Predictions, Sweeps Explosions Helped Trigger Nevada’s New Suitability Standard

Ten years and worlds apart since the last time a U.S. regulator offered this kind of substantive guidance around suitability for licensure, Nevada Gaming Control Board (NGCB) Chairman Mike Dreitzer issued a memo on Jan. 16 titled, “Industry Guidance for Online Gaming Products.”

It’s both a sign of the times and a response to a drastically evolved iGaming landscape where licensees and applicants “have faced increasing complexity in determining which jurisdictions are lawful, versus which are illegal or prohibited,” the memo says. 

The increased complexity is in part due to more widespread availability of real-money gambling, which has “expanded dramatically” in recent years: sweepstakes and “social” games, prediction markets, “skill games,” crypto casinos, fantasy sports offerings that share DNA with sports betting, and gaming products that are just difficult to define. The meaning of “gaming” in itself has become a definitional battle in federal court. 

Under the New Jersey model announced by former Division of Gaming Enforcement (DGE) Director David Rebuck in guidance issued on April 16, 2016, a market was essentially considered safe if that jurisdiction had not seen “affirmative, concrete enforcement actions” to prohibit online gaming — or if there were clear official statements that online gaming is illegal. In the absence of both, business-to-consumer outfits (B2C), business-to-business firms (B2B), and games and content aggregators could generally feel free to do business there and stay in New Jersey’s good graces. 

New Nevada standard ups the ante

The new standard is more active and less passive, putting the onus on licensees and applicants, including subsidiaries and affiliates, to demonstrate that their participation in “gray” markets comports with respective local laws. It requires that licensees maintain a register documenting their legal assessment for every jurisdiction, based on applicable laws, not just on enforcement actions. That documentation must be available to the NGCB upon request and updated quarterly if newly entering any additional jurisdictions.

From the guidance:

The Board expects all Licensees to complete full and proper due diligence regarding a Jurisdiction’s laws, regulations, rules, policies, interpretive guidance, or declarations (“Applicable Laws”) before entering a Jurisdiction regardless of the Commercialization Approach and regardless of whether the offering occurs from within or outside the Jurisdiction. This due diligence may include consulting with the Licensee’s internal risk and compliance departments and/or Compliance Committee, following established policies, procedures and compliance plans, obtaining legal analysis, and any other appropriate due diligence methods (together “Due Diligence”).

Some additional requirements include a non-exhaustive list of “presumptively prohibited” jurisdictions: Australia, China, Cuba, India, Indonesia, Iran, Russia, Saudi Arabia, Syria, and Thailand. Licensees can potentially overcome a presumption of illegality with sufficient documented proof. 

While the old slogan goes, “What Happens in Vegas Stays in Vegas,” this Nevada standard may prove an exception to the rule. The guidance does apply only in assessing suitability in Nevada, but it may become a de facto suitability standard adopted or incorporated by other U.S. or foreign jurisdictions.

“While the New Jersey guidance left it to compliance teams to implement their own processes, Nevada is basically advising what should be the steps every operator and supplier take as they enter a new market or expand their products in existing markets,” said Joseph Casole, vice president of legal and regulatory affairs at IC360, in a conversation with Casino Reports.

In other words, per Casole, “Nevada has basically benchmarked an expectation, as opposed to a best practice.”

But in New Jersey, for now, the standard announced in 2016 remains the status quo.

“The guidance issued by former Director David Rebuck is still in effect in New Jersey,” the agency said in response to an inquiry. “DGE evaluates gray-market suitability on a case-by-case basis and will notify licensees of any changes in policy.”

Prediction markets and sweepstakes catalysts

In the decade spanning from Rebuck’s guidance in 2016 until Dreitzer’s memo this January, 40 U.S. jurisdictions have legalized sports betting and 32 of them allow it online. A decade ago, only New Jersey and Delaware authorized iGaming (a.k.a. online casinos), while today five more states have joined, with one more (Maine) on the way. Add in “social-plus” casinos and sportsbooks (née sweepstakes); prediction markets and sports event contacts inserting a federal footprint virtually overnight; crypto casinos; some operators and suppliers straddling white, gray, and black; and in general the ever-increasing digitized, global nature of online commerce; and, well, things have gotten complicated.

Even in more mature markets such as the European Union, things are not always black and white, and that’s true for the most diligent compliance departments. 

