Nevada Judge Denies Crypto.com Sports Contract Injunction

Federal Nevada judge Andrew Gordon has denied Crypto.com’s request for an injunction that would have enabled it to keep offering sports event contracts in the state. The decision shocked many, given that the same judge had granted a similar injunction to prediction market Kalshi earlier this year.

The Controversial Definition of “Swap”

Crypto.com filed the lawsuit in June after the Nevada Gaming Control Board ordered it to stop offering contracts tied to the outcomes of sporting events. However, the company fought back, arguing that these contracts fall under the oversight of the Commodity Futures Trading Commission (CFTC) and not state gaming regulators. In other words, the contracts should be regarded as federally regulated “swaps,” and not gambling products.

When Kalshi made the same argument in April, Judge Gordon agreed, saying the CFTC had “exclusive jurisdiction” under the Commodity Exchange Act. That decision allowed Kalshi to continue operating amid a greater legal battle unfolding. 

This time around, however, Judge Gordon refused to extend the same protection to Crypto.com. The full reasoning hasn’t been released yet, but the difference may come down to the way the court defines a “swap.”

Under federal law, a swap has to be tied to a financial or economic consequence. Whether a sports outcome qualifies as such is a gray area that regulators and prediction markets have been debating for years. If the court decided that Crypto.com’s contracts don’t meet that definition, that could explain the denial.

Earlier this week, the CFTC issued a letter to firms offering sports event contracts, saying it hasn’t yet decided whether they’re legal. That uncertainty may have made the judge reluctant to issue another injunction.

As explained by Daniel Wallach on X, the decision would considerably impact the sports event contracts industry.

“If sports event contracts do not qualify as ‘swaps’ under the CEA, then the entire business model falls apart.”

Upcoming Appeal

Crypto.com’s case leaned heavily on the Kalshi ruling, mentioning it 38 times and urging the court to follow the same reasoning. The company argued that even if people bet on sports outcomes, the contracts themselves are not gambling, but rather financial instruments.

Despite the setback, Crypto.com says it will appeal to the Ninth Circuit Court of Appeals. “When two cases on the same issues before the same judge result in two completely different rulings, it guarantees a different result at the appellate level,” a company spokesperson said.

Kalshi, meanwhile, still has its injunction in place in Nevada but lost a similar case in Maryland, where a judge ruled that federal commodities law doesn’t override state gambling regulations.