FanDuel and DraftKings are walking away from Nevada’s regulated sportsbook market as both operators pivot toward launching prediction markets, a move that pits them directly against state gaming regulators.
The Nevada Gaming Control Board Thursday announced FanDuel surrendered its Order of Registration and related licences and approvals for sportsbooks in the state. Meanwhile, the board approved DraftKings’ request to withdraw its pending sports betting licence applications. FanDuel has one in-person sportsbook in Nevada.
“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,” an NGCB release reads. “The conduct is incompatible with their ability to participate in Nevada’s gaming industry.
“The board takes seriously its obligations to operate a thriving gaming industry and to protect Nevada citizens.”
Nevada has been steadfast in its opposition to the unchecked nationwide growth of the prediction market industry, particularly sports event contracts. The NGCB previously warned licensees about potential disciplinary measures related to offering sports event contracts. The regulator said that offering prediction markets constitutes unsanctioned gambling activity.
That warning came after the NGCB sent a cease-and-desist letter to prediction market operator Kalshi in March. Kalshi sued and won a preliminary injunction in April. The NGCB also sent letters to Crypto.com and Robinhood, which both also sued in response. Unlike Kalshi, a judge denied Crypto.com’s injunction request in October.
Prediction market operators argue they can operate nationally under the federal purview of the Commodity Futures Trading Commission (CFTC).
FanDuel, DraftKings prep sports event trading
During Flutter’s third quarter earnings call Wednesday, CEO Peter Jackson said FanDuel Predicts will launch sometime in December. This summer, FanDuel announced a partnership with CME Group for a prediction markets product.
FanDuel Predicts will offer sports event contracts in states without legal sports betting, such as Texas and California.
“Whilst we’re sad to have to surrender the license, that’s what we’ve done,” Jackson said during Wednesday’s call. “Nevada were 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 said DraftKings will launch its prediction markets offering, including sports event contracts, in the coming months. Robins said it represents a significant opportunity for the company.
Underdog announced in September it would integrate sports prediction markets into its app. The operator is partnered with Cypto.com, which is registered with the CFTC.
Legacy land-based gambling operators, like Caesars and MGM, have not jumped into the prediction markets industry.
Growing battle between states, prediction markets
This summer, an outgoing CFTC commissioner warned of the unchecked prediction market growth.
Nevada is just one front in the battle between sports betting regulators and prediction markets. Other regulators and attorneys general have entered lawsuits against prediction market operators, including Maryland, Massachusetts, New Jersey, New York and Ohio. Likewise, several tribes have sued prediction markets contending they are violating the Indian Gaming Regulatory Act by offering their products on tribal land.
Other state regulators have also sent warnings to sports betting licence holders similar to Nevada’s warning, with Ohio, Arizona, Michigan and Illinois having done so.
All the state actions come as prediction markets continue a push into the mainstream. The National Hockey League recently partnered with Kalshi and Polymarket. Google Finance also now includes prediction market data from the companies. This week, Yahoo also partnered with Polymarket for similar uses.
FanDuel surrenders its licences and DraftKings withdraws its sportsbook applications, signalling the two betting giants’ full retreat from Nevada.