Nevada's Mike Dreitzer says sports event contracts should be treated like sports bets, criticizing CFTC approach

Nevada Gaming Control Board Chairman Mike Dreitzer has criticized the federal approach to prediction markets, arguing that sports event contracts should be regarded as equivalent to traditional sports bets. He made the remarks on October 14 during a webinar hosted by the Indian Gaming Association.

His comments follow two measures proposed by the Commodity Futures Trading Commission last week. One proposed rule would widen the federal definition of a swap to cover event contracts tied to sports, politics, cultural events and weather. A separate interim final rule confirms that casino-style gambling, including sportsbook wagers and casino games, falls outside that definition. Dreitzer said the split distinguishes between products in a way that does not match how they actually work. He compared a $10 bet on an NFL game with a $10 contract on the same game, saying the transaction is the same in both cases.

Dreitzer also dismissed the claim that prediction markets are not gambling because they are peer-to-peer. He noted that poker, horse racing and bingo also involve participants competing against one another, and that such a structure does not place an activity outside gambling law. He questioned whether traders always face other individuals, suggesting that hedge funds, designated contract markets and affiliated trading entities can take positions against retail customers.

On price discovery, he argued that sophisticated financial firms may disadvantage casual traders instead of producing a fair market. He also said the ability to exit a position before an event ends is not a sound basis for separating the products, since online sportsbooks have offered cash-out features for years. Consumer protection was another concern, particularly because some prediction market platforms admit 18-year-olds, and he warned that such products blur gambling for entertainment with investment for profit.

The legal dispute continues in the courts. Nevada's regulator has won a court battle against Kalshi, and the court previously ruled unanimously against Kalshi in cases brought by regulators in Ohio and Tennessee, finding that prediction markets were not excluded from state gambling statutes, including tax obligations. Kalshi has petitioned for a rehearing, which asks for a fresh review but does not vacate the existing decision.

The CFTC's proposals could further complicate the relationship between federal oversight and state gambling law. Comments on the proposed swap definition are due within 30 days of its publication in the Federal Register.