Nevada Warns Gaming Licensees About Prediction Markets, Sports Event Contracts

Nevada Warns Gaming Licensees About Prediction Markets, Sports Event Contracts

Officials in Nevada are cautioning the more than 300 licensed casinos and gaming facilities in the state that partnering with a business that operates prediction markets and offers event contracts involving sports results could jeopardize their continued eligibility to hold a gaming license.

The Nevada Gaming Control Board (NGCB) notified licensees in a notification on Wednesday that it views "sports event contracts" as sports gambling. All Nevada licensees should stay away from companies like Kalshi, Polymarket, and Robinhood that claim to be operating legally under federal jurisdiction through the Commodities Futures Trading Commission (CFTC).

"If a Nevada licensee chooses to offer Sports and Other Event Contracts in Nevada or decides to partner with other entities offering Sports and Other Event Contracts in the state, the Board will consider these developments as it evaluates the suitability of the entity to maintain a Nevada gaming license,” the NGCB notice read.

The CFTC has granted Designated Contract Market (DCM) and Futures Commission Merchant (FCM) permits to Kalshi, Polymarket, and Robinhood.

The Nevada Gaming Control Act is overseen and enforced by the NGCB. It provides the Nevada Gaming Commission (NGC) with reports and policy recommendations.

The Ripple Effect? 

The NGCB warned its licensees that there could be consequences if they partnered with a prediction market that was involved in sports event contracts in another state where it operates, in addition to prohibiting them from doing so in Nevada.

“If a licensee offers Sports and Other Event Contracts in another state without complying with the other state’s restrictions, prohibitions, or licensing regime, partners with another entity that engages in such activities, or acts in violation of a compacted tribal right, the licensee may be subject to discipline under the Gaming Control Act,” the NGCB continued.

Other state gaming regulators frequently follow the NGCB's decisions, which are regarded as the gold standard of commercial gaming regulation in the US. Nevada's warning to its gaming licensees may therefore have unintended consequences.

Many sports betting firms have considered partnerships, acquisitions, or investments in the developing prediction market.

FanDuel and CME Group established a collaboration in August to perform yes/no event contracts based on financial events and economic data. Sports contracts are not offered by CME. Additionally, FanDuel is not active in Nevada.

Sports Contracts Are Illegal Gambling 

Nevada casino officials summarized their notification by stating that, at least in terms of state law, prediction markets that sell sports contracts are effectively involved in illegal gambling. Naturally, it is a serious breach of the state's suitability consideration of a licensee or licensing candidate to participate in or collaborate with illicit gaming.

“The Board reminds licensees to be mindful of their obligations to maintain suitability and comply with all applicable laws in all jurisdictions where they operate,” the NGCB notice said. “The Board will consider any such conduct when evaluating suitability for new applications filed pursuant to the Gaming Control Act.”