FanDuel and DraftKings Step Away from Nevada as Prediction Markets Trigger Regulatory Standoff

A Turning Point for the U.S. Sports Betting Landscape

FanDuel and DraftKings have taken a decisive step that reshapes the broader U.S. wagering ecosystem by formally removing themselves from Nevada’s sports betting framework. The move marks a notable turning point for two of the country’s biggest operators, who now appear fully committed to pursuing prediction markets, an emerging sector that challenges long-established regulatory boundaries.

Major Gambling Operators Make a Clean Break from Nevada

As two of the biggest forces in U.S. betting, FanDuel and DraftKings have long shaped both online and retail wagering across the country, offering online sportsbooks and casino games in states where it’s permitted. Their decision to step away from Nevada highlights a widening divide between traditional state-regulated betting markets and the rapidly evolving online ecosystem. It also underscores how national operators, which normally play a central role in the growth of online casinos and sports betting platforms, are now shifting strategic focus toward prediction markets instead of expanding within Nevada’s long-established regulatory model.

Both companies have rapidly expanded across most legal betting states, but Nevada has remained one of the few major markets where digital access never gained meaningful traction. With prediction markets gaining momentum nationwide, FanDuel and DraftKings have opted to prioritise this new area rather than maintain a small or symbolic regulatory presence in the Silver State.

FanDuel and DraftKings Finalise Their Nevada Withdrawal

The Nevada Gaming Control Board confirmed that FanDuel surrendered its licences and DraftKings withdrew all pending sportsbook applications. Regulators pointed to both companies’ plans to offer sports event contracts, which they consider to be wagering activity that must fall under state authority rather than federal oversight.

FanDuel’s exit closes the door on its limited retail presence at a single Las Vegas sportsbook. DraftKings, which never operated a Nevada sportsbook due to the state’s in-person account registration requirement, departs without disrupting any local offerings. While the financial impact on Nevada is minimal, the regulatory implications are significant. Two industry leaders abandoning the state underscores how strongly prediction markets have become a strategic priority.

Nevada Draws a Firm Line on Sports Event Contracts

Nevada has taken one of the most restrictive positions in the country regarding prediction markets. State regulators classify sports event contracts as gambling, regardless of whether companies argue that they fall under the federal Commodity Futures Trading Commission (CFTC) 's oversight. Under Nevada law, any offering tied to the outcome of a sporting event is considered wagering and must be licensed accordingly.

In recent months, the state has issued warnings to license holders, emphasising that involvement in prediction markets, even in jurisdictions outside Nevada, could jeopardise their suitability. The board has also been active in issuing compliance notices and cease-and-desist letters, including actions involving Kalshi, Crypto.com, and Robinhood.

Regulators have made it clear that operators cannot participate in prediction markets while maintaining a Nevada licence. For FanDuel and DraftKings, the decision to walk away reflects the challenges of navigating competing state and federal interpretations effectively.

Operators Push Forward With Prediction Market Expansion

Despite Nevada’s stance, both companies are moving ahead aggressively. FanDuel’s upcoming platform, FanDuel Predicts, is set to launch in partnership with CME Group and will be available in states without legal sports betting, including major markets such as Texas and California. The product aims to appeal to users who cannot legally access a sportsbook but can participate in federally regulated event contracts.

DraftKings is following a comparable model and has confirmed its own prediction market offering will roll out in the months ahead. Both companies say they plan to geofence tribal lands as well as states where they already hold sportsbook licences. However, Nevada’s response suggests that this approach may not be sufficient to satisfy regulators.

The strategic rationale is clear: prediction markets represent a large, mostly untapped national audience, one that exists outside traditional sports betting regulation.

Growing Legal Battles Across Multiple States

Prediction markets have drawn increasing legal scrutiny throughout 2025. Court rulings have produced inconsistent outcomes, reflecting the ongoing uncertainty surrounding the issue. A Nevada judge previously allowed Kalshi to operate, yet later blocked Crypto.com from offering sports event contracts. Other states, including Maryland and Massachusetts, have filed challenges that question whether these platforms fall under state gambling laws or federal financial regulations.

Tribal authorities have also raised concerns, arguing that prediction markets bypass tribal compacts and undermine jurisdiction over mobile-based gambling activity. Meanwhile, the industry continues to gain mainstream visibility. Google Finance, Yahoo, and various professional sports leagues have incorporated prediction market data, reinforcing the sector’s push into public view.

These developments create increasing pressure for regulators to decide whether sports event contracts should be treated as financial instruments or gambling products.

A Signal to Other States and What Comes Next

Nevada’s enforcement action may be symbolic in terms of revenue, but it carries considerable influence. The state remains the benchmark for regulatory standards in U.S. wagering, and its position creates a framework that other jurisdictions could adopt. If more states follow Nevada’s approach, operators may be forced to choose between accessing federal prediction market opportunities and maintaining state sportsbook licenses.

For now, prediction markets occupy a grey area, overseen federally yet operating in ways that resemble traditional betting. As regulators, courts, and lawmakers grapple with these blurred lines, the future of the prediction market sector remains uncertain. What is clear is that FanDuel and DraftKings have made their choice, and it sets the tone for a new phase in the U.S. wagering industry.