Crypto.com Fights Nevada Gaming’s Crackdown on Sports Event Contracts

Crypto.com has taken legal steps to protect its right to offer sports event-based financial contracts in Nevada, which has intensified a dispute about whether federal or state authorities should regulate these markets.

Crypto.com Seeks Injunction After Nevada Orders Halt to Sports Prediction Markets

The cryptocurrency exchange submitted a request for a preliminary injunction to the US District Court in Nevada last week. This action challenges a cease-and-desist order that the Nevada Gaming Control Board (NGCB) issued on May 20. The NGCB’s order told the company to stop offering contracts that allow users to bet on sports event outcomes.

Nevada regulators say these contracts are sports bets, which face tight rules and need special licenses under state law. However, Crypto.com argues that these products are financial derivatives, grouped as commodities futures, putting them under the sole watch of the Commodity Futures Trading Commission (CFTC) through the Commodity Exchange Act.

In its legal papers, Crypto.com pointed to a recent court win by Kalshi, a similar regulated prediction market, which had earlier gotten a court order stopping the NGCB from messing with its business. Bringing up that case, Crypto.com stressed that federal courts have backed the idea that states cannot overrule federal authority in this area.

Crypto.com Warns State Interference Undermines Trust in Federally Approved Markets

Crypto.com’s filing pointed out that the NGCB had not explained how its contracts, which the CFTC regulates and certifies, could be labeled as illegal gambling just because people might use them to speculate. The company said that letting the state step in creates an unstable market and shakes user trust.

The lawsuit showed that Crypto.com has about 12,000 signed-up users in Nevada, though not all of them take part in the sports event market. The platform worries that if these users cannot access its services, it might cause wider uncertainty and fewer people using its exchange, which falls under federal rules.

Although Kalshi has won legal battles in Nevada and is fighting similar cases in several states, like Maryland and New Jersey, Crypto.com’s lawsuit is another important test to figure out where the line is drawn between federal control of commodities and state control of gambling.

The NGCB says that anyone running a sports betting platform in Nevada must follow state licensing rules. However, Crypto.com claims these rules clash with federal laws that require open and fair access to commodity markets across the country.

If Crypto.com wins, it could change how states can or cannot control prediction markets that look like regular sports betting but say they are part of the financial services world.