It seems like the legal tide might be turning against prediction market companies in the fight against state regulators in the United States, with a Nevada federal judge denying Crypto.com’s request for relief last Thursday.
Crypto.com, like current market leader Kalshi before it, had preemptively sued the Nevada Gaming Control Board in June, seeking a preliminary injunction that would block any attempt by the gaming control board to impose its own regulations on the company or block it from opening its prediction markets to state residents.
Like Kalshi, Crypto.com argued exclusive regulation by the Commodities Futures Trading Commission protects them from state regulators. But unlike Kalshi, the same judge in this case—Andrew Gordon—denied the injunction.
A member of the Nevada Gaming Control Board even celebrated the win, declaring “the gig is up” during a meeting this week, according to a Las Vegas Review-Journal.
But it’s a false alarm, said a cryptocurrency and novel financial products attorney. “This will lose six ways to Sunday on appeal,” Aaron Brogan, founder and managing attorney of Brogan Law, told Decrypt.
The full transcript of the Crypto.com’s hearing and Judge Gordon’s ruling won’t be made public until January, but screenshots shared by sports legal analyst Dan Wallach have been making the rounds on X.
NEW: Nevada federal judge explains on the record that because https://t.co/jeBmEO4GSa’s sports prediction contracts are based on the “outcomes” of sporting events rather than their “occurrence” or “non-occurrence” they do not qualify as “swaps” under the CEA. pic.twitter.com/RrMyytB2ZC
— Daniel Wallach (@WALLACHLEGAL) October 6, 2025
In them, Wallach points out, Judge Gordon reasoned that because Crypto.com’s sports contracts “are based on the ‘outcomes’ of sports events rather than the ‘occurence’ or ‘non-occurrence’ they do not qualify as ‘swaps’ under the CEA.”
The CEA, or Commodity Exchange Act, is a core piece of federal law that gives the CFTC its regulatory authority over futures, options, and swaps. Since prediction market contracts are neither futures nor options, U.S. companies have instead relied on proving that they are swaps.
“This idea that there is a distinction between ‘outcome’ and ‘occurrence’ that is legally significant is, in my view, completely fanciful,” Brogan told Decrypt. “As far as I can tell, nobody has actually argued it in the case. The idea comes from the definition of ‘swap’ which states that a contract can be a swap where it is ‘dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency.’”
The denial of an injunction was noteworthy because Kalshi scored a major legal win in the state earlier this year by obtaining an injunction. It’s even more surprising because Kalshi’s case was also heard by Judge Gordon. But it appears the judge has either changed his mind, or has ruled against Crypto.com based on whatever technical or legal difference there may be between an “outcome” and an “occurrence.”
“I think, plainly, that this is wrong, and from what I have seen, the judge gives no support other than his own rhetorical argument,” Brogan said, noting again that the full transcript hasn’t been released.
This has been a big year for prediction markets as they invite U.S. users onto their platforms. Combined volume on Kalshi, Polymarket, Limitless, and Myriad last week came close to reaching $1.5 billion, according to a Dune Analytics dashboard. That’s almost the level volume reached in the run-up to the 2024 U.S. presidential election. The week of the election, total volume soared to nearly $2 billion. (Disclosure: Myriad is a product of Dastan, Decrypt’s parent company.)
Kalshi was the first fully regulated prediction market to open in the states after the CFTC dropped its appeal to block the company from offering sports event contracts to U.S. users. Meanwhile, Polymarket has gotten the nod and is preparing to launch its U.S. arm soon. An often cited Certuity report estimates that prediction markets could reach $95.5 billion by 2035, with a compound annual growth rate of 46.8%.
But there’s a growing list of state regulators battling prediction markets in court, including Maryland, New Jersey, and Nevada. Because the CFTC requires prediction market companies to obtain a designated contract market license, that’s made the industry an appealing pivot for crypto exchanges that already obtained them in pursuit of expanding to derivatives markets.
Crypto.com is unique among the growing cohort of U.S. prediction market companies in that it’s the first crypto exchange to obtain what’s been referred to as a full house of licenses from the CFTC.
The company obtained its latest, the designated contract market, or DCM, license just last week through North American Derivatives Exchange. The company has had a DCM license since 2004 and was acquired by Crypto.com in 2022.
Since then, the exchange has partnered with Underdog Sports, a fantasy sports and gaming company, to begin offering sports prediction markets through the Underdog app, which is available in most of the U.S. and all Canadian provinces except Ontario.
Crypto.com did not immediately respond to a request for comment from Decrypt.