Crypto.com Denied Injunction in Nevada
A federal judge in Nevada has dealt a blow to the prediction market sector by denying Crypto.com’s request for a preliminary injunction. The ruling by U.S. District Judge Andrew Gordon in the District of Nevada reverses a key legal trend.
Crypto.com sued the state after the Nevada Gaming Control Board (NGCB) issued a cease-and-desist order in May over the company’s offering of sporting event contracts. Judge Gordon, who previously granted a similar injunction to prediction market operator Kalshi in April, revealed he would not side with Crypto.com. The judge also dismissed Crypto.com’s motion for summary judgment.
Losing the Federal Preemption Argument
The denial is significant because Crypto.com largely based its legal defense on the same grounds as Kalshi. That core argument relies on the Commodity Exchange Act (CEA), which grants the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over financial instruments known as “swaps.” If a contract qualifies as a swap, federal law preempts state gaming regulations.
The judge has not yet published a full written decision. However, the likely reason for denying the injunction is that Judge Gordon determined the sporting event contracts offered by Crypto.com do not meet the definition of a “swap” under the CEA.
Losing this status invalidates the argument for federal preemption. Legal experts warn that if these contracts fail to qualify as swaps, the entire business model for prediction markets operating outside state gambling licenses collapses.
Industry-Wide Implications and Appeal
The decision is expected to send shockwaves across the U.S. prediction market industry. It suggests that platforms may need to either exit certain states or seek state-level gaming licenses if their contracts are not legally classified as swaps. The ruling also affects the legal certainty of every operator in the space, despite Kalshi’s current injunction in the same court.
Crypto.com quickly announced it would appeal the decision to the U.S. Circuit Court of Appeals for the Ninth Circuit. A company spokesperson stated that two different decisions in similar cases by the same judge guarantee a different outcome at the appellate level.
The legal landscape is increasingly complex. Kalshi, which secured an injunction in Nevada, previously lost a similar attempt in Maryland. The Ninth Circuit Court of Appeals has not yet reviewed the legality of sporting event contracts. This case will be critical in establishing the long-term legal status of prediction markets across the U.S.
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