Polymarket legal fight intensifies as appeals court weighs ongoing jurisdiction battle in Nevada
A legal fight over online prediction markets is picking up steam, as companies tied to Polymarket push a federal appeals court against Nevada to step in and block a lower court’s decision.
In a new filing with the US Court of Appeals for the Ninth Circuit, the companies, which include Blockratize Inc., QCX LLC, and Adventure One QSS Inc, argue the case belongs in federal court and are now seeking an emergency stay while their appeal moves forward. argue they’re likely to win on appeal and shouldn’t be forced to fight the case in Nevada state court in the meantime. They’re asking for an emergency stay after a federal judge ordered the dispute sent back to state jurisdiction.
This comes as the appeals court has already declined to grant a pause in related proceedings, allowing the case to keep moving forward even as the jurisdictional fight continues.
The enforcement action from the Nevada Gaming Control Board says the companies operated without the required state license. The companies insist their platform falls under federal oversight, not state control.
The filing states, “Plaintiff’s opposition does not defend the district court’s reasoning, ignores Defendants’ key arguments, and seeks to replace Nken’s discretionary standard with a categorical rule.” The Nken issue is whether the court should apply the usual four-factor balancing test for a stay pending appeal, or adopt a categorical rule that effectively denies stays in these cases.
The defendants argue that Polymarket US operates under authority delegated by federal regulators, giving them the right to defend themselves in federal court.
“Courts have consistently held that private entities exercising federally delegated authority may invoke the federal officer removal statute,” the filing states.
They also take direct aim at the lower court’s reasoning. “The district court’s theory for remanding—the notion that federal supervision defeats removal—is indefensible,” the companies argue.
Polymarket urges federal appeals court to stay remand against Nevada
Beyond jurisdiction, the companies say the case raises federal questions that can’t be handled properly at the state level. They point to Nevada law allowing conduct if it is “otherwise provided by law,” arguing that it includes federal law and requires federal interpretation.
At the same time, pressure is mounting on the ground in Nevada. A state court recently issued a temporary restraining order against Polymarket, reinforcing regulators’ efforts to halt its operations while the case plays out.
The companies warn that continuing in state court could cause lasting damage. “Congress has determined that those who remove under the federal officer removal statute are entitled to have their federal defenses decided in federal court,” the filing states.
Without a stay, they argue, Nevada could expand earlier enforcement actions into a wider injunction.
They also say forcing the case to move forward in parallel courts would waste time and resources. “Judicial economy would be better served by staying the case, not by forcing the parties to litigate merits issues once in state court and again on return to federal district court,” the filing says.
Nevada, for its part, has argued that delays would be harmful. The companies counter that point by noting prior rulings acknowledging Congress anticipated delays when allowing these types of appeals.
With a temporary administrative stay nearing its expiration, the companies are urging the appeals court to act quickly or extend relief.
Featured image: Polymarket / Canva
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