The Nevada Gaming Control Board admonished the state’s licensees to comply with state laws regulating sports-events contracts or risk being in violation of their gaming licenses. The notice issued by Chair Mike Dreitzer on Wednesday said the Board is aware that licensees or affiliates have expressed interest in offering prediction-market contracts either in Nevada or other U.S. jurisdictions.
MGM Resorts International CEO Bill Hornbuckle told the audience at G2E last week in Las Vegas that it continues to monitor what’s happening with prediction markets. He also applauded a Control Board member for calling out these platforms, considered a major threat to licensed gaming operators and state tax revenues.
Nevada Gaming Control Board: The prediction market “gig is up”
Sports-event contracts, offered by unlicensed companies like Kalshi and Crypto.com that are locked in a legal battle with Nevada, are a type of derivative financial product that functions like a betting exchange, allowing people to speculate on the outcome of a sporting event. Because they’re regulated by the U.S. Commodity Futures Trading Commission, companies that offer these contracts argue they’re not subject to state-level gambling laws and taxes.
That’s led to a regulatory fight with and court cases from Nevada and other states and tribal gaming operations.
In August, the Board warned FanDuel to stay away from prediction markets when its executives appeared before the Board on another matter. FanDuel has signed a deal with the CME Group to offer non-sports contracts, but that option hasn’t been ruled out.
“The Board has received direct inquiries regarding the Board’s stance on such offerings or partnerships to that effect,” Dreitzer said in the notice. “The Board takes seriously its obligation to operate a thriving gaming industry and to protect Nevada citizens. To that end, this industry notice provides notice to licensees under the Gaming Control Act (that the) Board considers offering sports event contracts, or certain other events contracts, as constituting wagering activity under (Nevada state statutes). Wagering occurs whether the contract is listed on an exchange regulated by the Commodity Futures Trading Commission or elsewhere.”
Wagering subject to the Board’s jurisdiction includes event contracts based on the outcome or partial outcome of any sporting or athletic event and other selected events, such as the World Series of Poker, Oscars, esports, and political elections.
“Offerings for sports and other events contracts may be conducted in Nevada only if the offering entity possesses a non-restricted gaming license with sports pool approval and meets the other requirements for sports wagering, including, without limitation, wagering accounts and sports book systems,” Dreitzer said.
If a Nevada licensee offers sports and other event contracts in Nevada or partners 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, Dreitzer said.
“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. Further, the Board will consider any such conduct when evaluating suitability for new applications filed pursuant to the Gaming Control Act,” Dreitzer said.
MGM Resorts International CEO Bill Hornbuckle addressed prediction markets at G2E. He has said gambling should remain a state’s rights matter over the federal government.
“If you put a product in the market that’s unregulated and not taxed, it’s a major disadvantage for us,” Hornbuckle said. “We have gaming regulators in three states now telling us not to do that. We have no choice but to (keep options open). We would be a fast follower if it were to break though. Absolutely. But it does invite the notion that the federal government will step into our space and that’s something the industry has historically and categorically said no thank you for decades.”
Hornbuckle said prediction markets are a single-digit market share and that their products aren’t as robust as what sports betting operators offer.
“Until it matures to that point, if it’s allowed to mature to that point, it is what it is,” Hornbuckle said. “We all need to keep a very close watch on it and really understand what’s going on. It’s going to make its way through the courts. There are 11 or 12 cases and seven states where the attorneys general are after this thing. We’ll see where this call comes down.”