Strengthening Standards: Nevada's Approach to Prediction Markets

NGCB Mike Dreitzer Urged to Meet Compliance Standards

Mike Dreitzer spoke on a conference that featured a lot of discussion about prediction market operators like Kashi and others that have proliferated across the country in the past year and bypassed state regulations, while battling states and tribes in court.

“As an industry, we have to stand for things,” Dreitzer said. “We have to have standards. That’s not regulatory capture and overregulation. When this wholesale creation comes about, where all of a sudden we have an end run that allows for sports betting in 50 states, we have to stand up to it. We have to look it in the eye and say this is sports betting. It’s wrong for you to do that.”

Dreitzer argued that state regulators appreciate new prediction technology and are consumer friendly, but it has to go through state regulatory processes. Prediction markets have bypassed that oversight in Nevada, where the state has obtained cease-and-desist orders against operators who claim they derive their authority under the Commodity Exchange Act and regulatory oversight of the Commodity Futures Trading Commission.

“The standards we have are there for a reason,” Dreitzer said. “They’re not consumer unfriendly, but they’re there to protect people. Nevada just celebrated its 70th anniversary (with the Gaming Control Board). Regulation is difficult, nuanced, and complex, and you can be consumer friendly, but also pro consumer protection.”

Raising his voice, Dreitzer said, “Now is the time to be heard on this issue and stand up and say no. It needs to be done the right way. We want prediction products in Nevada, but do it the the way everybody else does, so when somebody wants to make a sports bet, they can do it with integrity and know there won’t be insider betting, and they can’t do it if they’re 14. They have to know the customer make sure the (anti-money-laundering) protections are in place. Believe me, we have plenty to do without worrying about (this), but if we don’t stand up now, what’s going to happen when this thing keeps going?”

Protecting the Public and Operators Is Essential

Christopher Hebert, chair of the Louisiana Gaming Control Board who appeared with Dreitzer in a one-on-one discussion, said he “wholeheartedly agrees” with his Nevada colleague: It’s about protecting the public and operators who do everything regulators ask: making sure from a compliance perspective that everything is air tight, casinos aren’t vulnerable to cyberattacks, and they aren’t allowing underage gamblers and those with gambling problems.

“We have to protect them,” Hebert said. “We’re the ones to protect those individuals. It’s a fundamental fairness issue, and I wholeheartedly believe that you are correct (Mike). We’re at a crossroads and the time to stand up is now.”