Trading or gambling? Nebraska’s online betting ban is being tested by prediction markets
Nebraska maintains a ban on online gambling even as people in the state increasingly use app-based prediction markets to wager on outcomes ranging from college basketball to elections and other events. The platforms’ pitch is that they are not offering traditional sports betting; instead, they describe their products as trading contracts whose prices move based on what participants expect will happen.
The distinction matters in Nebraska, where state law blocks online sportsbooks but has allowed legal in-person sports betting at casinos since 2023. Prediction-market companies say Nebraskans are able to participate because their platforms rely on “trading” rather than gambling operations, while casino executives and addiction advocates argue the practical experience is still betting—just with different wording and a different interface.
In Nebraska, the stakes include both the size of wagers and the policy question of whether state rules apply. A problem-gambling director, Mike Sciandra, said he sees little discernible difference between traditional sports betting and prediction markets in how they affect people who struggle with gambling, arguing that the apps can deliver the “same dopamine hits” and the same financial consequences. “I think we’re only at the tip of the iceberg,” Sciandra said.
Sciandra’s remarks came as Omaha-area casino executives argued that prediction markets are undermining Nebraska’s prohibition by exploiting what they characterize as a loophole. Lance Morgan, the CEO of Ho-Chunk Inc. and WarHorse Casino, said the products look like sports betting and raise concerns about addiction risk tied to the new online access. “It looks like a sports bet. It quacks like a sports bet. It’s a sports bet,” Morgan said, adding a comparison to commodity trading. “How is betting on the Huskers the same as trading on the price of soybeans?” Morgan said.
Prediction markets describe their mechanics differently from sportsbooks, which set odds against a customer. At a sportsbook, a gambler bets against a bookmaker who determines the odds. In a prediction market, users “trade” against each other by buying and selling positions tied to future outcomes at prices influenced by supply and demand, the companies say.
Kalshi and Polymarket are two of the biggest prediction-market platforms, and the story of their growth is playing out alongside major sports operators’ own launches. FanDuel and DraftKings began rolling out prediction markets in the past four months that look “nearly identical” to their existing online sports-betting offerings, according to reporting distributed by the Associated Press.
The report said users of Kalshi and Polymarket have wagered more than $97 million on Nebraska Cornhuskers men’s basketball games this season, though it is unclear how many participants are based in the state. It also described political activity on the platforms, including a combined $1.4 million wager on the winner of the Omaha-area “Blue Dot” political contest in 2024.
Nebraska’s casino industry leaders say the spread of online prediction markets erodes the state’s ability to enforce its rules. Morgan said prediction markets dodge state authority and taxes, warning that “some wealthy companies” are making money off Nebraskans without the state having a say. He tied the concern to how legal wagering at Nebraska casinos is taxed: since sportsbooks opened at casinos, they have taken in more than $9 million in revenue last year, while WarHorse said it saw a 13% drop in Super Bowl betting this year—after activity rose in the prior year when the Kansas City Chiefs played.
The fight over oversight has a federal angle as well. The platforms have argued that states and tribes should not treat them as gambling operations and instead should regulate them as commodity exchanges under federal authority. Under President Donald Trump, the U.S. Commodity Futures Trading Commission has agreed with that approach, asserting sole jurisdiction to regulate prediction markets, which have expanded rapidly since 2024.
States and Native American tribes have pushed back in lawsuits. Nebraska Attorney General Mike Hilgers, according to the report, signaled his support for a legal challenge brought by three California tribes against Kalshi, filing a brief in January backing the argument that prediction markets are not outside state and tribal control. Hilgers’ spokeswoman declined comment.
The issue is also drawing enforcement actions in other states. This week, Arizona’s attorney general filed criminal charges against Kalshi, alleging the platform is running an unlicensed gambling operation. Kalshi denied the allegations and has said it is not beholden to state regulations.
Legal specialists expect the jurisdictional questions to reach the highest court. Chicago Mercantile Exchange Group CEO Terry Duffy told Reuters he expects “the Supreme Court” to address how to define prediction markets on sports and whether they are the same as gambling, and his company has partnered with FanDuel’s prediction-market app.
In Nebraska, the controversy is also reflected in how residents describe their own use of the platforms. A Lincoln retiree, Bob Linhardt, said he first learned about Kalshi during a television interview in which former New Jersey Gov. Chris Christie denounced prediction markets as unregulated and illegal. Linhardt said he began checking the platform daily and placing “pocket money” wagers on big-ten basketball and national politics, including betting on his Husker team—something he said is not possible through local casinos due to the state’s restrictions on college-team wagers.
Another resident, Braden Burns, described becoming addicted to gambling as a teenager through the video game Counter-Strike and said he resisted betting for years before an in-app prediction-market feature led him back. Burns said he worries other young men could fall into the same pattern and described the absence of “friction” on the platform as making temptation easier to act on.
While addiction advocates and some casino executives argue for stronger state-level restrictions, the platforms and some users defend personal choice and a different classification of what is happening on their systems. A Kalshi spokesman told the report the company is a licensed derivative exchange, like the Nasdaq, offering financial contracts on the outcome of future events, and said there is “no ‘house’ on Kalshi.” A DraftKings spokesperson said in an email the company remained dedicated to working collaboratively with federal regulators, and Polymarket did not respond to comment requests. A FanDuel spokesman pointed to a press release saying the company plans to stop offering sports prediction markets in states like Nebraska if they legalize sports betting.
As Nebraska weighs whether its online gambling prohibition can be enforced against prediction markets, some lawmakers and industry leaders are also focusing on revenue. State Sen. Dunixi Guereca, an Omaha Democrat, said Nebraska is losing out on tax revenue by barring online sports betting and argued the inability to tax prediction markets is compounding the problem. “As a senator currently facing down an $800 million budget shortfall for the next fiscal year … I’m hoping that we’re able to put a sin tax on (prediction markets) because we have to get creative with how we find revenue here in Nebraska,” Guereca said.
For casino leaders, the immediate hope is action through Nebraska’s legal system. Morgan said he is hoping Hilgers will recognize the problem and issue cease-and-desist orders to prediction-market operators, warning that companies are playing on the definitional gap. “We may not be Wall Street experts, but we’re not stupid,” Morgan said. “You know when you’re being played.”