Nevada Gaming chair challenges CFTC on prediction markets
Mike Dreitzer also questions whether retail users trade against peers, noting hedge funds and affiliated firms can take the other side.
U.S.- Nevada Gaming Control Board Chairman Mike Dreitzer has again challenged the CFTC’s argument that prediction markets should be treated differently from sportsbooks, saying contracts tied to sports results function like conventional bets. Speaking during an Indian Gaming Association webinar on October 14, he criticised the Commodity Futures Trading Commission’s (CFTC) efforts to establish a distinct regulatory approach for event contracts.
For Dreitzer, the format in which a wager is offered does not change its underlying nature. He compared a US$10 bet on an NFL game with a US$10 contract on the same outcome, arguing that the transactions are effectively identical. He also noted that the ability to exit a position before a match ends isn’t unique to prediction markets, since online sportsbooks have long offered cash-out features.
Dreitzer also touched on two other arguments used to distinguish prediction markets from traditional gambling: that participants trade directly against one another and that these platforms support price discovery. Poker, horse racing and bingo also involve competition between participants, he said, yet that structure does not automatically place them outside gambling laws.
He also questioned whether customers are always trading against other individuals. Hedge funds, designated contract markets and affiliated trading firms may take positions against retail participants, potentially giving sophisticated players an advantage rather than ensuring a level playing field, he said.
Consumer safeguards are another concern for the Nevada regulator. Some prediction market platforms accept users aged 18.
The CFTC issued an interim final rule on October 9 excluding qualifying traditional gambling products, including sportsbook wagers and casino games, from the federal definition of a swap. The measure is intended to reinforce the distinction between gambling products regulated by states and federally recognised tribes and derivatives traded on financial markets.
Previously, it submitted two rules to the White House Office of Management and Budget (OMB) in an attempt to clarify federal oversight of prediction markets and contracts linked to real-world events. One would amend the definition of a swap to explicitly exclude casino-style gambling and the second would establish that event contracts qualify as swaps.
