Nevada State Court Delivers Major Blow to Polymarket, Issues Temporary Restraining Order

In a stunning legal development that has sent shockwaves through the prediction market industry, a Nevada state court has issued a temporary restraining order (TRO) against Polymarket, effectively barring the federally-licensed platform from offering event contracts to Nevada residents. The ruling represents a significant escalation in the ongoing jurisdictional battle between innovative prediction markets and traditional state gambling regulators.

Judge Woodbury Rules Against Federal Preemption

Judge Jason Woodbury of the First Judicial District Court of the State of Nevada, Carson City, delivered a decisive ruling that challenges the long-held assumption that federal oversight automatically supersedes state gaming regulations. In his carefully worded decision, Judge Woodbury stated unequivocally that “The question of federal preemption in this regard is nuanced and rapidly evolving. At the moment, the balance of convincing legal authority weighs against federal preemption in this context.”

This legal reasoning strikes at the heart of Polymarket’s defense strategy, which has consistently argued that its Commodity Futures Trading Commission (CFTC) license provides blanket protection against state-level interference. The judge’s rejection of this argument suggests that the regulatory landscape for prediction markets remains far more complex and contested than many industry observers had assumed.

Immediate and Irreparable Harm Standard Met

The court’s decision to grant the TRO rested on Nevada’s ability to demonstrate what Judge Woodbury characterized as “immediate, irreparable, and not sufficiently remediable by compensatory damages.” This standard, typically difficult for plaintiffs to meet, indicates that the court found Nevada’s arguments compelling enough to warrant emergency intervention.

“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,” Judge Woodbury elaborated in his written opinion. This language suggests the court views unregulated prediction markets as fundamentally incompatible with Nevada’s carefully constructed gambling regulatory framework.

Nevada Gaming Control Board’s Statutory Duty

Central to the court’s reasoning was the recognition of the Nevada Gaming Control Board’s (NGCB) statutory responsibilities. Judge Woodbury emphasized that “The Board has a statutory duty to protect the public and advance Nevada’s interest in administering a reputable gaming industry with integrity. An unlicensed participant beyond the Board’s control, such as Polymarket, obstructs the Board’s ability to fulfill its statutory functions.”

This interpretation effectively positions prediction markets as a direct threat to Nevada’s regulatory authority, rather than as complementary or parallel systems. The court’s alignment with this perspective represents a significant legal victory for traditional gaming regulators who have long viewed federally-licensed prediction markets with suspicion and hostility.

Polymarket’s Immediate Operational Impact

The practical consequences of the TRO are severe and immediate for Polymarket’s Nevada operations. The company has been ordered to cease offering trading services to Nevada residents for a period of fourteen days, during which time the court will consider whether to extend the restrictions through a preliminary injunction.

Industry observers note that this temporary exclusion from Nevada’s lucrative market could have ripple effects throughout Polymarket’s business model. Nevada’s large population, significant tourist economy, and reputation as a gambling-friendly jurisdiction make it a particularly valuable market for any prediction platform.

Wallach Predicts Polymarket’s Nevada Exit

Legal analyst Daniel Wallach, who has been closely following the case, wasted no time in declaring the practical outcome of the ruling. “It’s official. Polymarket exits Nevada,” Wallach stated emphatically on social media platform X, sharing screenshots of Polymarket’s own notification to users about the restricted access.

Wallach’s assessment carries particular weight given his track record of accurately predicting outcomes in complex gambling law cases. His LinkedIn post highlighted Judge Woodbury’s comments about the NGCB’s regulatory responsibilities, suggesting that the court’s reasoning leaves little room for Polymarket to successfully challenge the restrictions.

Polymarket’s Official Response

In response to the court’s order, Polymarket issued a carefully worded statement acknowledging the temporary restrictions while maintaining its legal challenge. “On January 29, 2026, a Nevada state court issued a temporary order requiring Polymarket US to stop offering trading in Nevada for fourteen days pending the court’s decision on whether to issue a preliminary injunction. Polymarket US is challenging this temporary order in court,” the company stated.

