DraftKings and FanDuel have responded to the Nevada Gaming Control Board’s (NGCB) stance on prediction markets by voluntarily pulling their license applications in the state.
The NGCB announced that it “accepted the surrender” of FanDuel owner Flutter Entertainment’s registration and related licenses and approvals for FanDuel Sportsbook, as well as its license as an “information service” supplier. Meanwhile, DraftKings withdrew all pending applications related to sports betting in Nevada.
Both companies made the moves as they plan to start offering sports contracts on their respective upcoming prediction market platforms.
“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. This conduct is incompatible with their ability to participate in Nevada’s gaming industry,” wrote NGCB Chairman Mike Dreitzer.
FanDuel’s operations in Nevada
Flutter’s FanDuel brand does not offer online sports betting in Nevada and only accepts wagers at a brick-and-mortar sportsbook at the Fremont Hotel in Las Vegas. It works with Boyd Gaming as an information service provider.
Flutter gave up its registration as it plans to launch a prediction market in partnership with CME Group, launching contracts on sports where it does not offer online sports wagering.
Dreitzer warned Nevada licensees in October that facilitating event contracts would put companies in opposition to the NGCB’s stance. “If a Nevada licensee chooses to offer sports event contracts in Nevada or decides to partner with other entities offering sports event contracts in the state, the Board will consider these developments as it evaluates the suitability of the entity to maintain a Nevada gaming license,” he wrote at the time.
“We have had conversations with different stakeholders over time and Nevada was amongst that,” said Flutter CEO Peter Jackson on a company earnings call on Wednesday. “We did have a license in Nevada, but we didn’t have B2C operations there; we were supporting Boyd. It’s sad to have to surrender the license but that’s what we’ve done.
“Nevada [is] protecting their interest, we’re protecting our interest and FanDuel Predicts will allow us to go after the half of the market we hadn’t been able to go after.”
DraftKings withdraws its applications in Nevada
Meanwhile, DraftKings withdrew all pending Nevada applications as it also plans to start offering sports contracts “in the coming months” with the launch of DraftKings Predictions.
“DraftKings holds its gaming licenses in the jurisdictions where we operate in the highest regard,” DraftKings Chief Compliance Officer Jen Aguiar told SBC Americas. “As part of our ongoing commitment to regulatory compliance, we have withdrawn our inactive application in Nevada. Prediction markets are federally regulated by the Commodity Futures Trading Commission (CFTC), and we remain dedicated to working collaboratively with regulators to uphold the highest standards of integrity in our operations.”
DraftKings will offer event contracts after its acquisition of derivatives exchange Railbird Technologies in a deal that could fetch up to $200 million. It plans to leverage deals with ESPN and NBCUniversal to expand the reach of event contracts.
FanDuel and DraftKings’ stance on Nevada and sports contracts in general contrasts with that of Las Vegas-rooted casino giants Caesars and MGM Resorts International, which have not been willing to take firm steps towards offering prediction markets.
Nevada at center of legal disputes
FanDuel and DraftKings are forfeiting their claims in Nevada after Crypto.com pulled its event contracts in the state after a judge denied the platform’s request for a preliminary injunction against the NGCB. Earlier this year, Crypto.com sued the NGCB after receiving a cease-and-desist order for its sports contracts. Crypto.com argued that state gaming regulation should be superseded by the CFTC, which oversees derivative exchanges.
A judge determined that Crypto.com’s sports event contracts don’t qualify as swaps under the Commodity Exchange Act, subjecting the company to Nevada’s gaming regulations. As a result, Crypto.com filed a motion for an injunction to keep its sports event contracts alive in the state. The preliminary injunction was denied, leading to their removal in Nevada. The NGCB also sent a cease and desist order to prediction market Kalshi.
Kalshi is also suing the NGCB after receiving a C&D. Unlike Crypto.com, Kalshi was granted a preliminary injunction in Nevada, allowing it to offer sports event contracts.
