The CFTC’s surprise withdrawal of its event‑contracts proposal has reopened a national policy debate over whether prediction markets should be treated as financial products or gambling
The Nevada Gaming Control Board (NGCB) has filed a civil enforcement action against Coinbase Financial Markets, escalating a long‑brewing clash over whether event‑based derivatives constitute gambling under state law.
The move comes just one day before the Commodity Futures Trading Commission (CFTC) unexpectedly withdrew its own proposed rulemaking on event contracts, signalling a major shift in federal policy.
In a complaint filed February 2 in Carson City District Court, the NGCB asked a judge to declare Coinbase’s operations unlawful in Nevada and to issue an injunction preventing the company from offering what the Board considers unlicensed wagering. Coinbase, a CFTC‑registered Futures Commission Merchant, intermediates customer trading of event‑based derivatives listed on a Designated Contract Market and makes those products available through its mobile app.
The NGCB argues that certain sports‑related and other event contracts offered to Nevada residents fall squarely within the state’s statutory definition of wagering under NRS 463.0193 and 463.01962, and therefore require a Nevada gaming licence. The Board alleges violations of multiple state provisions, including NRS 463.160, 463.350, 465.086, and 465.092.
“The Board takes seriously its obligation to operate a thriving gaming industry and to protect Nevada citizens,” said NGCB Chairman Mike Dreitzer. “The action taken yesterday reinforces this obligation.”
Nevada’s position reflects its long‑standing view that any product allowing customers to stake money on the outcome of a future contingent event, regardless of federal classification, constitutes gambling unless licensed under state law.
CFTC reverses course on event‑contract restrictions
The state action landed just as the CFTC moved in the opposite direction. On February 4, the Commission announced it had withdrawn its June 2024 Notice of Proposed Rulemaking on event contracts, which sought to categorically prohibit contracts involving gaming, political contests, awards shows, and certain sports‑related outcomes.
The agency also withdrew a September 2025 staff advisory on sports event contracts.
“Today’s actions reflect the CFTC’s commitment to lawful innovation in our markets,” said CFTC Chairman Michael Selig in a statement. He criticised the prior proposal as “the prior administration’s frolic into merit regulation,” adding that the Commission would pursue a new rulemaking grounded in a “rational and coherent interpretation” of the Commodity Exchange Act.
The withdrawn 2024 proposal would have expanded CFTC Regulation 40.11, declaring that event contracts involving gaming, war, terrorism, assassination, or activity unlawful under federal or state law were “contrary to the public interest” and therefore prohibited. It also proposed a detailed definition of “gaming” that explicitly included staking value on political contests, awards shows, or athletic competitions.
By withdrawing both the proposal and the 2025 advisory, the CFTC has effectively reopened the policy debate over how – and whether – event contracts should be regulated at the federal level.
