The Nevada Gaming Control Board (NGCB) recently issued a formal notice to all gaming licensees, stating unequivocally that “sports event contracts”—which encompass prediction-market style bets on sports, esports, award shows, or elections—are classified as wagering under Nevada law. This classification subjects these activities to the Board’s oversight unless they are conducted within a fully licensed gaming framework.
According to Nevada Revised Statutes NRS 463.0193 and 463.01962, offerings deemed as “sports event contracts” or similar “other event contracts” clearly fall under the definition of wagering. This ruling holds true whether these contracts are listed on an exchange regulated by the Commodity Futures Trading Commission (CFTC) or made available through other venues. The NGCB stressed that any contract related to the outcome—or partial outcome—of sporting events, the World Series of Poker, the Oscars, esports, or political elections is under its jurisdiction.
For operators to offer these contracts within Nevada, they must possess a non-restricted gaming license with explicit sports pool approval and comply with all statutory and regulatory demands for sports wagering. The Board cautioned that licensees who collaborate with unlicensed providers, whether within Nevada or beyond state lines, could face serious ramifications, including questions regarding their “good character and integrity” and potential disciplinary measures. Moreover, violations occurring in other jurisdictions or tribal gaming compacts could influence the evaluation of a licensee’s suitability.
The NGCB further warned that new license applications will be meticulously scrutinized, especially if they involve such activities, and the suitability of existing licensees could be reassessed if they engage with unlicensed event contract operators. Essentially, the Board is treating prediction-market contracts on par with conventional wagering unless they are meticulously licensed and regulated.
This notice emerges amid escalating tensions between state regulators, tribal gaming entities, and operators of prediction markets. Kalshi, a well-known prediction-market platform, had previously received a cease-and-desist order from the NGCB. However, it was temporarily allowed to continue operations in Nevada while the legal proceedings are ongoing. In a related development, Robinhood Derivatives LLC has initiated a lawsuit to secure the right to offer sports event contracts without them being categorized as gambling under state law.
Internally, the NGCB has expressed concerns over FanDuel’s collaboration with CME Group, which might facilitate event contracts through a futures-exchange approach. Additionally, Crypto.com has encountered legal hurdles in Nevada for similar offerings, with courts scrutinizing claims that such contracts do not constitute gambling. The regulatory environment has been further complicated by the CFTC’s recent decision to withdraw its appeal in a case that permitted Kalshi to list political event contracts, amplifying calls for a federal regulatory solution.
Implications for operators are significant. Current and prospective market participants must meticulously assess whether their business operations are recognized as gambling under Nevada law and whether they can satisfy the rigorous requirements for sports wagering licenses. It’s crucial for partners or affiliates working with Nevada licensees to ensure compliance across other jurisdictions, as non-compliance could jeopardize the licensee’s standing.
Tribal gaming interests could find themselves in a strengthened position, given the NGCB’s explicit mention of tribal compact violations as a basis for disciplinary action. Ongoing legal battles are anticipated to focus on constitutional and preemption arguments, with plaintiffs striving to secure protections for prediction markets against state-imposed wagering limits.
Nevada’s guidance underscores the persistent friction between federal and state regulatory frameworks, placing operators in a challenging legal milieu where compliance, licensing, and jurisdictional issues are paramount for successful market participation. As the landscape evolves, stakeholders must remain vigilant and adaptable to navigate the complex interplay of laws and regulations shaping the prediction market industry.
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