The Commodity Futures Trading Commission (CFTC) has entered a high-profile court battle over sports-related prediction markets, signaling that it intends to defend its authority against state regulators. Chairman Mike Selig announced Tuesday that the agency filed an amicus brief in the U.S. Court of Appeals for the Ninth Circuit in litigation involving Crypto.com and Nevada gaming authorities.

Selig revealed the filing in a video statement on X, describing it as a formal step to assert federal oversight. “Over the past year, American prediction markets have been hit with an onslaught of state-led litigation,” he said. “In response, the CFTC has today filed a friend-of-the-court brief to defend its exclusive jurisdiction over these derivatives markets.”

The dispute centers on whether sports-based event contracts fall under federal commodities law or state gambling statutes. Nevada regulators argue that contracts offered by platforms such as Crypto.com amount to unlicensed sports wagering and therefore require compliance with state gaming rules. Operators maintain that the contracts qualify as federally regulated financial instruments under the Commodity Exchange Act.

Nevada Case Draws Federal Intervention

The immediate case stems from a cease-and-desist letter issued by the Nevada Gaming Control Board to Crypto.com. After receiving the notice, the company sued the regulator. U.S. District Judge Andrew Gordon denied Crypto.com’s request for a preliminary injunction. As its appeal moves forward in the Ninth Circuit, the company withdrew its event contracts from Nevada.

Other exchanges have faced similar action. Kalshi initially secured a preliminary injunction in Nevada, though that order was later dissolved. Robinhood filed related litigation, and the board has asked the appellate court to consolidate arguments for efficiency. Oral arguments are expected in April.

Nevada has pursued temporary restraining orders and civil enforcement proceedings in its efforts to curb sports-related event contracts. The state is also involved in separate disputes with other firms entering the prediction market sector, including Coinbase.

Selig Signals a More Aggressive Posture

The amicus filing marks the first time the CFTC has formally stepped into ongoing litigation tied to sports event contracts. Selig’s recent statements reflect a shift from his earlier posture. During a Senate confirmation hearing last year, he told lawmakers he would “look to the courts” for guidance on sports-related contracts. Since taking office in December, he has emphasized that Congress granted the CFTC full authority over event contracts as “swaps” under the Commodity Exchange Act.

“The most common allegation is that these contracts are a form of gambling and therefore subject to state laws,” Selig wrote in a Wall Street Journal opinion column, cited by SBC Americas. “The CFTC will no longer sit idly by while overzealous state governments undermine the agency’s exclusive jurisdiction over these markets by seeking to establish statewide prohibitions on these exciting products.”

In Tuesday’s video statement, he sharpened that message. “To those who seek to challenge our authority in this space, let me be clear, we will see you in court,” Selig said.

He also defended the broader role of prediction markets. “The CFTC has regulated these markets for over two decades,” he said. “They provide useful functions for society by allowing everyday Americans to hedge commercial risks like increases in temperature and energy price spikes, they also serve as an important check on our news media and our information streams.”

The agency’s involvement comes after Selig withdrew a 2024 rule proposal that would have banned political and sports-related event contracts. He has said the commission will pursue new rulemaking “grounded in a rational and coherent interpretation of the Commodity Exchange Act that promotes responsible innovation in our derivatives markets in line with Congressional intent.”

Federal and State Tensions Expand

State officials across the country have argued that sports contracts resemble traditional bets and should fall under local gaming frameworks. They contend that platforms offering such products lack state licenses and create competitive disparities with regulated sportsbooks that pay taxes and comply with responsible gambling requirements.

The debate has drawn responses beyond Nevada. Utah Governor Spencer Cox criticized Selig’s position on social media. “Mike, I appreciate you attempting this with a straight face, but I don’t remember the CFTC having authority over the ‘derivative market’ of LeBron James rebounds,” Cox wrote. “These prediction markets you are breathlessly defending are gambling — pure and simple. They are destroying the lives of families and countless Americans, especially young men. They have no place in Utah.” He added that he would use every power to “beat you in court.”

Meanwhile, Crypto.com continues expanding its footprint. The company recently partnered with DraftKings to power DraftKings Predictions’ prop-style event contracts.

The Ninth Circuit’s eventual ruling could clarify whether federal commodities law preempts state gaming statutes in the context of sports-related event contracts. The outcome may influence how exchanges structure their offerings nationwide and whether prediction markets operate under a single federal regime or face varying state requirements.