TechFlow News, February 18: According to FinanceFeeds, the U.S. Commodity Futures Trading Commission (CFTC) filed an amicus curiae brief with the U.S. Court of Appeals for the Ninth Circuit regarding the prediction market dispute between Crypto.com and the State of Nevada. In its brief, the CFTC asserted that Congress granted it “exclusive jurisdiction” over futures and related products under the Dodd-Frank Act—a jurisdiction that extends to event contracts.
The dispute originated in 2024, when former CFTC Chairman Rostin Behnam proposed restrictions on event contracts tied to gambling, war, and similar topics. However, this rulemaking effort was formally terminated earlier this month. Subsequently, Crypto.com’s prediction market division sued the State of Nevada last June after the state attempted to block its provision of sports-event contracts. The lower court ruled that sports-event contracts fall outside the CFTC’s jurisdiction and are instead subject to Nevada’s gambling regulations. Crypto.com promptly appealed that decision.
Current CFTC Chairman Michael Selig characterized state-level regulatory initiatives as “power grabs,” emphasizing that event contracts constitute commodity derivatives—fundamentally distinct from casino wagering. He underscored that such contracts are cleared through central clearinghouses, allow investors to freely enter and exit positions, and are subject to established investor protection mechanisms.
The case has also sparked disagreement at the congressional level. Twenty-one Democratic senators jointly wrote to Selig urging him not to interfere in the ongoing judicial proceedings. In contrast, Republican Senator Bill Hagerty took the opposing view, arguing that clear federal rules would foster innovation. The Ninth Circuit’s final ruling will largely determine whether prediction markets will be governed primarily by federal derivatives regulations—or remain exposed to enforcement actions under individual states’ gambling laws.
