Casino operators in two of the most mature legalized gambling markets in the U.S. are warning that the buying and selling of sports-related event contracts could deal a blow to their local slots and table game-supported economies.
Key insights
- The Nevada Resort Association and the Casino Association of New Jersey have warned the CFTC about potential economic impacts of sports event contracts.
- Regulators in both states have already sent cease-and-desist letters to prediction markets offering those contracts.
- The CFTC is gathering feedback ahead of a roundtable on prediction markets.
The Nevada Resort Association and the Casino Association of New Jersey sent letters to the U.S. Commodity Futures Trading Commission (CFTC) last week ahead of the federal regulator's roundtable on prediction markets like Kalshi and Crypto.com.
Both letters oppose sports event contracts offered by those markets, which allow users to make de facto wagers on teams and leagues. For example, a Kalshi trader could buy or sell a “yes” contract for Florida to win the NCAA men’s basketball tournament.
Those contracts are now available in all 50 states, not just the ones with legalized sports betting. And while some state regulators have objected, viewing the activity as unauthorized sports wagering, the contracts are federally regulated by the CFTC and continue to trade.
However, the recent letters from the two casino groups also caution that this trading has the potential to take a bite out of the brick-and-mortar gambling industry.
“Nevada stands as the nation’s home for legal gaming, and we have spent decades offering safe legal sports betting to Americans,” Nevada Resort Association president and CEO Virginia Valentine wrote in an April 3 letter to the CFTC. “Allowing for sports wagering to happen outside of state regulated channels puts citizens at risk and endangers the critical economic support gaming provides.”
The letter says that the gaming industry represents 43% of Nevada's gross domestic product and employs 27% of workers in the state, "supporting more jobs and generating more economic output than any other sector."
You're being dramatic
Yet the "strict state-run regulatory system" for legal sports betting in the U.S. is being "dramatically undermined by the sports events contracts" offered by CFTC-regulated entities, the Nevada casino group claims.
“By offering a nationwide betting product without any regulatory guardrails or consumer protections, the citizens of Nevada will be put at risk and our state’s largest economic driver will be damaged,” the letter adds.
The Atlantic City-based Casino Association of New Jersey’s letter notes that the state’s gaming suppliers and operators support more than 30,000 jobs and generate $1 billion in government tax revenue annually.
“As the trade association that represents New Jersey's gaming industry, we are deeply concerned about the availability of sports events contracts, the economic impact it will have on New Jersey, and the consumer harm that may come to our citizens due to the lack of protections that the legal gaming industry is required to adhere to through state law,” wrote Mark Giannantonio, the president of the casino group and CEO of Resorts Casino Hotel in Atlantic City.
Giannantonio's letter to the commission highlighted several state-specific regulations for New Jersey sports betting that are now allegedly being flouted, such as no wagering with cryptocurrency and no betting on in-state colleges.
"All of these policy choices were made intentionally to ensure that the legal sports betting industry in New Jersey provides a safe and responsible way to bet on sports and provide economic value to our state," Giannantonio wrote. "In contrast, the sports events contracts that are being offered by CFTC-regulated companies provide no revenue to our state coffers, allow anyone 18 years old to bet on sports, and don't restrict betting on collegiate wagers, a direct violation of our state laws that New Jersey citizens voted on."
You're welcome
The Atlantic City casino operators also pointed to the lead role New Jersey played in toppling the Professional and Amateur Sports Protection Act (PASPA). A New Jersey-driven decision by the Supreme Court in 2018 paved the way for widespread legalization of sports wagering in the U.S.
“Not only has sports betting legalization brought greater transparency to a former black market, New Jersey has also been a leader in the development of Responsible Gaming protocols that all sports wagering licenses are required by law to follow,” the letter says. “The state has also collected over $100 million in tax revenue from sports betting.”
The letters from the two casino groups are in addition to two dozen more received by the CFTC from Native American gaming tribes, commercial gambling interests, and Major League Baseball, among others.
Those letters underscore the growing interest and concern that various parties have about event contracts since they expanded to sports late last year. Federally regulated prediction markets initially focused on subjects like politics, economics, crypto, and pop culture, but their sports-related contracts are quickly becoming a popular offering.
At Kalshi alone, for example, more than $380 million in March Madness-related contracts have been traded.
The expansion into sports by CFTC-regulated entities is creating conflict, because sports betting has historically been regulated at the state level. It also means there is now a new, federally regulated form of competition for state-regulated sportsbooks such as DraftKings and FanDuel.
Moreover, the trading of sports event contracts is taking place despite some lingering uncertainty about what federal law permits. The CFTC has even acknowledged "several key obstacles" to regulating prediction markets, including "States’ rights and State regulatory schemes."
The reason for the feedback from the casino groups and others, the CFTC's upcoming roundtable on prediction markets, is expected to happen at the end of this month. The event could result in further clarity on where the regulator stands on sports event contracts under its relatively new leadership.
The @NevadaGCB issued the following news release today. pic.twitter.com/uzQEwE2yy1
— Nevada Gaming Control Board (@NevadaGCB) March 5, 2025
Not everyone is waiting for a ruling, though. The economic worries voiced by Nevada and New Jersey casino operators come as regulators in those two states (as well as Ohio, Illinois, Montana, and Maryland) have sent cease-and-desist letters to CFTC-regulated entities in connection with sports event contracts.
One of those prediction market operators, Kalshi, has pushed back against the requests from Nevada and New Jersey. The company launched lawsuits to try to stave off a shutdown in those two states, with no decision yet reached by the courts.
Kalshi has argued in legal filings that it answers to the CFTC, not state regulators. Its CEO, Tarek Mansour, also said during a recent interview with TechCrunch that he isn’t “necessarily very concerned” about the cease-and-desist letters.
“We are literally like a financial exchange, but the underlying trading is events,” Mansour said. “The CFTC is our regulator. If the CFTC tells us to stop, we will absolutely stop. If they don’t, then we won’t.”
The Nevada Resort Association, "the primary advocacy voice for gaming and resorts in Nevada," noted to the CFTC that the Nevada Gaming Control Board has sent a cease-and-desist letter to Kalshi.
The Nevada sports betting regulator has alleged Kalshi is breaking state law and rules by offering election and sports-related event contracts.
“We ask that the Commission take this under advisement as you review these contracts and prohibit sports events contracts that violate state law and potentially other federal laws from being offered,” Valentine wrote.
ICYMI, Congresswoman
The letter CC's several politicians, including Nevada Congresswoman Dina Titus, who has written her own letter to the CFTC questioning sports event contracts.
That letter likewise cites the economic importance of the legalized gambling industry.
“Before the Commission allows sports betting in all 50 states, I hope they listen to the feedback presented at this roundtable and consider the harm that contracts on sports events would have on the legal gaming ecosystem that provides tax revenue, responsible gaming resources, integrity monitoring, and consumer protection,” Rep. Titus wrote in February.
