(Law360) The derivatives platform owned by Crypto.com asked a Nevada federal judge to permanently block the state’s gambling regulators from taking action over its sports event contracts, which it argues are exclusively overseen by the U.S. Commodity Futures Trading Commission.
North American Derivatives Exchange Inc., which does business as Crypto.com Derivatives North America, on Monday moved for a judgment on the pleadings in its ongoing challenge to Nevada’s Gaming Control Board over a May cease-and-desist order that branded its sports event contracts as unregistered wagers.
According to Crypto.com, the contracts lawfully trade on its federally regulated platform and are beyond the state agency’s jurisdiction.
“The NGCB’s order seeks to subject a CFTC-regulated [designated contract market] to the state’s licensure scheme — precisely the type of regulation Congress intended to preclude,” said Crypto.com.
The sports event contracts, which allow traders to wager on the outcome of sporting events, have been certified with the CFTC, Crypto.com argued. If the court allowed Nevada’s scrutiny to stand, it could enable individual states “to effectively prohibit federally regulated derivatives based on state-specific evaluations of the underlying events, even where the CFTC has already authorized those derivatives to be traded on national exchanges,” the firm said.
That would make the CFTC’s authority under the Commodity Exchange Act “effectively subject to veto” by any state, which isn’t what Congress intended when it enacted laws to regulate designated contract markets like Crypto.com’s, according to the firm.
If the court declines to shield Crypto.com from enforcement, it could harm the platform’s users and force the company to choose between complying with the CFTC’s mandates or Nevada gambling regulators’ directive to cease-and-desist, the firm said. According to Crypto.com, shutting down the sports contracts for Nevada users would violate CFTC core principles requiring designated contract markets to provide impartial access to markets without disruption.
“These violations could cause [Crypto.com] to lose its CFTC designation as a [designated contract market], putting its entire business in jeopardy,” the firm said.
Crypto.com is also awaiting a decision on a preliminary injunction request that would temporarily protect it from an enforcement action in Nevada. In its request for a judgment on the pleadings, it highlighted a favorable decision won by trading platform Kalshi, which is likewise suing Nevada regulators over a similar cease-and-desist directive.
A Nevada federal judge granted Kalshi the temporary relief in April, noting that Kalshi’s event contracts appeared to be subject to the CFTC’s exclusive jurisdiction. Kalshi last week to permanently enjoin the Nevada regulators.
Other states have scrutinized both Crypto.com’s and Kalshi’s event contracts, leading the firms to file other separate suits. Both firms are suing Maryland, and Kalshi is additionally battling with New Jersey at the Third Circuit after its state regulators challenged a federal judge’s order temporarily restraining them from enforcement.
While Nevada and New Jersey have sided with Kalshi, a Maryland federal judge broke with those courts last week. U.S. District Judge Adam B. Abelson declined to temporarily restrain Maryland’s gambling regulators, finding Kalshi hadn’t shown that Congress specifically intended to preempt state gambling laws when it passed federal derivatives regulation.
Crypto.com and the Nevada Attorney General’s Office did not immediately respond to a request for comment on Wednesday.
Crypto.com is represented by Bradley Austin of Snell & Wilmer and Nowell D. Bamberger and Matthew C. Solomon of Cleary Gottlieb Steen & Hamilton LLP.
Nevada is represented by Jessica Whelan and Sabrena Clinton of the Nevada Attorney General’s Office.
The case is North American Derivatives Exchange Inc. et al. v. The State of Nevada on relation of the Nevada Gaming Control Board et al., case number 2:25-cv-00978, in the U.S. District Court for the District of Nevada.