In a recent development for the cryptocurrency and derivatives sectors, the Commodity Futures Trading Commission (CFTC) has intervened in a high-profile legal battle, signaling a shift toward more supportive federal oversight of prediction markets. On February 5, 2026, the agency filed a motion to submit an amicus brief in the Ninth Circuit Court of Appeals case involving the North American Derivatives Exchange, operating as Crypto.com, and the state of Nevada.
This move marks the CFTC’s first courtroom engagement in this jurisdiction on the regulation of event-based contracts, often tied to cryptocurrency platforms.
The case stems from Nevada’s efforts to classify certain prediction market activities as gambling under state law, potentially requiring additional licensing or outright bans.
Crypto.com, a CFTC-registered Designated Contract Market (DCM), argues that such state-level interventions are preempted by federal statutes.
The CFTC’s involvement aims to clarify the scope of the Commodity Exchange Act (CEA), emphasizing the agency’s “exclusive jurisdiction” over commodity derivatives, including swaps and futures related to events like sports or politics.
By asserting this authority, the CFTC seeks to prevent states from overriding federal approvals, arguing that instruments qualifying as swaps under the CEA cannot be prohibited or regulated at the state level.
Under the leadership of Chair Michael Selig, the CFTC is undergoing a policy overhaul. Selig, in a recent address, advocated for the “responsible development” of event contract markets while criticizing past approaches as overreaches into “merit regulation.”
Tthe CFTC takes 1st court action in the 9th Circuit for prediction markets regulation re: Crypto. com vs. Nevada. Thanks @FormerCFTCGC and @PredictAction. Will states start to ask, who is that masked man from the CFTC @ChairmanSelig? via @ForbesCrypto https://t.co/B0diwwuiI9 pic.twitter.com/kuquUNCQLT
— Jason Brett (@RegulatoryJason) February 10, 2026
Key steps include the withdrawal of a 2024 proposal that would have restricted contracts on political and athletic events by broadening the definition of “gaming.”
Additionally, a 2025 advisory on sports contracts was rescinded due to the “confusion and uncertainty” it generated, particularly in state-federal conflicts.
Legal experts view this as a bold assertion of federal primacy.
Rob Schwartz, a former CFTC General Counsel, noted that the agency’s brief is likely to reinforce its exclusive oversight, which could surprise observers expecting a more neutral or restrictive stance.
The Coalition for Prediction Markets (CPM), an industry advocacy group, has praised the CFTC’s actions, highlighting the need for “clear, durable federal oversight” to avoid a fragmented regulatory landscape across states.
A CPM representative stated that consistent CFTC rules would foster innovation and build trust, while protecting against unregulated operators.
This intervention comes amid growing state-level scrutiny of prediction markets.
For instance, Hawaii is considering legislation (H.B. 2198) to ban contracts on sports, elections, and other events, while Nevada has pursued enforcement against platforms like Polymarket, and Tennessee has issued cease-and-desist orders to entities such as KalshiEX.
The CFTC’s pushback could set precedents that reach the Supreme Court, resolving longstanding jurisdictional tensions.
Broader implications extend to the cryptocurrency ecosystem, where prediction markets often leverage blockchain technology for decentralized betting on real-world outcomes.
By promoting a unified federal framework, the CFTC aims to encourage innovation without the burden of varying state laws.
Selig has pledged forthcoming rulemaking to establish “rational and coherent” standards under the CEA, addressing ambiguities in classifying products as derivatives.
This evolving stance represents a departure from previous administrations’ caution, potentially unlocking new opportunities for market participants.
As states grapple with emerging technologies, the CFTC‘s proactive role—likened by some to a “masked defender” of federal authority—could reshape the regulatory environment, ensuring prediction markets thrive under expert, centralized supervision rather than a patchwork of local restrictions.
