LAS VEGAS - Prediction market operators frame their sports event contracts as financial trading, not gambling. But in America’s gambling capital, they are considered sports betting - and barred from operating.
Nevada officials excoriated prediction markets repeatedly during a multi-day gaming conference in Las Vegas this week. Speaking at the Global Gaming Expo (G2E) along the Las Vegas Strip, gaming stakeholders and regulators labeled the platforms as illegal threats to licensed gambling entities.
Nevada Gaming Control Board chair Mike Dreitzer said prediction market operators should face the same legal obligations as licensed gambling companies. He challenged the industry’s characterization of its products as innovations deserving different treatment.
“Crime and deception are not innovation,” Dreitzer said.
Nevada leads fight
His comments underscored Nevada’s position in a national fight over whether federally regulated prediction markets can offer sports event contracts without following state gambling laws. The state secured an August federal appeals court ruling supporting its enforcement authority, adding momentum to efforts elsewhere to restrict the products.
Dreitzer questioned operators accepting trades from users ages 18 to 20 and offering sports contracts in states where sports wagering is prohibited. He also raised concerns about advertising and market practices, rejecting suggestions that gaming regulators are protecting established companies from competition.
Prediction market operators and federal regulators argue the contracts are financial products under the Commodity Futures Trading Commission’s jurisdiction. State regulators contend the sports offerings amount to unlicensed gambling. Dreitzer argued that calling a product an exchange does not establish that it should operate outside state oversight.
Kalshi, Polymarket, and other major prediction markets don't accept users physically in Nevada. The platforms require geolocation services prior to use and block any individuals detected in Nevada.
Users can be blocked from even seeing trade options on some platforms. Some Nevada residents have also been prohibited from registering with the platforms, even when located in a different state.
DraftKings, which has promoted its platform as being live in all 50 states in a wave of ads, does technically offer event contracts in Nevada. But it is limited to only a handful of commodities trades for products such as oil. The company's fellow sportsbook operators-turned-prediction markets, FanDuel and Fanatics, are similarly limited.
Nevada court victory strengthens enforcement case
Nevada’s confrontation with Kalshi began in March 2025, when the Gaming Control Board sent a cease-and-desist letter demanding that the company stop offering sports and election event contracts.
The board determined Kalshi’s sports products constituted an unlicensed sports pool and warned that continued operations could prompt civil or criminal enforcement.
Kalshi sued, arguing federal commodities law displaced Nevada’s authority. It initially secured a preliminary injunction blocking enforcement, but the district court later dissolved that protection.
On Aug. 28, the Ninth Circuit Court of Appeals affirmed the dissolution as it applied to sports event contracts. The panel concluded Kalshi had not demonstrated that federal law likely preempted Nevada’s gaming regulations.
DraftKings does offer sports betting and/or trading in all 50 states, including Nevada, even though here it's limited to just "traditional" commodities trades such as oil futures (of which I apparently know even less about than sports) pic.twitter.com/jT0zzX4PeE
— Ryan Butler (@butlerbetstrade) October 1, 2026
It rejected the argument that listing contracts on a federally designated exchange automatically placed them beyond state gambling oversight. The court examined whether the sports event contracts qualified as financial derivatives known as swaps under the Commodity Exchange Act.
Its analysis distinguished wagering on sports outcomes from transactions serving the financial risk-management purposes of commodities law.
The ruling concerned preliminary relief rather than a final judgment resolving every issue. The panel also sent the election-contract dispute back to the district court for further consideration.
The ruling also widened a split among federal appeals courts. The Third Circuit had sided with Kalshi in its New Jersey dispute, creating competing interpretations of how federal commodities regulation interacts with state gambling authority and potentially setting a case for Supreme Court action.
Other states pursue restrictions
Nevada is not alone in its fight.
Ohio and Tennessee gained support for their enforcement efforts Sept. 25 when the Sixth Circuit upheld the denial of Kalshi’s requested injunction in Ohio and vacated an injunction protecting it in Tennessee. The court concluded Kalshi had not shown its sports event contracts fell within the CFTC’s exclusive jurisdiction and alternatively rejected its federal preemption arguments.
Michigan has pursued restrictions through state court. A Sept. 1 preliminary injunction bars Kalshi from offering, facilitating, or advertising internet sports betting to people in Michigan. It also requires a state-licensed geolocation provider and sets a $500,000 daily fine for each day the court finds Kalshi violated the geolocation requirements.
The Michigan court cited concerns about access for customers under 21, consumer protections, and advantages over licensed operators. Those findings echo Dreitzer’s argument that prediction markets should meet obligations imposed on conventional gambling companies.
Minnesota's effort to enforce a broader ban underscores the limits of state regulation amid an unresolved federal jurisdictional dispute. A federal judge blocked enforcement July 27, before the law’s scheduled Aug. 1 effective date, finding federal law likely preempted the prohibition.
And Washington joined Nevada earlier this year in successfully implementing a court-approved ban of the platforms.
Gaming industry backs Nevada’s position
In an impassioned address, American Gaming Association president and CEO Bill Miller used his G2E keynote remarks to frame prediction markets as an “existential threat” extending beyond sportsbooks.
“Gaming belongs to the states and the tribes,” Miller said.
He warned that allowing prediction markets to bypass gambling laws could encourage expansion into other parts of the industry. He also criticized efforts to present sports gambling to young customers as investing.
“These prediction platforms want young people to think that sports gambling is a form of investment,” Miller said.
The competing court decisions leave the national outcome unsettled. For Nevada, America’s decades-long gambling regulation leader, Dreitzer’s message was that new products must operate within the rules underpinning each state’s gambling industry.
“At the end of the day, regulation is important,” Dreitzer said.
