Prediction Market Pursuit Forces FanDuel and DraftKings Out of Nevada

Nevada Regulators Define Event Contracts as Wagering

The core issue centers on how Nevada law classifies event contracts based on sport outcomes. NGCB Chairman Mike Dreitzer stated that the Board became aware Flutter Entertainment/FanDuel and DraftKings intended to engage in what the state views as unlawful activities related to sports event contracts.

The NGCB holds that offering contracts on sporting events constitutes a wagering activity under Nevada Revised Statutes (NRS) 463.0193 and 463.01962.

This definition applies even if the contracts are traded on an exchange regulated by the federal Commodity Futures Trading Commission (CFTC).

The NGCB warned that such conduct is incompatible with participation in Nevada’s licensed gaming industry. The Board’s jurisdiction covers contracts based on events like the Super Bowl, the World Series of Poker, and political elections. These offerings require a non-restricted gaming license with specific sports pool approval in Nevada.

Interstate Enforcement and License Risk

Nevada’s control board has taken a firm stance against operators involved with prediction markets, even outside of its borders. The NGCB warned licensed operators that engaging in sports event contracts could compromise their status in the state. The warning extended beyond state lines.

Dreitzer confirmed that a Nevada licensee could face disciplinary action under the Gaming Control Act even if they do not offer sports event contracts inside Nevada.

Penalties may apply if a licensee offers these contracts in another state without complying with that state’s rules or partners with an entity that does so. Nevada is protecting its regulatory interests by enforcing compliance across all jurisdictions where its licensees operate.

Companies Prioritize New Market Strategy

The operators’ decision confirms their commitment to a prediction market strategy over maintaining a Nevada gaming license. Flutter CEO Peter Jackson said that the company made the difficult choice to surrender its license, noting that Nevada is protecting its interests while Flutter protects its own.

FanDuel announced plans to launch FanDuel Predicts in December. This application will offer contracts on events in baseball, basketball, football, and hockey. The service aims to target states that have not yet legalized online sports betting. DraftKings also plans to launch its own platform, DraftKings Predictions, in the coming months.

Both companies defend their actions by asserting that prediction markets fall under federal regulation by the CFTC. The products will extend beyond sports to include financial benchmarks like the S&P 500 and Nasdaq-100, oil and gas prices, gold, cryptocurrencies, and key economic indicators like GDP and CPI.

For instance, the CME Group, a partner for FanDuel Predicts, noted that the new event contracts will dramatically expand their distribution to FanDuel’s millions of registered users.

Regulatory Conflict Forces a Split

The final actions were a direct result of the regulatory conflict. FanDuel, which had been licensed in Nevada as a partner for Boyd Gaming, acknowledged that its approach to prediction markets outside of regulated states was in direct opposition to Nevada’s priorities. The company’s spokesperson, Alex Pitcocchelli, affirmed the decision was a voluntary surrender.

Similarly, DraftKings Chief Compliance Officer Jen Aguiar stated the company withdrew its inactive application as part of an ongoing commitment to regulatory compliance. DraftKings maintains a large presence in Southern Nevada, with an office of over 1,000 employees focused on customer support and odds creation, despite the exit from sports betting ambitions in the state.