This was expected. From the LA Times:
Federal judge Brian Sandoval defeated Gov. Jim Gibbons in the Nevada GOP gubernatorial primary
Gibbons, who had to deal with a bitter divorce and questions about his fidelity, was defeated by former
Sandoval will face Rory Reid, the son of the Senate Majority Leader Harry Reid. Both Reids won their nominations Tuesday.
Gibbons, a first-term Republican, led a campaign against taxes and the role of the federal government in his economically hard-hit state.