What Happens in Nevada … May Impact Prediction Markets and Sports Gambling Across the U.S.

Bottom line: The sports-prediction market landscape just shifted. Nevada District Court Judge Andrew Gordon’s newly released opinion denied Crypto.com’s motion for a preliminary injunction against Nevada regulatory oversight for its prediction market product. More important, the decision provides a broader challenge to the architecture on which sports-prediction markets (e.g., Kalshi, Polymarket, Robinhood) have staked their argument that federal preemption allows them to operate outside state regulatory oversight. Since Judge Gordon previously approved Kalshi in the same state, his current reasoning calls that earlier decision into question. Along with recent court decisions both supporting Kalshi (in New Jersey) and opposing Kalshi (in Maryland), this suggests that different circuits may reach different conclusions on this issue, potentially resulting in Supreme Court review. The political context is also shifting against sports- prediction markets, with a bipartisan group of senators pressing the Commodity Futures Trading Commission (CFTC) to clarify that such products are sports gambling that are not preempted by federal law and are subject to the full scope of state regulation and taxation.

Below are the important details on recent sports-prediction market regulatory developments—and what’s coming next.

1. Judge Gordon’s Crypto.com Ruling: Why it Matters

• Not a “swap.” Gordon holds that a contract predicated on the outcome of a sporting event does not qualify as a “swap” under the Commodity Exchange Act (CEA). He homes in on the statutory text requiring dependence on the “occurrence” or “non-occurrence” of an “event” and draws a sharp distinction: outcomes (who wins, who loses, what’s the score, etc.) are separate from events.
• Event is not an outcome. Under Gordon’s reading, an “ordinary meaning” of “event” is the occurrence of the underlying sporting contest itself (e.g., the Kentucky Derby), whereas the identity of the winner is an “outcome.” If one were to blur that line, the entire distinct meaning of “event” in the swap definition would collapse (making virtually any bet into a swap that would need to trade on a DCM).
• Restoring state domain over wagering. Gordon warns that Crypto.com’s (and by extension, Kalshi’s) argument would shift all sports wagering into the CFTC’s exclusive domain, displacing decades of historical regulation by the states. He deems that result untenable under both textual and legislative historical grounds.
• Congressional intent and Rule 40.11. Gordon tracks Congress’s special rule (7 U.S.C. § 7a-2(c)(5)(C)(i)), reflecting that some gaming-related contracts may be subject to public-interest review and highlights the CFTC’s own prohibition in 17 C.F.R. § 40.11(a),which forbids DCM listing of gaming contracts tied to excluded commodities. He argues that this regime itself signals that Congress did not envision all sports betting conducted on DCMs.
• Consistency with historical state practice. He underscores that Nevada (as well as most other states) has long regulated casino sports books without treating them as swaps and that neither Congress nor the CFTC have treated them as such.
• Preliminary-pleadings posture. Because the decision is in the context of a motion for judgment on the pleadings and a preliminary injunction, Gordon sees flaws in Crypto.com’s argument that CFTC has exclusive jurisdiction. He denies both the motion to dismiss and the injunction, concluding Crypto.com is unlikely to prevail on the merits.
• Appeal Incoming: Expect Crypto.com to appeal to the Ninth Circuit.

Key takeaway: The decision cuts to the heart of the swap-definition logic that undergirds the entire federal preemption theory for sports event contracts that would remove them from the regulatory oversight and taxation regime for sports gambling in the states. Especially since Gordon had earlier blessed Kalshi’s injunction against Nevada regulators, his new framing may provide the basis of a potent attack on Kalshi’s legal foundations in that same court.

2. Kalshi’s Nevada Decision (April 2025)

To understand the tension, here is how Kalshi’s preliminary injunction against Nevada regulators was decided by Judge Gordon (and how the ruling is now vulnerable under Gordon’s new logic).

• Injunction granted. On April 9, 2025, Judge Gordon (in a different case) granted Kalshi’s motion for preliminary injunction, enjoining Nevada regulators from enforcing state gaming laws against Kalshi’s event contracts in the state.
• Basis for Kalshi’s victory. The district court accepted that Kalshi had a strong showing that the CEA and Dodd-Frank amendments created an exclusive federal regime over event contracts offered via DCMs (i.e., field preemption, or at least a strong preemptive argument).
• Injunctive Relief. The order explicitly enjoined the Nevada Gaming Commission, the Nevada Gaming Control Board and related state actors from civil or criminal enforcement against Kalshi for offering such event contracts.
• Motion to dismiss denied. After the injunction, Nevada regulators moved to dismiss the underlying complaint, but the court declined, keeping the litigation alive.
• Continuing uncertainties. Even within the Kalshi decision, the court reserved on certain issues and flagged areas for further development (e.g., distinguishing contracts, jurisdictional boundaries).
• Shaky Ground: Because Gordon now repudiates the notion that outcome-based event contracts qualify as swaps, he implicitly undercuts the essential predicate of Kalshi’s Nevada win. That puts Kalshi’s foothold in Nevada in serious jeopardy, especially on appeal or reconsideration.

