In a major regulatory move, the Nevada Gaming Control Board (NGCB) has effectively halted FanDuel and DraftKings from entering the Nevada sports betting market, following their intentions to focus on prediction markets instead. Both companies are well-known for their dominance in the U.S. online sports betting industry, but the NGCB’s latest decision signals the state’s firm stance against sports event contracts, which are central to their new platforms.

FanDuel, operated by Flutter Entertainment, and DraftKings, the two giants of online sports betting in the U.S., have chosen to pivot towards prediction markets. This transition prompted both companies to request regulatory approval for their new ventures, which involve offering event contracts related to sports outcomes. However, Nevada has made it clear that such activities are considered a form of illegal sports wagering under state law.

The Surrender of FanDuel’s License

In a significant development, FanDuel announced the voluntary surrender of its Nevada license in response to the NGCB’s warning. FanDuel had previously operated in Nevada under a limited role, providing odds and branding for Boyd Gaming’s Fremont Casino sportsbook. Despite having a presence in the state, FanDuel has never directly offered sports betting in Nevada, which has strict in-person registration requirements for mobile accounts.

“The Board considers offering sports event contracts to constitute wagering activity under state law,” said NGCB Chair Mike Dreitzer. “If a Nevada licensee chooses to offer sports event contracts in Nevada or partners with entities offering such contracts, the Board will evaluate these developments when determining the suitability of the entity to maintain a Nevada gaming license.”

In a statement, FanDuel explained its decision to withdraw, citing a conflict between its new prediction markets and Nevada’s regulatory priorities. “We are making the difficult decision to voluntarily surrender our license. We look forward to resuming our Nevada efforts in the future as circumstances allow,” said the company, emphasizing their ongoing commitment to working within regulatory frameworks.

DraftKings, which operates an office in Las Vegas but has not yet launched a sports betting operation in the state, also withdrew its pending applications. While DraftKings has not directly engaged in sports betting in Nevada, it had planned to expand its operations by entering the prediction market space. The company emphasized its dedication to regulatory compliance in a statement reported by CDC Gaming: “DraftKings holds its gaming licenses in the jurisdictions where we operate in the highest regard. As part of our ongoing commitment to regulatory compliance, we have withdrawn our inactive application in Nevada.”

Both companies now find themselves unable to proceed with their plans to offer prediction markets in Nevada, a setback for their aspirations to capitalize on this emerging sector. These prediction markets would have allowed customers in states without legal sports betting to trade contracts on the outcomes of sporting events and other economic indicators, such as stock prices and oil prices.

Nevada’s Stance on Prediction Markets

The NGCB’s position is clear: sports event contracts, which are central to the new platforms being developed by FanDuel and DraftKings, fall under the category of sports wagering. Even though companies like Kalshi, which also offers event contracts, claim they are federally regulated by the Commodity Futures Trading Commission (CFTC), Nevada considers these markets to be subject to state regulations. Dreitzer reiterated that operators offering such contracts must possess the appropriate licenses under Nevada’s sports betting laws.

“The offering of sports event contracts is incompatible with the requirements for operating within Nevada’s gaming framework,” said Dreitzer. The board has repeatedly warned operators to avoid entering the sports prediction market, with a strong message that any violation of these rules will result in enforcement actions.

Despite this setback, both companies are moving forward with their plans to launch prediction markets in other states where online sports betting is not yet legal. FanDuel has announced the launch of its new platform, FanDuel Predicts, scheduled to debut in December. The platform will offer customers the opportunity to trade event contracts on sports events in baseball, basketball, football, and hockey, as well as on broader economic indicators such as the S&P 500 and crude oil prices.

“We’re excited to offer FanDuel Predicts, which will expand access to financial markets and sports event contracts for millions of users,” said Terry Duffy, Chairman and CEO of CME Group, which is partnering with FanDuel for this venture. The platform will include responsible gambling tools, allowing customers to set limits and track their spending, in line with FanDuel’s commitment to consumer protection.

While Nevada’s decision may have cooled the immediate prospects for FanDuel and DraftKings in the state, it has opened up discussions about the future of prediction markets. The NGCB’s action has left both companies recalibrating their strategy for expansion. The companies have expressed their intentions to work with regulators to comply with Nevada’s rules, suggesting they may return to the state in the future under different circumstances.