TD Cowen: Despite CFTC intervention, state governments still hold the upper hand in legal disputes over prediction markets.

Investment bank TD Cowen states that in legal disputes surrounding sports betting markets, even with the Commodity Futures Trading Commission (CFTC) supporting the platforms, state governments may still hold a more favorable legal position. Analysts point out that sports betting has historically been primarily the responsibility of state-level regulators, and the Supreme Court often prioritizes historical regulatory precedent in similar cases. Therefore, in the dispute between Crypto.com and the state of Nevada, the state government's position remains somewhat advantageous. The case arose because Nevada regulators determined that Crypto.com's sports event contracts constituted unlicensed betting and attempted to halt them; Crypto.com argued that its products were derivatives transactions regulated by the CFTC. The district court previously ruled in favor of Nevada, and the case is currently appealed to the Ninth Circuit Court of Appeals. The CFTC recently submitted an amicus curiae opinion emphasizing that betting markets should be regulated at the federal level. TD Cowen believes that if the case ultimately goes to the Supreme Court, the legal uncertainty surrounding the regulatory authority for betting markets could persist for years.