The statement concluded with a message to users that, while professional, carried an undercurrent of uncertainty: “We love building with you, and we hope to continue doing so in the near future, reopening access as soon as we’re allowed to do so.” This language suggests that Polymarket’s leadership is preparing for the possibility that the restrictions may become permanent or significantly extended.

Broader Industry Implications

The Polymarket case represents just the latest chapter in a broader conflict between federally-licensed prediction markets and state gambling regulators. Similar battles have already been fought and lost by competitors like Kalshi and Crypto.com in Nevada, suggesting a pattern of judicial hostility toward prediction market expansion into traditional gambling jurisdictions.

Legal experts note that the outcome of Polymarket’s challenge could set important precedents for the entire industry. If Nevada’s position is ultimately upheld, it could embolden other states to pursue similar restrictions, potentially fragmenting the prediction market landscape into a patchwork of state-by-state regulations.

The Federal Preemption Question

At the heart of this legal battle lies a fundamental question about the relationship between federal and state regulatory authority in the emerging field of prediction markets. The CFTC’s licensing of platforms like Polymarket represents an attempt to create a unified federal framework for these novel financial instruments. However, Nevada’s successful challenge suggests that states retain significant power to regulate or exclude such platforms within their borders.

This tension between federal innovation policy and state regulatory sovereignty is likely to intensify as more prediction markets enter the market and seek to operate across state lines. The Polymarket case may ultimately require resolution at a higher judicial level, potentially reaching federal appellate courts or even the Supreme Court.

Timeline and Next Steps

The current TRO will remain in effect for fourteen days, during which time Polymarket will presumably pursue all available legal remedies to overturn or modify the restrictions. A hearing on the preliminary injunction motion has been scheduled for February 11, 2026, which will determine whether the restrictions become more permanent.

Industry observers will be watching closely to see whether Polymarket can present new legal arguments or evidence that might sway the court’s position. However, given the strength of Judge Woodbury’s initial ruling and the pattern of similar outcomes in related cases, many expect Polymarket to face an uphill battle in preserving its Nevada operations.

The Polymarket case represents a critical juncture for the prediction market industry, testing whether federal licensing can provide meaningful protection against state regulatory action. As the legal proceedings continue, the outcome will have significant implications not just for Polymarket, but for the entire emerging ecosystem of event-based trading platforms.

Tags: Polymarket, Nevada Gaming Control Board, prediction markets, event contracts, federal preemption, Judge Jason Woodbury, temporary restraining order, CFTC licensing, gambling regulation, Daniel Wallach, Kalshi, Crypto.com, preliminary injunction, state vs federal authority, NGCB, Carson City court, Shane Coplan, Sin City, gambling law, regulatory compliance, trading restrictions, market access, legal challenge, jurisdictional conflict, innovation regulation, gaming industry, event-based trading, commodity futures, regulatory framework, state sovereignty, federal oversight

Viral Sentences:

• “Polymarket exits Nevada” – the death knell for federally-licensed prediction markets in traditional gambling states
• Judge Woodbury just handed state regulators the blueprint to crush innovation nationwide
• This isn’t just about Polymarket – it’s about whether federal licenses mean anything anymore
• Nevada just proved that states can tell the CFTC to pound sand
• The prediction market industry’s worst nightmare just came true in Carson City
• Polymarket thought they had federal protection – turns out they had nothing
• State regulators just declared war on federally-licensed innovation
• This ruling could fragment prediction markets into 50 different regulatory hellscapes
• The CFTC’s licensing authority just took a massive credibility hit
• Nevada’s comprehensive regulatory structure just steamrolled federal innovation policy
• Polymarket’s users just got caught in the crossfire of a regulatory turf war
• This isn’t the end – it’s just the beginning of the battle for prediction market supremacy
• State gambling boards everywhere are celebrating this legal precedent
• The future of event-based trading platforms hangs in the balance
• Polymarket’s statement reads like a eulogy for their Nevada operations

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