You might call this the "shot across the bow" of the prediction market industry in Nevada.
The Nevada Gaming Control Board (NGCB) is sending a clear message to licensed gambling operations, like the well-known Flutter Entertainment, about the importance of complying with Nevada’s strict gambling laws.
The NGCB issued a notice titled “Sports Event Contracts Are Wagers,” underscoring that such contracts are deemed wagering under state law — “whether the contract is listed on an exchange regulated by the Commodity Futures Trading Commission (CFTC) or elsewhere.”
NRS 463.0193 defines a sports pool as “the business of accepting wagers on sporting events or other events by any system or method of wagering”.
These are agreements where the payoff depends on the outcome of a sporting event, and they fall under Nevada’s gaming laws.
So, if you're offering contracts based on these outcomes, you're considered to be engaging in gambling. The state requires that such activities be conducted through its licensed sportsbooks to ensure all operations remain above board.
The Michigan Gaming Control Board (MGCB) launched a similar investigation in April into unlicensed sports prediction markets operating within The Wolverine State.
The news also comes on the heels of the announcement detailing how the FanDuel and CME Group prediction market will work.
Prediction Markets Targeted in Flutter Entertainment Warning from NGCB
The Board has advised license holders that even if certain activity contracts are approved at the federal level, they are still considered gambling under Nevada law. This means you can't participate in these activities without getting the right approval from the state.
It also pointed out that betting on sports results, esports, major events like the World Series of Poker, the Oscars, or political elections counts as gambling in Nevada. Therefore, state approval is required to do so legally.
Companies like Kalshi, Polymarket, and Robinhood have permits from the federal Commodity Futures Trading Commission (CFTC) and deal with sports betting markets. However, the NGCB warned that Nevada license holders should not work with these companies unless they have the necessary Nevada gaming license.
If a Nevada licensee decides to work with these companies or offers such betting contracts without the proper license, they could face serious consequences.
The NGCB has stated that not following these rules could lead to fines, license suspensions, or even losing the license altogether. This warning applies not just in Nevada but also in any other area where a licensee operates, emphasizing the importance to follow all relevant local or regional laws, and/or tribal rules.
What penalties can the Nevada Gaming Control Board Impose?
Nevada takes its gaming laws seriously and has several ways to punish those who break the rules:
- License Issues: If a gaming license holder breaks the law or doesn't meet the required standards, the Nevada Gaming Commission (NGC) can suspend, limit, or completely take away their license.
- Fines: The NGC can fine people or companies for breaking gaming rules. The first mistake can cost between $25,000 and $500,000. If it happens again, fines can go up to $1,000,000 each time.
- Criminal Charges: Intentionally breaking gaming laws can lead to criminal charges, which might mean going to prison for 1 to 10 years, a fine up to $50,000, or both. This also usually results in losing the gaming license immediately.
- Other Penalties: The gaming board can shut down a business if they don’t renew licenses or follow rules. People found unsuitable may be banned from working in or earning money from gaming.
- Suitability Concerns: Breaking these laws can also lead to being considered unsuitable, which means you can’t get or keep a gaming license in Nevada. This is because suitability requires having good character, honesty, and integrity.
Nevada enforces these rules strictly to keep its gaming industry honest and reputable, using a mix of severe fines, possible jail time, and license-related actions.
What's Next in the Sports Prediction Market Battle?
This strong stance by the NGCB highlights Nevada's commitment to upholding its gaming laws.
For operators like Flutter Entertainment, it serves as a stern reminder of the risks associated with participating in non-compliant prediction markets. The landscape is tightening, and those in the industry must stay alert and adhere strictly to the rules to retain their licenses and reputation.
The NGCB's latest warning appears to be more than just a nudge; it looks like a wake-up call for all licensees to review their partnerships and ensure they meet Nevada’s stringent gaming requirements.
