US Online Sports Betting Powers DraftKings & FanDuel Leaving Las Vegas

If someone had told you a decade ago that a betting company decided that the best path to success would be to stay far away from Nevada, you probably would’ve advised them to seek medical help.

Showing how times have changed in the industry, that’s exactly what the two largest operators in the US online sports betting market are doing. Both FanDuel and DraftKings are choosing not to pursue getting a Nevada gaming licence.

The two online sports betting superpowers are in the process of moving into the prediction market side of the business. Prediction markets are considered to be illegal operations by Nevada’s gambling regulator, the Nevada Gaming Control Board (NGCB).

Last month, the NGCB sent a letter to all licensed sports betting operators in the state that they would risk losing their license if they entered the prediction market business.

“Engaging in unlawful sports wagering in another state or entering into a business relationship with another entity offering unlawful sports wagering in another state may call into question the good character and integrity of the licensee,” the letter noted.

FanDuel pulls its Nevada licence application

Flutter Entertainment, owner of FanDuel, opted to heed this warning. Late last week, the company withdrew its application for a Nevada gaming licence.

“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,” NGCB Chairman Mike Dreitzer stated in a notice to the industry released by the state regulator.

In August, FanDuel formed a partnership with the CME Group to launch prediction market products. The FanDuel Predicts app is expected to launch later this year.

Last month, DraftKings acquired the CFTC-regulated Railbird Exchange to create its prediction market site. It will be called DraftKings Predict.

“This conduct is incompatible with their ability to participate in Nevada's gaming industry,” Dreitzer said.

Nevada regulators are dead set against prediction markets

Unlike sports betting sites, which operate as the house and take bets, prediction markets offer yes-or-no propositions called sports event contracts. Prediction market sites are federally regulated Commodity Futures Trading Commission and can be accessed in states that don’t offer legal sports betting.

Online sportsbooks are regulated by state gaming commissions like the NGCB.

The NGCB is adamant that, despite claims to the contrary by prediction market operators, the product they are providing is a form of gambling and must be licensed by state regulators.

“The board considers offering sports event contracts to constitute wagering activity under NRS 463.0193 and 463.01962,” Dreitzer said. “Wagering occurs whether the contract is listed on an exchange regulated by the Commodity Futures Trading Commission or elsewhere.”

In March, the state of Nevada issued a cease-and-desist order to prominent prediction market operator Kalshi. Lawyers representing Kalshi sued, arguing that only the CFTC could regulate prediction markets.

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