Nevada Regulator Cracks Down on Event Contracts Related to Prediction Markets

In a letter sent Tuesday to licensed sportsbooks, the Nevada Gaming Control Board (NGCB) advised operators to “be mindful of their obligations to maintain suitability and comply with all applicable laws in all jurisdictions where they operate.” The board also noted that any operator choosing to offer sports or other event-based contracts will have their license suitability closely scrutinized.

NGCB Issues New Rules Regarding Offering Prediction Markets Products

The NGCB emphasized that this applies regardless of whether the contracts are listed on an exchange regulated by the Commodity Futures Trading Commission (CFTC), the federal agency responsible for overseeing prediction markets. Licensees offering such contracts, or entering into similar partnerships, in Nevada, other states, or on tribal lands may now be subject to suitability reviews or additional disciplinary actions.

Regulators in Ohio, Michigan, and Arizona have also issued warnings to operators about venturing into the prediction market space. This comes even as executives at major companies like FanDuel’s parent, Flutter, and DraftKings have recently indicated they are exploring potential opportunities in the sector. State gambling authorities argue that prediction market platforms should be regulated at the state level, rather than falling under the jurisdiction of the federal CFTC.

However, prediction markets providers have not stayed idle on this and have taken action, even taking state regulators to court. Recently, for example, Kalshi sued the Ohio Casino Control Commission, claiming the regulator overstepped its authority by restricting Kalshi’s ability to sell “event contracts” connected to sports results. 

What the NGCB Considers a Potential Violation?

According to the release, the Nevada Gaming Control Board considers certain event contracts to fall under its jurisdiction as wagering activities. These include contracts based on the outcome or partial outcome of sporting or athletic events, as well as other specific events such as the World Series of Poker, the Oscars, esports competitions, and political elections.

The board stated that such sports and event-based contract offerings are permitted in Nevada only if the offering entity holds a nonrestricted gaming license with sports pool approval in the state and complies with all applicable sports wagering requirements, including those related to wagering accounts and sportsbook systems.

According to NGCB member George Assad, “A derivative contract or whatever you want to call it is nothing more than a sports wager.” As such, it’s under the jurisdiction of the Nevada Gaming Commission and Nevada Gaming Control Board. Therefore, operators who offer such products against the ruling of the NGCB will fall under disciplinary assessment.