Since they started offering sports event contracts before last year’s Super Bowl, prediction markets have been a highly debated topic. Prediction platforms like Kalshi and Crypto.com have been at the forefront of a legal battle with state gaming agencies, contending they are violating state gaming laws by operating in markets all across the nation without the requisite licenses or tax obligations required of licensed sportsbooks.
The state gaming agencies and many of the sportsbooks that have deigned to launch their own prediction markets, unlike FanDuel, DraftKings, and Fanatics, argue that these prediction markets are essentially operating as sportsbooks.
How Sports Event Contracts Differ From Sportsbooks
However, these sports event contracts offer a designated price that fluctuates as the event unfolds, akin to a commodities contract for silver, gold, or any other commodity. In contrast, sportsbooks provide point spreads and odds that are fixed at the time of the wager and do not fluctuate like the sports event contracts.
The CFTC has opted to steer clear of the legal tussle and instead has taken a hands-off approach, which appears unlikely to change under the new chairman, Michael Selig. Under questioning during his confirmation hearings, Selig was reluctant to have his agency weigh in on the matter, preferring to let the legal system decide. However, recent reports suggest that Selig’s stance could be evolving.
Courts May Decide the Fate of Prediction Markets
The prediction markets have repeatedly countered that they are under the governance of the CFTC, a federal agency, whose authority supersedes that of the state agencies. Several early rulings have been adjudicated in favor of the prediction markets, but recent setbacks, like the one against Polymarket in Nevada, suggest the legal winds could be turning against them.