3. The New Jersey decision – Parallel Path, But Robust Support for Kalshi

While Nevada has become more fraught, Kalshi has secured stronger footing in New Jersey.

• Preliminary injunction in New Jersey. In April 2025, U.S. District Judge Edward Kiel issued a TRO and preliminary injunction barring the New Jersey Division of Gaming Enforcement from halting Kalshi’s sports event contracts in the state.
• District court’s reasoning. The court held that Kalshi’s event contracts fall within the CFTC’s exclusive jurisdiction and that the CEA preempts New Jersey’s sports wagering laws (as applied to Kalshi) and scoring a big win for Kalshi’s field preemption argument.
• Appeal underway. The state has appealed to the Third Circuit.
• Amici and regulatory gravity. New Jersey’s appeal has attracted strong support from 34 other states (in amicus), the American Gaming Association, multiple tribal groups and the Casino Association of New Jersey, making the Third Circuit fight especially high stakes.

4. The Maryland Decision – First Real Pushback on Federal Preemption

The Maryland case offers the first major judicial rejection of Kalshi’s core federal preemption argument. It now stands as the inflection point in creating a circuit split.

• Injunction denied. On August 1, 2025, U.S. District Judge Adam B. Abelson denied Kalshi’s motion for a preliminary injunction, allowing the Maryland Lottery and Gaming Commission to enforce its cease-and-desist order targeting Kalshi’s sports event contracts.
• Preemption skepticism. Abelson acknowledged that federal law (CEA/Dodd-Frank) may preempt some state laws, but he concluded that Kalshi had not shown a “clear and manifest” congressional purpose to preempt state gambling regulation in this realm.
• State “field of traditional regulation.” The court emphasized that gambling is a field long regulated by states, invoking the presumption against preemption. It insisted that Kalshi’s proposed federal domain would displace a historically state-controlled space.
• Inconsistency in Kalshi’s prior posture. Judge Abelson flagged that Kalshi’s earlier litigation (notably in the D.C. Circuit over election contracts) had described sports event contracts as less economically significant, but here Kalshi is pushing them within CEA’s ambit—a kind of shifting of positions.
• Implications. The ruling introduces a true split: the Fourth Circuit (or at least a district court within it) is unwilling to afford Kalshi the sweeping preemption that New Jersey and Nevada courts have granted.

Strategic Takeaways:

1. Crypto.com’s appeal is the leading test. Because Gordon has already drafted the reasoning in the Crypto case, that will turn into appellate precedent first, potentially reshaping the playing field before Kalshi’s appeals mature.
2. Legislative/rulemaking risks. A wave of adverse decisions could catalyze legislative proposals to explicitly sanction or ban event contracts (or redefine “swap”), or prompt CFTC rulemaking to clarify 40.11 or other event contract boundaries. A bipartisan group of Senators are pressing the CFTC to clarify that sports prediction markets are gambling, not swaps under CFTC rules, and not preempted by federal law and regulations.
3. Kalshi’s Nevada win is now at risk. Gordon’s new approach may be used to seek reconsideration, interlocutory review, or reversal of Kalshi’s injunction in the same court or to narrow its effect.
4. New Jersey’s appeal now becomes critical. Kalshi needs a favorable Third Circuit ruling that either rejects Gordon’s textual logic or construes the swap definition differently.
5. Maryland opens the door to a circuit split. That split may attract en banc or Supreme Court review, especially if the Third Circuit and Ninth Circuit diverge on the key swap/outcome line.
6. Tax implications. If Judge Gordon’s “outcomes ≠ events” logic holds, approved and regulated sports-based prediction markets would be treated as wagering operations rather than swap markets, exposing them to state gross-gaming-revenue taxes (ranging roughly 6–20 percent) and the federal wagering excise tax under 26 U.S.C. § 4401 (0.25 percent of handle if state-authorized, 2 percent if not).
7. States will push harder. Gordon’s rationale gives state gaming regulators a new doctrinal tool to oppose prediction markets on the merits of contract structure rather than merely jurisdictional grounds.
8. CFTC and Congress now loom larger. If courts swing against prediction markets, Kalshi (and others) may lobby Congress or the CFTC to revise swap definitions or carve out event contracts—raising the stakes of regulatory rulemaking.
9. Operators should brace for state level bifurcation. Today, Kalshi may remain operable in New Jersey (and in Nevada under injunction), but not in Maryland—and depending on circuit outcomes, that patchwork may fragment further.
10. Further state actions loom. Other states (including Massachusetts, Ohio, California) are already in play. For example, tribes in California have sued Kalshi (and Robinhood) alleging violations of IGRA and state gaming compacts.