Adam Roarty is a journalist covering sports betting, regulation, and industry innovation for CasinoBeats. His coverage includes tax increases in the UK, covering breaking stories in the ever-evolving landscape of US betting such as the...
Read Full BioThe Nevada Gaming Control Board (NGCB) has warned betting companies licensed in the state that they “may be subject to discipline” if they offer sports event contracts or do business with prediction market platforms.
The letter, titled “Sports Event Contracts are Wagers,” was sent to licensees from NGCB Chairman Mike Dreitzer. It makes clear that the gambling regulator will not allow licensed betting companies to participate in prediction markets. This includes offering the markets themselves or partnering with a company, such as Kalshi or Crypto.com.
The letter states, “Wagering occurs whether the contract is listed on an exchange regulated by the Commodity Futures Trading Commission (CFTC) or elsewhere.”
It is a similar letter to the one sent by gambling regulators in Arizona. The Arizona Department of Gaming‘s letter followed a similar document from the Ohio Casino Control Commission (OCCC). Since then, the Michigan Gaming Control Board (MGCB) has also sent a warning to companies licensed in the state.
Prediction Markets Outside Nevada May Also Incur Penalties
The NGCB also warns that even if companies do not offer markets in the state, they may still face enforcement action. Arizona, Michigan, and Ohio sent out a similar warning to dissuade companies from making deals with prediction market platforms.
Nevada’s letter states, “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 CFTC has also warned companies that they may be subject to legal action in certain states, suggesting they might need to geo-block specific jurisdictions, similar to sportsbooks. The NGCB, however, states that simply geo-blocking Nevada residents would not be enough to satisfy the regulator.
As gambling companies see their stocks slide due to the continued expansion of prediction markets, they face a crossroads in how to deal with the threat. Underdog and PrizePicks have made moves to partner with prediction market platforms, but neither holds a sports betting license in Nevada.
Major sportsbooks such as DraftKings and FanDuel have yet to enter the space, although the latter has made a deal with CME. The partnership does not yet offer sports markets.
However, the NGCB did not limit its warning to sports event contracts. It also included “other selected events such as the World Series of Poker, the Oscars, Esports, and political elections.”
Nevada’s Ongoing Battle With Prediction Markets
The letter from the NGCB is the latest action in the state against prediction markets. Nevada was one of the first states to issue a cease-and-desist letter to Kalshi over its sports markets. The state also sent letters to Crypto.com and Robinhood back in April.
In response, the companies have all filed counter-lawsuits against the NGCB. While Kalshi initially won an injunction in its court battle to allow the company to continue operating in the state, the same judge rejected Crypto.com’s request for an injunction two weeks ago.
The full decision of Judge Andrew Gordon came to light this week. Gordon stated that he now believes the event contracts do not fall under the “swaps” definition that allows Designated Contract Markets (DCMs) to offer markets under license from the CFTC.
In the ruling, Gordon stated, “I deny the motion for preliminary injunction because Crypto has not met its burden to show that it is likely to succeed in demonstrating that its event contracts based on the outcome of live events are swaps that fall within the CFTC’s exclusive jurisdiction.”
In response to the ruling, a Crypto.com spokesperson told Casino Beats, “We remain steadfast that the contract we offer are swaps subject to the exclusive jurisdiction of the CFTC, and we look forward to the next round following our appeal.”
The company’s appeal and Kalshi’s case in Nevada remain ongoing with no clear end in sight for the legal battles between state regulators and prediction markets.