“There are several what I would call ‘gray markets,’ even though some people dislike that term,” said Casole. “In Europe, for example, EU free-market principles historically allowed operators licensed in one member state to offer products across borders. About five or six years ago, operators frequently prevailed in EU courts when countries like Germany tried to block Malta-licensed operators. At the same time, individual countries pushed back in their own courts and regulatory systems, often reaching the opposite result.

“The point is that even in Europe, with long-standing gaming laws, many jurisdictions can still fall into a gray-market category — something that ultimately needs clearer resolution, similar to what New Jersey and Nevada have attempted to provide,” Casole explained.

It also seems likely that Nevada’s involvement in some key prediction market litigation was an impetus for the new guidance, even if this guidance does not explicitly apply (yet) to prediction markets’ involvement. 

In March 2025, the Nevada Gaming Control Board became the first state gambling regulator to order Kalshi to shut down its sports and election contracts, arguing that the markets are an illegal form of betting. (Later cease-and-desists followed from New Jersey and Maryland, among several others.)

“If you’re doing business with prediction markets, you should absolutely be analyzing this issue closely,” Casole said. “Right now, the legal status is highly contested and subject to litigation across the country. That’s why it’s more accurate to describe it as a ‘gray’ market rather than a black market — reasonable minds can disagree on the law, and ultimately the courts will decide.”

In a recent article assessing the scope and impact of the new Nevada standard, the gaming department at Duane Morris LLP wrote, “While the Notice is facially related to Internet gaming, it can potentially have broader implications as well, including but not limited to the prediction markets space.”

The firm expanded and looked ahead:

For instance, the NGCB previously issued Notice #2025-77 on October 15, 2025, in response to inquiries regarding the NGCB’s stance on sports events contracts. The NGCB advised, in pertinent part, that a licensee may be subject to discipline under Nevada law if it offers Sports and Other Event Contracts in another state without complying with that state’s restrictions, prohibitions, or licensing regime, partners with an entity engaged in such activities, or violates a compacted tribal right. … While Notice #2025-77 provides guidance to licensees in the prediction markets space, it is less expansive than the requirements imposed by the Notice on Licensees and Applicants in the Internet gaming space. However, in light of recent events in Nevada, see Notice #2025-100, licensees in the prediction markets space may face increased obligations moving forward, including but not limited to independently assessing the legality of their own commercial operations in certain jurisdictions and complying with additional self-reporting requirements to the NGCB regarding the same — similar to the obligations imposed by this Notice in the Internet gaming context.

Tightening ecosystem

Nevada’s stated goal with the new guidance is to “reduce potential adverse consequences for Licensees and Applicants under the NGCB’s Foreign Gaming requirements” and related statutory provisions. 

The other apparent goal is to level the playing field and force industry stakeholders to take a position as a participant in either regulated or black markets. And for gray or “unregulated” markets, or whatever you want to call the space in between, the expectation in Nevada has become to do and show your homework, as opposed to establishing plausible deniability. 

“The ecosystem is tightening from all angles,” BetComply’s Chief Compliance Officer Mike De Graaff told SBC News. “Regulators and banks are placing increasing pressure on [payment service providers], data partners, and affiliates to cut ties with unlicensed activity. It’s no longer just operators being scrutinized. Every node in the chain, from payments to games, will eventually have to choose a side.”   

Casole echoed the sentiment. 

“Payment processors, because of federal requirements under UIGEA, they’ve always required legal opinions. With these protocols being put into place now, the process for onboarding with banks and payment processors probably will require these same things now.” 

De Graaff helps illuminate the struggle that has led some stakeholders to straddle lines across markets. 

“One of the biggest issues for regulated operators is that they’ve had to compete with unlicensed sites offering the same games, plus more bonuses and fewer restrictions,” he said. “If popular titles become exclusive to licensed operators, it levels the playing field and incentivizes players to stay within the regulated space. When regulated operators can finally compete on offering and profitability, that creates more room, not less, for innovation.”

Meanwhile, the NGCB was also careful to point out another reality: “the legal status of each jurisdiction can be dynamic.”

They will shift with innovations, judicial decisions, and new regulations, and all the while industry stakeholders will shift their strategies in response to an ever-changing landscape.

“The most important thing here is that people in the industry can’t sit on their hands,” Casole said. “We now have two of the leading jurisdictions in the gaming world coming out with clear expectations for how companies grow and expand their operation. If you are going to be a multi-jurisdictional operator, these are going to be the expectations and what every operator and supplier should be doing going forward.”