The Washington State Gambling Commission has issued a public notice declaring that online operators offering event-based contracts are engaging in “unauthorized activity” in the state, marking the latest regulatory challenge for prediction market platforms operating across the United States.

The announcement, posted as a general advisory rather than a directive to licensees, reiterates that Washington permits sports wagering only on tribal lands. Mobile betting apps may be used on those properties, but statewide online sports betting remains prohibited. Major operators, including FanDuel and DraftKings, already maintain partnerships with tribal casino operators in the state.

Fanatics, which does not hold a local partnership or sports betting operation in Washington, recently launched a prediction market product that is now active in 24 states.

Fanatics Markets went live last week after debuting in 10 states and expanding quickly through a partnership with Crypto.com and the acquisition of Paragon Global Markets, an introducing broker that offers event contracts through designated contract markets such as Crypto.com or Kalshi.

Although Fanatics does not operate regulated sports betting in Washington, the commission’s position could have broader implications. Regulators in Arizona, Illinois and Nevada have previously warned that offering sports-related event contracts in jurisdictions where such products are deemed illegal, or collaborating with partners that do so, could affect an operator’s suitability in their own states.

Fanatics holds sports betting licenses in Arizona and Illinois but not in Nevada. The commission emphasized that its latest statement is a precautionary alert rather than a cease-and-desist action. 

Despite labeling event-based contracts as illicit, Washington authorities have not taken any recent enforcement steps against prediction market operators. The regulator noted the unsettled legal environment surrounding event contracts at the state and federal levels and indicated that developments in ongoing court cases will shape its next steps.

“While prediction markets are an unauthorized activity in Washington State, we acknowledge that the future of prediction markets, including those for sports, political events, etc., remains a subject of ongoing litigation both federally and in other states,” the commission said.

“We will continue to monitor the ongoing cases as they progress through the court system and will provide updates once the courts provide further guidance.”

Washington regulators have previously confronted operators in the sector, issuing a cease-and-desist order to Polymarket in 2021. The platform, which was not permitted to offer services to U.S. customers at the time, later received a $1.4 million civil penalty from the Commodity Futures Trading Commission for failing to register as a swap execution facility. Polymarket withdrew from the U.S. market in 2022 and resumed activity earlier this month.