Crypto.com Sues Nevada Over Block on Sports Event Contracts

On June 3, 2025, Crypto.com’s derivatives division filed a lawsuit against the Nevada Gaming Control Board (NGCB) in the U.S. District Court for Nevada. The complaint centers on the regulator’s decision to block the company from offering derivative contracts tied to sporting events. According to Crypto.com, the NGCB’s actions were based on a “mistaken premise” that these financial products, traded on the federally regulated North American Derivatives Exchange, fall under Nevada’s gaming laws https://news.worldcasinodirectory.com/federal-judge-sides-with-kalshi-in-nevada-prediction-market-dispute-117930. The company argues that the Commodity Futures Trading Commission (CFTC) holds exclusive jurisdiction over such derivatives under the Commodity Exchange Act, a position supported by recent federal court decisions.

Crypto.com, which operates its North American derivatives business under North American Derivatives Exchange, claims that the NGCB does not have the authority to regulate its products. The lawsuit contends that the CFTC’s regulation of the national derivatives market preempts state gaming regulations, making Nevada’s actions unlawful. Crypto.com’s filing directly challenges Nevada’s attempt to regulate sports event contracts, alleging that the NGCB’s move is in violation of federal law.

Cease-and-Desist Letter and Legal Precedents

The conflict escalated when the NGCB sent Crypto.com a cease-and-desist letter on May 20, 2025, demanding that the company cease offering sports event contracts to Nevada residents. The NGCB threatened both criminal and civil penalties unless Crypto.com complied. The exchange, however, asserts that its derivatives contracts are certified and permitted under federal law. Moreover, it argues that Nevada’s interference would cause “irreparable harm” to its business, as it would be forced to comply with state rules that conflict with federal regulations. The firm further claims it cannot feasibly implement measures such as geo-fencing users without violating federal requirements for impartial access to the market.

Crypto.com’s legal strategy is strongly influenced by previous rulings involving prediction markets such as KalshiEX. In similar cases, federal courts sided with platforms regulated by the CFTC, reinforcing the argument that state gaming authorities lack jurisdiction over such federally approved contracts. In April 2025, U.S. District Judge Andrew Gordon ruled that Nevada could not enforce its gaming laws on KalshiEX’s event contracts, citing the Commodity Exchange Act’s preemption of state law.

The Growing Debate: Event Contracts or Gambling?

The dispute between Crypto.com and Nevada is part of a broader regulatory debate concerning event-based contracts and their classification. While some critics argue that such contracts resemble gambling products, others, like Kalshi’s Jack Such, see them as a potential trillion-dollar asset class. The challenge lies in determining whether these prediction-based products qualify as financial instruments or if they fall into the category of gambling, which is heavily regulated at the state level.

The ongoing regulatory scrutiny also extends beyond Nevada. Both Crypto.com and Kalshi faced investigation by the CFTC earlier this year regarding their Super Bowl-related contracts. Despite this, both companies maintain that their offerings comply with federal derivatives regulations.

Crypto.com Seeks Permanent Injunction

In its lawsuit, Crypto.com seeks a permanent injunction to prevent Nevada from enforcing its gaming laws against the company. The exchange also requests a declaratory judgment affirming that federal law preempts state gaming authority when it comes to CFTC-regulated event contracts. This legal battle highlights the tension between federal oversight of financial markets and state regulations governing gambling activities, and the outcome may set a precedent for future cases involving prediction markets.

Source:

“Crypto.com sues Nevada gaming body over block on sports event contracts“, cointelegraph.com, June 5, 2025.