Nevada judge explains change of heart on sports contract legality.

Despite having previously given Kalshi a similar concession, Nevada District Court Judge Andrew Gordon has outlined his justification for rejecting Crypto.com’s motion for a preliminary injunction to continue providing sports-related event contracts in the state.

Following Kalshi’s example in Nevada, Crypto.com filed a lawsuit against the Nevada Gaming Control Board (NGCB), the state’s regulatory agency, after the group delivered a cease and desist letter to the business requesting that it stop providing sports-related contracts in the state.

Gordon took the time to explain why he decided against one corporation but not the other, noting his shift in position in his verdict.

The term “event” is simply too wide.

The terms “event” and “swap,” whose definitions Gordon found problematically broad, were at the centre of his argument.

Gordon pointed out that the CFTC is not specifically given the sole authority to determine what constitutes a swap under the Commodity Exchange Act (CEA). As a result, I am able to read the statute.

Gordon started by attempting to define an event operationally before deciding that Crypto.com’s claim that a sporting event is the result of a match is overly general.

He pointed out that “anything could be defined as an event, so Crypto’s proposed reading of the statute knows no limiting principle.” Additionally, he stated that although it is obvious that the Kentucky Derby is an event and therefore it makes sense to switch whether it happens or not, it is too far to argue about whether the race’s winner qualifies as an event.

A judge claims that such broadness was not intended by Congress.

Additionally, he noted that the CEA’s wording, which Crypto.com claims preempts state gaming laws, is phrased in a way that makes it impossible to interpret the term “event” in such a broad way. For example, the description of a credit default swap in the CEA is written in such a way.

Furthermore, if the CEA states that only Designated Contract Markets (DCM) are permitted to broker swaps and a swap is a contract on an event, this could lead to a situation in which all state-level gmabling is prohibited.

“The CEA prohibits almost all swap dealing and trading unless done on a DCM, with the exception of specific market participants, none of whom are casinos or the typical sports bettor, so that cannot be a proper reading of the statute because that would mean that all sports wagering must be done on a DCM and not at casinos.”

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