- Nevada is warning gaming licensees about sports event contracts
- The NGCB considers such prediction market offerings to constitute sports gambling
Nevada officials are warning its more than 300 licensed casinos and gaming establishments that aligning with a company that’s engaged in prediction markets offering event contracts involving the outcome of sports is a risk to their ongoing suitability to possess a state gaming license.
On Wednesday, the Nevada Gaming Control Board (NGCB) published a notice to licensees informing them that the state gaming regulatory agency considers “sports event contracts” to constitute sports gambling. Entities such as Kalshi, Polymarket, and Robinhood, claiming to operate lawfully under federal regulation via the Commodity Futures Trading Commission (CFTC), should be avoided by all licensees in Nevada.
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.
Kalshi, Polymarket, and Robinhood hold Designated Contract Market (DCM) and Futures Commission Merchant (FCM) permits from the CFTC.
The NGCB governs and enforces the Nevada Gaming Control Act. It reports and makes policy recommendations to the Nevada Gaming Commission.
Ripple Effect?
Along with refraining from partnering with a prediction market engaged in sports event contracts in Nevada, the NGCB told its licensees that if it teams with such an entity in another state where it operates, there could be repercussions.
“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.
Decisions by the NGCB, considered the gold standard of commercial gaming regulation in the US, are often mirrored by other state gaming regulators. Therefore, Nevada’s warning to its gaming licensees could have a snowball effect.
Numerous sports betting companies have mulled investments, partnerships, or acquisitions in the emerging prediction market space.
In August, FanDuel announced a partnership with CME Group to conduct yes/no event contracts based on economic data and financial happenings. CME, however, doesn’t offer contracts on sports. FanDuel also doesn’t operate in Nevada.
Sports Contracts Constitute Illegal Betting
In summarizing its notice, Nevada gaming officials said prediction markets offering sports contracts are essentially engaged in illegal gambling, at least under state law. Engaging in, or partnering with, illegal gambling is, of course, a major violation of the state’s suitability consideration of a licensee or licensing applicant.
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.”
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