The federal watchdog has barked.
- The Commodity Futures Trading Commission filed an amicus brief backing Crypto.com in its legal fight with the Nevada Gaming Control Board concerning sports event contracts.
- The CFTC argues that these contracts fall under exclusive federal oversight and should not be treated by states like Nevada as illegal sports betting.
- By asking the U.S. Court of Appeals for the Ninth Circuit to overturn a lower court ruling, the agency is advancing a stronger federal defense of prediction markets amid ongoing state-level legal battles.
On Tuesday, the Commodity Futures Trading Commission (CFTC) filed an amicus brief in support of Crypto.com’s legal war with Nevada.
The court battle concerns the prediction market operator’s sports event contracts, which can be bought and sold by users, allowing them to make de facto bets on sporting events.
While there are non-sports event contracts, the sports-related ones have put prediction markets and state gambling regulators at odds with each other. It's now sports event contracts that have the CFTC-regulated Crypto in appeals court with Nevada sports betting regulators.
In short, in Nevada and several other states, regulators view sports event contracts as a form of sports betting that requires licensing and local oversight. Operators, meanwhile, contend they are federally regulated, so states should butt out.
Nevada sent Crypto a cease-and-desist letter last year, and Crypto failed to obtain a preliminary injunction to shield itself against the crackdown. Crypto then stopped offering sports event contracts in the state.
However, as was promised by new CFTC Chair Michael Selig, the CFTC has now gotten involved in a prediction market-related court battle. Moreover, the CFTC has sided with Crypto and sports event contracts.
“States cannot invade the CFTC’s exclusive jurisdiction over CFTC-regulated designated contract markets (‘DCMs’) by re-characterizing swaps trading on DCMs as illegal gambling,” the CFTC argued. “The decision below is inconsistent with the text, structure, and history of the [federal Commodity Exchange Act] and, if affirmed, would reintroduce precisely the regulatory fragmentation Congress deliberately displaced.”
The move by the CFTC to defend a prediction market operator and its sports betting-like products is part of a pivot by the federal regulator, which had previously taken a relatively hands-off approach to the exchanges.
That approach allowed online sports betting via prediction markets to flourish, but it has also left operators to defend themselves from state gambling regulators.
Get off our turf
No longer, though. Now, under Selig, the CFTC has become more hands-on, and defensive of what it views as its jurisdiction and the players that it oversees.
The CFTC’s brief even specifically argues in favor of sports event contract trading in a few different ways, including that banning those contracts could create a slippery slope.
According to the federal agency, Nevada’s theory “presents a seismic shift in the longstanding status quo between CFTC and state authority.”
The CFTC then pointed to an injunction slapped on Coinbase prohibiting the prediction market operator from offering contracts tied to “sporting and other events.”
“Unable to articulate any limiting principle to their theory, they have upended decades of well-settled and Congressionally-mandated exclusive jurisdiction across the full spectrum of event contracts,” the CFTC argues.
Due to this, and other factors, the CFTC is asking the U.S. Court of Appeals for the Ninth Circuit to overturn a lower-court decision against Crypto. And, yes, those reasons include that there are financial consequences, including that sporting events “generate billions of dollars in economic activity.”
“Stadiums function as regional economic anchors around a network of businesses, including hotels, restaurants, transportation providers, retailers, and event management firms,” the CFTC argues. “For these reasons, hotels likely adjust pricing models, restaurants expand staffing to accommodate increased demand, vendors increase supply orders, and cities allocate resources to accommodate projected crowds. All of these decisions pose economic risk, which is precisely the type of economic exposure that derivatives markets are designed to mitigate.”
"Nevada Gaming Control Board Files Civil Enforcement Action Against Kalshi"
— Daniel Wallach (@WALLACHLEGAL) February 18, 2026
Press release from NGCB:
(Links to court filings in thread) pic.twitter.com/XojQHc8cYu
The CFTC’s brief doesn’t go into the economics of player props that prediction markets now offer, but it’s clear the agency intends to defend what it sees as its turf and the participants on its playing field. Whether it or other prediction market operators are ultimately successful remains to be seen, as there is a good possibility the U.S. Supreme Court will have a say at some point.
Indeed, litigation involving prediction markets continues to play out across the U.S., including multiple cases in Nevada, the country's historical home of legal sports betting.
For example, the Nevada Gaming Control Board scored another legal win against Kalshi on Tuesday, and the regulator followed it up with a civil enforcement action in the state.
"The Board continues to vigorously fulfill its obligation to safeguard Nevada residents and gaming patrons, and uphold the integrity of a thriving gaming industry," Board Chair Mike Dreitzer said in a press release.
