This story was originally published by Nevada Current.
Dana Gentry
Nevada Current
President Donald Trump’s latest business partnership may place him at odds with Nevada and other states suing to stop prediction markets from accepting what regulators say are nothing more than illegal bets.
The business endeavor also raises questions about Trump’s conflict of interest in appointing the commissioners charged with oversight of his venture, as well as bets being placed on outcomes of events or issues that as president, Trump could control.
Crypto.com, the company teaming up with Trump’s Truth Social to allow its users to make crypto bets (converted first to fiat currency) on the outcome of future events, is suing Nevada and other states that seek to impose gambling oversight on the platform, which is regulated by the Commodity Futures Trading Commission.
Congress, in 2010, gave the CFTC exclusive jurisdiction over the regulation of sports event contracts on commodity exchanges. The sites are known as places to bet on political races or cultural happenings but have exploded in popularity as outlets for placing sports bets.
In June, Crypto.com went to court to stop the Nevada Gaming Control Board from enforcing state law against the platform’s sports events contracts, which the Gaming Control Board deems to be wagers.
“Engaging in unlawful sports wagering in another state or entering into a business relationship with another entity offering unlawful sports wagering in another state may call into question the good character and integrity of the licensee,” the GCB said in an advisory to licensees. “Further, the Board will consider any such conduct when evaluating suitability for new applications filed pursuant to the Gaming Control Act.”
Trump, who currently owns a non-gaming hotel in Nevada, had a certificate of registration from Nevada regulators in 2004, but was never licensed for a casino.
Crypto.com and other prediction market platforms, such as Kalshi, which is also suing the state, charge a 2 percent fee to arrange the contracts on events, such as political races and sport competitions.
The framework established by Congress to regulate prediction markets pre-empts Nevada law, the platform asserts.
“These contracts are subject to extensive oversight by the CFTC, and— critically—they are lawful under federal law,” Kalshi argued in its complaint against Nevada. The CFTC recently allowed the exchange to accept sports outcome contracts without the CFTC’s review, and a federal court has upheld the legality of contracts on the outcome of political races, the complaint says.
Last month, U.S. District Judge Andrew Gordon denied Crypto.com’s motion for an injunction to stop Nevada regulators from enforcing state law, finding that its sports event contracts do not comply with the Commodity Exchange Act’s definition of swaps.
On Friday, GCB Chairman Mike Dreitzer announced Crypto.com agreed to stop arranging contracts in Nevada while the legal case proceeds.
Gordon’s ruling stands in contrast to an injunction he previously granted to Kalshi, ruling that Nevada regulators “have no jurisdiction to decide that Kalshi’s conduct violates state law where, at least at present, those activities are legal under federal law.”
The Nevada Resort Association, which represents casinos and is an intervenor defendant in Kalshi’s case against the state, argued Kalshi’s position “would result in the complete upheaval of Nevada’s gaming regulations, reversing over one hundred and fifty years of state control over this area and over seventy-five years of regulated sports betting.”
‘No interest in upholding the law’
“The expansion of prediction markets is bad for the regulated gaming industry, bad for consumers, and bad for states and tribes,” Rep. Dina Titus (D-NV), a fervent opponent of prediction markets, said in a statement to the Current on Wednesday. “In particular, it is a backdoor way to legalize sports betting in states that have not authorized it.”
Titus contends that Kalshi and others like it “are attempting to circumvent both federal and state laws by conducting illegal sports betting” through the CFTC. “Unlike licensed operators, prediction markets do not comply with requirements for consumer protection, responsible gaming, tax revenue, integrity safeguards, and anti-money laundering compliance.”
Titus says opposition to Kalshi’s sports betting contracts “is bipartisan and nationwide,” noting Nevada led an amicus filing by 36 attorneys general in a case opposing the contracts in New Jersey. The company faces lawsuits from Arizona and Illinois, in addition to New Jersey and Nevada.
Gambling experts contend consumers are likely to confuse prediction markets with legal gambling sites.
“The CFTC is a small, independent agency that regulates the trading of contracts related to agriculture commodities and other financial instruments. It has no expertise in the complexities of sports betting,” Titus wrote in a recent commentary.
The agency, Titus said in a statement, “is not equipped to be a national gaming regulator and handle consumer disputes or integrity issues; furthermore it is laden with conflicts of interest. This Administration, however, has shown no interest in upholding the law. It will have even less as Truth Social enters this market.”
“We are thrilled to become the world’s first publicly traded social media platform to offer our users access to prediction markets,” Devin Nunes, chairman and CEO of Trump Media, said in a press release.
Crypto.com is the third major prediction market platform to tie its fortunes to the Trump family. Donald Trump Jr., the president’s son, is an advisor to Crypto.com rivals Polymarket and Kalshi.
Trump nominated Brian Quintenz, a member of the Kalshi board, as chairman of the CFTC in February, but withdrew the nomination last month. Last week Trump named Securities and Exchange Commission regulator Mike Selig to the position.
The CFTC’s five commissioners are appointed by the president. The CFTC currently has an interim chairperson and no commissioners, according to its website.
Gov. Joe Lombardo did not respond to a request for comment on Trump’s involvement with the prediction markets or the president’s apparent conflict of interest.
“The media’s continued attempts to fabricate conflicts of interest are irresponsible and reinforce the public’s distrust in what they read,” White House Press Secretary Karoline Leavitt said in response to the Current’s inquiry. “Neither the President nor his family have ever engaged, or will ever engage, in conflicts of interest.”
Kevin Thompson, CEO of 9i Capital Group and host of 9innings podcast, told Newsweek that since the president took office for the second time, the Trump family’s fortune has “surged by more than $800 million, a roughly 17-fold increase, largely tied to crypto holdings and the World Liberty Financial venture.”
Crypto.com reported revenue of $1.5 billion last year, and boasts some 140 million users.
Meanwhile, Mark Masnick, a journalist at Techdirt, pointed out the potential conflicts of a president having a financial interest in a prediction market.
“So the company the president currently owns is teaming up with a cryptocurrency company to create a prediction market, which will take bets… on things the president himself has quite a lot of control over?” Masnick wrote on social media. “Gosh, I’m sure nothing bad will happen.”