Nevada regulators are warning sports betting operators that getting involved in unlawful prediction markets in the Silver State could come with repercussions.
Key Takeaways
- Nevada regulators tell sports betting operators they must have a nonrestricted license to offer prediction markets.
- Operating event contracts or partnering with an entity that does business in another state could land sportsbooks in trouble in Nevada.
- The Silver State is locked into a legal battle with Kalshi.
The Nevada Gaming Control Board (NGCB) issued a letter to licensed sportsbooks Tuesday, telling them to “be mindful of their obligations to maintain suitability and comply with all applicable laws in all jurisdictions where they operate.”
The NGCB said any operator that chooses to offer sports or other event contracts will have the suitability of maintaining a license evaluated.
Also, if a Nevada sports betting licensee offers prediction markets or partners with another entity in other jurisdictions without complying with that state’s laws or tribal compacts, the operator could be subject to discipline in Nevada under the Gaming Control Act.
“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 letter states.
Inquiring minds
The gaming board says the warning is in response to operators who have inquired about the regulatory stance on prediction markets, which are regulated federally by the Commodity Futures Trading Commission (CFTC).
“The Board takes seriously its obligation to operate a thriving gaming industry and to protect Nevada citizens,” regulators stated.
In Nevada, sports event contracts are deemed a wagering activity, even if it's under a federally regulated exchange. The Silver State says prediction markets based on the outcome or partial outcome of a sporting or athletic event qualify as wagering. The list of non-sport events also includes the World Series of Poker, the Oscars, e-sports, and elections.
Nevada regulators state prediction contracts can only be offered if the operator holds a “nonrestricted gaming license with sports pool approval in Nevada and meets the other requirements for sports wagering, including, without limitation, wagering accounts and sports book systems.”
Ongoing battle
Nearly a handful of other states that have legal sports betting issued similar warnings.
Nevada has been in a legal battle against Kalshi since Silver State regulators issued a cease-and-desist order to the prediction market platform in March. Kalshi responded by filing a lawsuit against Nevada and other states, claiming that only the CFTC can regulate the trading company.
Contracts vs. wagering
Kalshi operates in all 50 U.S. states and is not considered a legal online sports betting site. Some sportsbooks have become involved in prediction markets. FanDuel, which does not operate in Nevada, recently partnered with CME Group to enter the prediction market side.
BetMGM and Caesars Sportsbook both operate online wagering in the Silver State. Neither has publicly announced intentions to offer event contracts, but many U.S. sportsbooks that offer betting across the country have acknowledged interest in prediction markets.
