Louisiana and Washington Regulators Issue Notices Regarding Prediction Markets

Gaming regulators in two U.S. states, Louisiana and Washington, have issued notices stating that participating in the purchase and sale of event-based contracts, more commonly known as "prediction markets," tied to sporting events represents a violation of those states' gaming laws. While both advisories noted that the exchanges offering the contracts are federally regulated in the United States and litigation is currently ongoing regarding the future of platforms like Kalshi and Robinhood, both statements characterize these contracts as unlicensed gambling akin to offshore online casinos.

The Washington Gaming Commission (WGC) released its statement on Dec. 9, a day before the Louisiana Gaming Control Board (LGCB) followed suit. Both statements took aim at providing clarity for residents regarding sporting event-based event contracts available at prediction markets.

The WGC notice minced no words, stating that "offering events-based contracts or participating in these markets is not authorized in Washington State." The advisory continued to explain that "Washington consumers interested in gambling on sports are able to do so legally at Tribal casinos authorized to conduct sports wagering pursuant to tribal-state gaming compacts."

Likewise, the LGCB notice shared that "it is the board's position that such activities constitute sports wagering activity under Louisiana law and are not being conducted in compliance with Louisiana Gaming Control Law or under a valid Louisiana issued license or permit." The LGCB advisory goes further, pointing out that it "reminds Regulated Parties to be mindful of their obligations to maintain suitability and comply with all applicable laws in all jurisdictions where they operate."

Although neither Louisiana nor Washington regulate real money online casino apps, the language in both of these notices could impact any future licensing for such gaming.

Gaming in Washington is dominated by tribal casinos, although there are a few commercial enterprises offering limited gaming opportunities. As such, any future iGaming platforms would likely be offered under the purview of the appropriate tribal governing bodies.

Commercial gaming is the norm in Louisiana, where the majority of the state affords access to regulated online sportsbooks. Among the licensed operators in Louisiana are Fanatics and FanDuel, which bear relevance in this discussion due to their current or presumptive prediction market offerings in the US.

FanDuel Predicts is expected to launch before 2025 closes, while Fanatics has already taken Fanatics Markets live for users in 24 states. Fanatics has excluded Louisiana from that list but Washington is on the list of current states.

For both companies, these offerings could impact future consideration for licenses to offer casino games online in Washington, should the state amend gaming compacts to allow for that type of gaming. Potential consequences could be more immediate in Louisiana, though.

As the LGCB statement alluded to, being in good standing with regulators in Louisiana is contingent upon compliance with legal standards in all markets, not just Louisiana. The LGCB could take Fanatics offering contracts to people in Washington as a violation of that expectation, therefore.

Apart from that, the offerings of Fanatics Markets and FanDuel Predicts could also compromise the companies' suitability for any future iGaming licenses in Louisiana. Without proper licensure, Louisianans' access to offers like FanDuel Casino bonus codes may be limited if not absent.

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The LGCB may be hesitant to take action against current sports wagering licensees while federal courts are still determining the legality of event-based contracts. Should they do so, though, none of the affected operators will be able to say that they were not warned.

Derek Helling