The battle over sports prediction markets extends far beyond sports betting, a top gaming regulator warned last week, arguing that federally regulated event contracts could ultimately open the door to nationwide online casino gaming and slot machine-style products outside traditional state gaming oversight.
- Nevada Gaming Control Board chairman Mike Dreitzer warned prediction markets could expand beyond sports contracts into nationwide online casino-style products and slot machine-like gaming.
- Nevada argues prediction markets raise broader states’ rights concerns by potentially shifting gaming oversight from state regulators to federal commodities regulators.
- Dreitzer said Nevada supports compliant innovation but believes prediction products should operate under existing gaming frameworks with licensing, consumer protections, and responsible gambling safeguards.
Nevada Gaming Control Board chairman Mike Dreitzer said last week that the rapid growth of prediction markets’ sports event contracts is the opening chapter of a broader effort that, if left unchecked, could fundamentally reshape the relationship between federal regulators and state gaming authorities.
"If you don't think the next step is going to be online gaming in all 50 states, you're wrong, because they're coming," Dreitzer said.
Speaking at the National Council of Legislators from Gaming States' Summer Meeting in San Diego, Dreitzer told a conference of state lawmakers and gaming stakeholders that the burgeoning industry is undertaking a “three-act play.”
The first act, he said, is sports event contracts that allow users to trade on the outcomes of sporting events. The second, he argued, would be online casino-style products available nationwide. The third could see those products migrate into physical electronic gaming terminals resembling slot machines.
Potential consequences
The comments illustrate how Nevada – the country's oldest and most influential commercial gaming regulator – views the legal fight over prediction markets as a much broader policy battle than simply determining whether sports event contracts constitute gambling.
Nevada has emerged as one of the leading states challenging prediction market operators in court, arguing that sports event contracts violate state gaming laws and intrude on states' longstanding authority to regulate gambling. Dreitzer said the state has worked closely with the Nevada Attorney General's Office, outside counsel, and the Nevada Resort Association while coordinating with regulators and lawmakers nationwide.
The chairman reiterated that prediction market companies’ ambitions extend well beyond sports betting.
He told conference attendees he has seen what claimed to be an online slot product powered by prediction contracts, not standard random number generators. These products already exist now, Dreitzer said, and are no longer a hypothetical future.
"They don't get to the valuations that they have in sports betting," the chairman said. "They've got to do more than that."
Among Dreitzer's biggest concerns is that prediction contracts could eventually become the underlying mechanism powering physical electronic gaming devices that look and function much like slot machines. Drawing comparisons to Historic Horse Racing terminals and Class II tribal bingo machines, he said gaming manufacturers have repeatedly demonstrated an ability to convert one form of regulated wagering into electronic products that are largely indistinguishable from traditional slot machines.
"I can tell you that the people in this segment are very great at ingenuity," Dreitzer said. "If there's a proper loophole, they're going to find it."
He envisioned prediction outcomes eventually being incorporated into gaming terminals that could proliferate well beyond traditional casinos. For states without commercial casinos, Dreitzer suggested the consequences could be especially significant, warning of "prediction lounges" operating outside existing gaming frameworks "on every street corner."
"Think about a ‘prediction lounge’ right next to a church," he said. "That's a real possibility here."
Regulatory significance
Despite his warnings, Dreitzer emphasized that Nevada is not opposed to innovation or prediction products themselves. He said the state is reviewing at least one prediction-style product that appears to comply with Nevada gaming regulations, arguing that innovation should occur within existing licensing and consumer protection frameworks rather than outside them.
His broader concern, he said, is preserving decades of state gaming regulation built around licensing, integrity monitoring, geolocation, know-your-customer requirements, and responsible gambling protections.
"The reason this works is because there's a bedrock of regulation," Dreitzer said.
Nevada's views carry considerable weight because the state has long served as the national standard-bearer for commercial gaming regulation. As lawsuits over sports event contracts proceed, gaming regulators and lawmakers across the country have increasingly looked to Nevada for leadership.
New Jersey, Maryland, Ohio, and Nevada are among the states that have taken legal action against sports event contracts, while Minnesota lawmakers recently approved legislation targeting certain prediction market activity before federal litigation quickly followed. Tribal governments, including those in Oklahoma and California, have likewise argued that sports event contracts threaten the exclusivity granted under tribal-state gaming compacts.
Supporters of prediction markets counter that the contracts are federally regulated financial instruments overseen by the Commodity Futures Trading Commission rather than state-regulated gambling products. They argue event contracts promote price discovery and risk management, and several companies have continued expanding sports offerings while defending their legal authority in court.
Leading operators have also maintained they have no intention to offer event contracts on pure games of chance such as slots or roulette. Proposed rules introduced by federal regulators would also recommend against contracts based on “random chance.”
With federal lawsuits continuing and the boundaries between commodities regulation and state gaming law still unsettled, Dreitzer argued the stakes extend well beyond sports betting. From Nevada's perspective, the outcome could determine whether the future expansion of online casino gaming and even slot machine-style products remains subject to state licensing or instead shifts toward a federally regulated model that many gaming regulators view as incompatible with decades of established state-level oversight.
