FanDuel and DraftKings are exiting Nevada's regulated sportsbook market as they shift their focus toward launching prediction markets, directly challenging state gaming regulators.
On Thursday, the Nevada Gaming Control Board announced that FanDuel had relinquished its Order of Registration and associated licenses for sportsbooks in the state. Concurrently, the board approved DraftKings' withdrawal of its pending applications for sports betting licenses. FanDuel currently operates one in-person sportsbook in Nevada.
An NGCB release stated, "It has been made clear to the board that Flutter Entertainment/FanDuel and DraftKings intend to engage in unlawful activities related to sports event contracts. The conduct is incompatible with their ability to participate in Nevada’s gaming industry." The board emphasized its commitment to maintaining a thriving gaming environment and protecting Nevada citizens.
The state has consistently opposed the rapid expansion of prediction markets, particularly those related to sports event contracts. The NGCB previously cautioned licensees about potential disciplinary actions for offering sports event contracts, asserting that such offerings are unapproved gambling activities.
This warning followed a cease-and-desist letter sent to the prediction market operator Kalshi in March. Kalshi subsequently sued and obtained a preliminary injunction in April. Additionally, the NGCB issued notices to Crypto.com and Robinhood, both of which filed lawsuits in response. However, unlike Kalshi, a judge denied Crypto.com’s request for an injunction in October.
Advocates for prediction market operators contend that they can legally operate nationwide under the authority of the Commodity Futures Trading Commission (CFTC).
During Flutter’s third quarter earnings call on Wednesday, CEO Peter Jackson announced that FanDuel Predicts is set to launch in December. This summer, FanDuel established a partnership with CME Group for a prediction markets product.
FanDuel Predicts aims to provide sports event contracts in states where legal sports betting is not yet available, such as Texas and California.
Jackson stated, "While we’re sad to have to surrender the license, that’s what we’ve done. Nevada was protecting their interest. We need to protect our interest. And FanDuel Predicts will allow us to go after the half of the market that we haven’t previously been able to go after."
Last week, DraftKings CEO Jason Robins indicated that DraftKings would launch its prediction markets offering, including sports event contracts, in the near future, calling it a significant opportunity for the company.
In September, Underdog announced plans to integrate sports prediction markets into its app, in partnership with Crypto.com, which is registered with the CFTC.
Traditional gambling giants like Caesars and MGM have yet to enter the prediction markets arena.
The ongoing conflict between states and prediction market operators enlarges, with other states such as Maryland, Massachusetts, New Jersey, New York, and Ohio filing lawsuits against prediction market firms. Additionally, several tribes have alleged that these markets violate the Indian Gaming Regulatory Act by operating on tribal land.
Other regulators like those in Ohio, Arizona, Michigan, and Illinois have issued warnings similar to Nevada’s to sports betting license holders.
As prediction markets gain traction, the National Hockey League has partnered with Kalshi and Polymarket, while Google Finance has begun to display prediction market data from these entities. Recently, Yahoo also formed a partnership with Polymarket for similar purposes.
