FanDuel, which along with casino operators has been warned by Nevada gaming regulators to abstain from prediction markets or risk their standing in the state, has surrendered its registration and all of its licensing in the state. This happened after after FanDuel’s parent company Flutter Entertainment on Wednesday announced the launch its own FanDuel-branded sports betting prediction market app.
The online gaming company has partnered with CME Group, the world’s leading derivatives marketplace, to launch FanDuel Predicts that will expand access to financial markets in the United States in December.
Subject to regulatory filings, the app will provide access to sports event contracts in baseball, basketball, football, and hockey. It will also offer event contracts on benchmarks, such as the S&P 500 and Nasdaq 100, prices of oil and gas, gold, cryptocurrencies, and such key economic indicators as GDP and CPI.
In states where online sports betting is not yet legal, customers who are not on tribal lands will be able to trade event contracts on the outcome of sporting events, the company announced. As new states legalize online sports betting, FanDuel will cease offering sports event contracts in those states.
“Our new event contracts on benchmarks, economic indicators, and now sports will appeal to a new generation of potential participants who are not active in these markets today,” said CME Group Chairman and CEO Terry Duffy. “This launch will dramatically expand our distribution and reach, connecting directly with FanDuel’s millions of registered U.S. users.”
The Nevada Gaming Control Board, in a note to licensees that serves as a repeated warning to them, said it has granted administrative approval of requests to withdraw all pending applications submitted by DraftKings related to its interests in sports wagering in Nevada.
FanDuel has a license as a provider of information services and has worked with Boyd Gaming at its Fremont Hotel & Casino in downtown Las Vegas. DraftKings has an office in Las Vegas, but doesn’t operate in the state in any fashion.
“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,” said Board Chair Mike Dreitzer in making the announcement. “This conduct is incompatible with their ability to participate in Nevada’s gaming industry.”
FanDuel, in hearings before the Board this summer, was non-committable on whether it plans to enter the sports betting prediction markets with CME.
The Board considers offering sports event contracts to constitute wagering activity under state law, even though operators like Kalshi and others claim they’re regulated under the federal Commodity Futures Trading Commission.
“Examples of event contracts that the Board specifically considers to be wagering subject to its jurisdiction include event contracts based on the outcome, in whole or in part, of any sporting event, or any other event, such as the Super Bowl, the World Series of Poker, the Oscars, esports, and political elections,” Dreitzer said. “Offerings for these events may be conducted in Nevada only if the offering entity possesses a non-restricted gaming license with sports pool approval in Nevada and meets the other requirements for sports wagering including, without limitation, wagering accounts and sports book systems.”
The Board has repeatedly sent a message to operators to avoid prediction markets and warning those operating in the state that they will be targeted in the courts.
Dreitzer said if a Nevada licensee chooses to offer sports event contracts in Nevada or partners 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 under state law.
“Moreover, even if a licensee does not offer sports event contracts or wagers in Nevada, if the licensee offers sports event contracts in another state without complying with the other state’s restrictions or licensing regime, partners with another entity that offers sports event contracts in another state without complying with the other state’s restrictions or licensing regime, or acts in violation of a compacted tribal right, the licensee may be subject to discipline under the Gaming Control Act,” Dreitzer said. “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, integrity, and associations of the licensee.”
The Board may take administrative action or enforcement action against any licensee that pursues illegal sports betting in this manner, Dreitzer said. The Board will consider any such conduct when evaluating suitability for new applications filed pursuant to the Gaming Control Act, he added.
In a statement, FanDuel told CDC Gaming, “FanDuel has built our business on operating within clear regulatory frameworks and maintaining strong partnerships with state gaming regulators across the 24+ jurisdictions where we hold licenses.
“While we are enthusiastic about expanding FanDuel’s presence in Nevada, our views of the current opportunity for prediction markets outside of regulated states are unfortunately in direct opposition to Nevada’s priorities for its licensed operators. As a result, 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.
“Our commitment to operating with integrity and in partnership with state regulators remains unchanged and appreciate the time and attention regulators have dedicated to our situation.”
