A US federal judge has ordered Crypto.com to halt its sports prediction markets in Nevada starting Monday, disrupting the crypto platform’s plans to expand its event-based contracts nationwide.
Judge Andrew P. Gordon of the U.S. District Court for Nevada denied the company’s request for a preliminary injunction. Consequently, Crypto.com must comply with the Nevada Gaming Control Board’s (NGCB) prior directive to cease operations. The ruling requires the Singapore-based firm to prevent Nevada residents from using its sports markets or face significant fines.
The dispute started when the NGCB declared on May 20 that Crypto.com was offering sports betting without a license, violating state laws. Crypto.com countered in June by filing a lawsuit, arguing that its event contracts should be classified as “swaps,” financial instruments regulated by the CFTC, rather than bets under Nevada’s gaming regulations.
However, Judge Gordon rejected this argument. He concluded that Crypto.com’s contracts were not swaps because their value depended on sports game outcomes, not quantifiable financial factors. Thus, he determined these contracts are subject to Nevada’s gambling laws.
The ruling caught many industry experts by surprise, as the same judge had previously allowed Kalshi to continue offering prediction markets in the state in August. Analysts believe the distinction between these two rulings might become a focal point when Crypto.com appeals to the Ninth Circuit Court.
Legal experts indicate this case highlights the increasing confusion regarding the regulation of prediction markets in the US. While the CFTC regulates platforms like Kalshi, state gambling authorities maintain that contracts dependent on sports or entertainment outcomes are bets, regardless of the technology or exchange format used.
The NGCB reiterated its stance last week, stating that any entity offering bets on real-world events must possess a Nevada non-restricted gaming license. Officials emphasized the importance of maintaining rigorous regulatory oversight to safeguard the state’s gambling industry.
Despite this setback, Crypto.com appears resolved to continue its federal case. The company has already informed the court of its intention to appeal and is preparing to present its case to the Ninth Circuit. For now, Nevada gamblers cannot access Crypto.com’s sports prediction markets online, as the company gears up for the next stage in its high-stakes legal battle.
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- Source: SCCGManagement.com