In a key development for prediction markets, the CFTC filed an amicus brief on February 17, 2026, supporting Crypto.com in its appeal against Nevada’s ban on its sports event contracts, as reported by Yogita Khatri. Nevada’s Gaming Control Board labelled these as unlicensed gambling, but the CFTC argues they fall under federal derivatives regulation, CoinDesk. A district court ruled in favour of Nevada, and the case is now before the Ninth Circuit. X posts from @CryptoLawUS highlight the brief’s emphasis on the Commodity Exchange Act (CEA), stating that states cannot recharacterize swaps as gambling to override federal jurisdiction.
TD Cowen analysts, led by Jaret Seiberg, give states a slight edge, citing historical precedents favouring state regulation of sports gambling, The Block. The Supreme Court’s tendency to weigh history, as seen in the Fed Gov. Lisa Cook case, supports this view. The CFTC counters that the CEA grants exclusive jurisdiction over DCMs, preventing state interference. Technical details include Nevada’s recharacterisation of Crypto.com’s products, which could fragment regulation Congress sought to avoid. X posts from @LawCryptoExt note potential violations of 18 U.S.C. § 981 if states overstep.
The dispute could reshape prediction markets, with platforms like Crypto.com facing state bans while appealing for federal protection. TD Cowen warns of prolonged uncertainty, which is impacting investor confidence and market liquidity, CoinDesk reports. Broader crypto sentiment, with Bitcoin at $113,234 and Ethereum at $4,070, remains stable, but prediction market TVL could suffer if states prevail, according to DefiLlama. Risks include regulatory fragmentation, which could stifle innovation, while a CFTC win could boost adoption. Investors should monitor Ninth Circuit rulings, as a loss for states could open doors for nationwide platforms.
TD Cowen predicts the case may reach the Supreme Court by 2028, with the Ninth Circuit appeal possibly extending into 2027, The Block. This timeline suggests ongoing legal uncertainty for prediction markets, which could delay growth. A Republican-led Congress may not intervene due to anti-gambling sentiments, complicating states’ rights. Outlook: If CFTC prevails, prediction markets could see $10B TVL by 2027; otherwise, state-by-state bans persist, CoinDesk. Risks include volatility from rulings; advice: Track support levels like BTC’s $112,000, follow @CryptoLawUS on X, and diversify into stable assets.
