Casino CEOs, Nevada Say Prediction Markets Are Sportsbooks

Casino executives this week rejected the argument that prediction markets are not sportsbooks, siding with Nevada regulators. The executives spoke Tuesday at the Global Gaming Expo (G2E) in Las Vegas. MGM Resorts and Caesars Entertainment CEOs said prediction market platforms need state gaming licenses. Their comments followed an Aug. 28 federal appeals court ruling in Nevada's favor.

Prediction market operators maintain that their event contracts are federally regulated financial products. That position has the backing of the Commodity Futures Trading Commission (CFTC). The dispute has also split federal appeals courts.

Casino CEOs at G2E Say Prediction Markets Need Gaming Licenses

American Gaming Association (AGA) CEO Bill Miller opened the G2E main stage with a warning. "At the AGA, we are operating on war-time footing," Miller said.

A CEO panel moderated by CNBC's Contessa Brewer followed, with Wynn Resorts CEO Craig Billings among the speakers. "(Prediction markets) are hurting the industry, full stop," MGM Resorts CEO Bill Hornbuckle told the audience. He and Caesars Entertainment CEO Tom Reeg said the platforms should operate only in states where they hold gaming licenses.

According to Hornbuckle, Nevada regulators warned MGM that entering the prediction market business could affect its license.

A Nevada Gaming Control Board industry notice states that licensees offering event contracts may face disciplinary action.

Nevada Wins Ninth Circuit Ruling, Seeks Daily Fine From Kalshi

The U.S. Court of Appeals for the Ninth Circuit ruled 3-0 on Aug. 28 that federal law does not preempt Nevada's gaming laws. At issue were sports-event contracts offered by Kalshi, Crypto.com, and Robinhood. The Nevada Gaming Control Board treats such contracts as wagering that requires a state license.

"This is sports betting and needs to be properly regulated by the state," Board Chairman Mike Dreitzer said. Nevada Gov. Joe Lombardo said sports-event contracts "constitute gambling" under state law. Since the ruling, the board has told a state court that Kalshi failed to properly geofence restricted contracts. It is asking for a $120,000 daily penalty. Kalshi counters that investigators circumvented its restrictions and says it complied with the geofencing requirements.

CFTC Backs Prediction Markets Amid Court Split and Bills in Congress

Prediction market operators argue their event contracts are federally regulated derivatives, not sportsbook wagers, and the CFTC agrees. "The CFTC will continue to safeguard its exclusive regulatory authority over these markets," Chairman Michael Selig said in April.

Selig's agency has sued Arizona, Connecticut, Illinois, New York, and Wisconsin over their actions against CFTC-registered exchanges.

The Ninth Circuit ruling conflicts with an April Third Circuit decision that sided 2-1 with Kalshi, finding that federal law likely preempts New Jersey's gambling laws. Kalshi has said it will appeal the Nevada decision. Congress is also weighing bipartisan bills that would bar certain sports and casino-style event contracts. Both the House and Senate versions remain in committee.