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Nevada Gaming Control Board chairman Mike Dreitzer believes sports event contracts form only one part of a much wider prediction market strategy. He warned that online casino products and physical gaming terminals could follow if courts limit state authority.
Good To Know
- Nevada treats sports, election and entertainment event contracts as wagering that requires a state gaming licence.
- Prediction market operators argue that federal oversight through the CFTC takes priority over state gambling laws.
- Courts across the US have reached different conclusions, leaving a major federal and state jurisdiction dispute unresolved.
Dreitzer Sees A Three Stage Strategy
Dreitzer presented his warning during the National Council of Legislators from Gaming States Summer Meeting in San Diego. Rather than focusing only on current sports markets, he described a “three-act play” that could end with prediction-based machines outside casinos.
Sports event contracts come first. Nationwide online casino-style products could follow. After that, companies could place similar contracts inside electronic terminals that resemble slot machines.
“If you don’t think the next step is going to be online gaming in all 50 states, you’re wrong, because they’re coming,” Dreitzer said.
Dreitzer said he has already seen an online slot-style product that uses prediction contracts instead of a conventional random number generator. In his view, company valuations also create an incentive to enter much larger gambling categories.
“They don’t get to the valuations that they have in sports betting,” the chairman said. “They’ve got to do more than that.”
A prediction contract pays according to whether an event occurs. Operators describe the product as a federally regulated derivative, while state regulators often see the sports versions as wagers that closely resemble sportsbook bets.
Nevada argues that companies must follow state rules covering licensing, age checks, geolocation, integrity controls and responsible gambling. The Nevada Gaming Control Board has already secured court orders that stop Kalshi from offering certain contracts in the state without a gaming licence.
Dreitzer also compared future terminals with Historic Horse Racing machines and Class II tribal bingo products. Manufacturers have repeatedly turned different wagering systems into games that look and play much like slots.
“I can tell you that the people in this segment are very great at ingenuity,” Dreitzer said. “If there’s a proper loophole, they’re going to find it.”
That possibility could affect states with no commercial casinos most heavily. Dreitzer said prediction-based venues could operate outside existing casino structures and spread through ordinary retail areas.
“Think about a ‘prediction lounge’ right next to a church,” he said. “That’s a real possibility here.”
Nevada does not oppose every prediction product. Dreitzer said regulators are reviewing at least one product that may fit state rules. His argument centers on where innovation takes place and which authority supplies consumer safeguards.
“The reason this works is because there’s a bedrock of regulation,” Dreitzer said.
The legal clash now reaches well beyond Nevada. Massachusetts, Michigan and New York courts have allowed state action against sports event contracts, while an Arizona federal judge backed federal preemption in a separate case. Meanwhile, the CFTC has proposed new rules for event contracts involving activities such as gaming and sports.
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