CFTC Backs Crypto.com in Prediction Markets Fight With Nevada

The US Commodity Futures Trading Commission has filed an amicus brief in the Ninth Circuit Court of Appeals backing Crypto.com in its legal dispute with the Nevada Gaming Control Board, asserting that federal law gives the CFTC exclusive jurisdiction over sports event contracts offered by prediction market platforms.

How the Case Reached the Ninth Circuit

Nevada’s Gaming Control Board issued Crypto.com a cease-and-desist order in 2025, classifying its sports event contracts as unlicensed sports betting. Crypto.com sued, arguing the contracts are federally regulated commodity derivatives under the Commodity Exchange Act and that Nevada was overreaching. A federal district court sided with Nevada. The case is now before the Ninth Circuit.

CFTC Chair Michael Selig announced the filing via a video posted to X on 18 February. His message to state regulators was direct: “To those who seek to challenge our authority in this space, let me be clear — we will see you in court.”

The brief argues that states cannot reclassify instruments traded on CFTC-regulated designated contract markets as illegal gambling. “States and other federal entities do not have the authority to further regulate markets within the CFTC’s exclusive jurisdiction, and attempting to do so would have destabilising economic effects,” the CFTC wrote in its filing.

A Full Reversal From the Previous Stance

The CFTC’s intervention marks a sharp break from its prior position. As recently as November 2025, Selig told senators during his confirmation hearing that jurisdictional questions around prediction markets should be decided by courts, not the agency. The commission had also previously proposed a rule in 2024 that would have prohibited political and sports-related event contracts. That proposal has since been withdrawn.

At a joint SEC-CFTC summit on 29 January 2026, Selig announced a four-part regulatory agenda to “support the responsible development of event contract markets,” signalling a wholesale recalibration of the agency’s priorities. The CFTC now characterises sports event contracts as commodity derivatives that fall squarely within its remit, rejecting what it called a “power grab” by state regulators.

The agency’s existing rules technically prohibit listing any contract that “involves, relates to, or references… gaming, or an activity that is unlawful under any State or Federal law.” The CFTC’s new posture argues that sports event contracts do not constitute gaming under the relevant legal definitions, a position that remains hotly contested in multiple jurisdictions.

Stakes for Licensed Operators and State Regulators

For the regulated sports betting industry, the CFTC’s stance carries significant commercial implications. If federal courts affirm the agency’s exclusive jurisdiction, prediction market platforms could gain access to states where sports wagering remains prohibited, including California, Texas, Georgia, and Florida. That is a structural competitive threat to the licensed sportsbook operators who spent years building market positions in the post-PASPA environment.

The American Gaming Association and Indian Gaming Association sent a joint letter to Congress opposing the CFTC’s position, arguing that prediction market platforms “mislead consumers into believing that a sports bet is an investment” and “rob state budgets and tribal finances.” Nevada Gaming Control Board Chair Mike Dreitzer said the board “continues to vigorously fulfil its obligation to safeguard Nevada residents and gaming patrons.”

The Nevada court restraining order against Polymarket and a separate Nevada Gaming Board suit against Coinbase over unlicensed betting sit within the same enforcement campaign. The Crypto.com Ninth Circuit appeal is now the case on which the broader regulatory framework will turn.

Timeline and Supreme Court Outlook

TD Cowen analyst Jaret Seiberg said states still hold a legal advantage, given historical precedents establishing state authority over sports gambling. He warned that the Ninth Circuit process could extend into 2027, particularly if the case draws an en banc request. Supreme Court arguments, if the dispute reaches that level, may not occur until late 2027, with a decision potentially arriving in early 2028.

“We continue to give a slight edge to the states in this legal fight primarily because the states have historically been the regulators of sports gambling. As we have seen with the case involving the President’s effort to fire Fed Gov. Lisa Cook, this Supreme Court appears to give weight to historical precedents.”
— Jaret Seiberg, managing director, TD Cowen

The political dynamics are also complicated. Republican tensions between opposition to expanded sports gambling, support for states’ rights, and enthusiasm for crypto-friendly federal policy create uncertainty over whether Congress would act to resolve the jurisdictional question legislatively. A group of nearly two dozen Democratic senators wrote to Selig urging him not to intervene in ongoing litigation, citing the impact on state consumer protections and public revenues.

Prediction markets currently cannot match licensed sportsbooks in product depth. They do not offer in-play betting or same-game parlays at scale. Their competitive differentiation lies in a broader contract scope covering political, entertainment, and financial outcomes, alongside a model that does not require state licensing. The $1bn in Super Bowl trading volume reported by Kalshi suggests consumer appetite is real, regardless of how courts ultimately classify the product.

The Ninth Circuit ruling, whenever it arrives, will be the most consequential decision yet on whether prediction markets operate inside or outside the regulatory perimeter built by states since 2018.

Source: Commodity Futures Trading Commission, Nevada Gaming Control Board, TD Cowen