The Nevada Gaming Commission questioned representatives from Flutter Entertainment, the parent company of FanDuel, about their plans to begin offering prediction markets during a meeting on Oct. 23. The questions came as the commission voted unanimously to approve John Bryant’s role as director and chair of Flutter. Bryant appeared at the meeting alongside Flutter counsel Erica Okerberg.
Amidst questions about Bryant’s professional and personal life, NGC vice chairman Brian Krolicki asked about Flutter’s plans for a new prediction market product. It was announced in August that FanDuel was teaming with the CME Group to launch a new prediction market platform.
Krolicki asked about any arrangements Flutter has made for its forthcoming prediction offerings in relation to the various safety protocols that are required of gambling licensees. Okerberg said the company was not ready to publicly reveal its prediction market plans, including what types of markets will be offered and where, but said consumer protections were a priority.
“One of the reasons that the company chose the CME Group was because the CME Group is a longstanding company that has a track record of compliance and consumer protection,” Okerberg said. “The company, certainly in its existing business, believes that responsible-gaming and all of those measures are very important on the sports betting and iGaming side. It plans to have similar types of protections, including consumer protection, reviewing and understanding customers, and all of those other measures, including geofencing and separating things by states as it moves through this joint venture with the CME Group.”
“You’re in a crucible that’s impossible going forward”
Krolicki was dialing into the meeting remotely from the International Association of Gaming Regulators conference in Toronto, where he said prediction markets were a hot topic in discussions behind the scenes. He said he’d been having conversations about accountability, licensing, problem gaming, and geolocation, things he said prediction market platforms “literally disregard.”
“You’re in a crucible that’s impossible going forward,” Krolicki said. “You all are trying to do it right, you are licensed in the things you do, but … the conflict that is arising between shareholders and regulators is profound. It’s very difficult to hedge for the future versus staying regulated.”
Krolicki added that prediction markets, from a regulatory standpoint in Nevada, are “unlawful.”
Questions follow Nevada licensee warning against prediction markets
After referencing the ongoing court battles Nevada is engaged in with prediction platforms Kalshi, Robinhood and Crytpo.com over their right to offer sports event contracts in the state, Krolicki brought up the letter the Nevada Gaming Control Board sent to all current state licensees last week. The letters warned the license-holders against offering sports markets or “other event contracts.”
Nevada was the fourth state to issue such a warning, following similar directives from Ohio, Arizona, and Michigan that warned of possible punitive action against companies’ licenses to offer other gaming products. The Nevada letter said that if a licensee offers (or partners with a company that offers) prediction markets in Nevada or another state, the board will “consider these developments as it evaluates the suitability of the entity to maintain a Nevada gaming license.”
Asked to comment, Bryant said that the company was working with CME to ensure that the new product will be “compliant with the laws and regulations everywhere.”
“The CME’s been around a long time and we’re both gold standards in our respective industries,” Bryant said. “We want to make sure what we do, we do right. The issues you raised have been discussed at the board level. We’re taking our relationships with our state regulators very seriously and taking our time to try to get this as right as we can. More clarity in this space would be good for everybody and I’d love to see that clarity come our way.”
Okerberg said the company would be willing to discuss their prediction market plans further in a “non-public forum.”
FanDuel prediction markets app could offer sports contracts
Krolicki previously grilled Okerberg about FanDuel’s prediction market plans during a meeting shortly after the partnership with the CME Group was announced in August. In the CME/Flutter partnership announcement, the companies said the new prediction platform would focus on financial markets and made no mention of sports event contracts.
CME is approved by the Commodity Futures Trading Commission (CFTC) as both a designated contract market (DCM) and a clearing house. DCM status also allows CME to partner with a futures commission merchant (FCM) to offer prediction markets nationwide. FanDuel would operate as an FCM in the partnership and offer prediction markets through its own platform, similar to the way Robinhood offers prediction markets via a partnership with DCM Kalshi.
In an appearance on Bloomberg’s Odd Lots podcast released in early October, CME chairman and CEO Terry Duffy said there will be a FanDuel Markets app that will be powered by CME. Duffy also described some of the market types they plan to offer, including “three or four event contracts a day per asset class.” He offered the example of “Will the price of gold be above or below $3,700 an ounce?” at the end of a 60-minute timeframe.
But Duffy has also said that the new FanDuel collaboration could include sports markets if Flutter decides it wants to go in that direction. “I will list them if they would like me to. I am operationally ready to do so on Day One,” Duffy told Bloomberg in September.
Last week, Bloomberg reported that CME, in an effort to compete with Kalshi and Polymarket, would be debuting contracts tied to sports and economic indicators before the end of the year. CME will release the new contracts through its FCM partners, including FanDuel, the report said.
Sports gaming operators reacting to soaring prediction market interest
Sports gaming companies have been carefully looking at ways to enter the prediction market space as platforms like Kalshi have seen surging trading volume in recent months, particularly with their sports event contracts. The perception that prediction markets could be taking away market share and customers from online sports betting operators led to recent stock price drops for Flutter and FanDuel’s primary competitor, DraftKings.
Earlier this week, DraftKings announced it had acquired the CFTC-approved DCM Railbird Exchange and intends to launch its new DraftKings Predictions app in the coming months. The announcement also didn’t mention sports markets, instead saying it will focus on markets “across finance, culture, and entertainment” initially, before potentially expanding into other areas. DraftKings’ stock price rose 4% the day after the Railbird announcement.
The lack of sports event contract mentions from both Flutter and DraftKings in their prediction market announcements shows just how precarious the balance is between wanting to keep both shareholders and regulators, including those in Nevada, happy.
