A US federal judge has ordered Crypto.com to cease its sports prediction markets in Nevada starting Monday, disrupting the 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, requiring Crypto.com to comply with the Nevada Gaming Control Board’s (NGCB) earlier directive. The ruling necessitates that the Singapore-based company block Nevada residents from its sports markets or face significant fines.
The dispute began when the NGCB declared on May 20 that Crypto.com was conducting sports betting without a license, violating state regulations. In June, Crypto.com responded 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 laws.
However, Judge Gordon rejected this argument. He determined that Crypto.com’s contracts were not swaps because they depended on sports event outcomes rather than quantifiable financial matters. Consequently, these contracts fall under Nevada’s regulations and must adhere to the state’s gambling laws.
The decision surprised industry observers, given that the same judge permitted Kalshi to continue offering prediction markets in the state back in August. Experts believe the discrepancy between these rulings could be pivotal when Crypto.com appeals to the Ninth Circuit Court.
Legal experts indicate this case highlights the increasing uncertainty regarding how to regulate prediction markets in the US. While the CFTC oversees platforms like Kalshi, state gambling regulators maintain that contracts linked to sports or entertainment results constitute bets, irrespective of the technology or exchange format used.
The NGCB reiterated its stance last week, stating that any company offering bets on real-world events must hold a Nevada non-restricted gaming license. Officials emphasized the importance of strict regulatory control to safeguard the state’s gambling industry.
Despite the setback, Crypto.com remains committed to its federal lawsuit. The company has informed the court of its intention to appeal and is preparing to advance its case to the Ninth Circuit. Currently, Nevada gamblers are unable to access Crypto.com’s sports prediction markets online, as the company braces for the next phase in its significant legal battle.
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- Source: SCCGManagement.com