Arizona sends cease-and-desist to platforms offering unlicensed esports betting

Arizona’s Department of Gaming (ADG) has issued cease-and-desist letters to five companies it accuses of operating illegally. In addition to offering unlicensed gambling, including esports betting, the ADG says the platforms are targeting minors. 

On Friday, the ADG announced it had requested BetOpenly, Bookmaker, Club WPT Online Poker, Kutt Inc., and Raffle Creator all cease operations in the state. BetOpenly and Bookmaker both offer esports wagering as well as betting on other sports. 

“Arizona is taking decisive action against illegal gambling operators that put Arizonans at risk,” said Jackie Johnson, Department Director. 

Johnson added: “Through these cease-and-desist orders, we are putting operators on notice: their conduct runs contrary to Arizona law, and they must stop promoting illegal gambling.”

P2P Gambling Is Still Gambling, Says ADG

BetOpenly promotes itself as a peer-to-peer betting exchange with no house. The ADG says this does not excuse it from following the state’s gambling laws.

“The fact that wagers supposedly occur between players does not change the illegal nature of your conduct,” the ADG wrote in its letter to BetOpenly. “You are still illegally promoting gambling. You charge a 1% commission or ‘juice’ from winners. Legal peer-to-peer ‘social gambling’ in Arizona prohibits any third-party benefit (even indirect), nor can it be conducted as a business.”

It also accuses the operator of deceiving users into believing it does not act as the house in its DFS product. 

“It appears that your daily fantasy sports contests are house-backed and daily fantasy sports bets are bets that instantly ‘fill,’ move to ‘pending’ instantly, and cannot be canceled,” it added.

On its website, the company says “every bet is matched directly between users” and adds that it “operates under applicable regulations.”

The ADG warns that if it does not cease operations, then it risks criminal charges or civil action. Arizona has also warned that any companies collaborating with prediction market operators risk enforcement action. It revoked Underdog’s DFS license as a result of its partnership with Crypto.com.  

Arizona Takes Fight With CFTC To Ninth Circuit

The state is also locked in a legal battle with prediction markets. It filed criminal charges against Kalshi in March after sending the company a cease-and-desist letter last year. 

In response, the Commodity Futures Trading Commission (CFTC) filed a lawsuit against the ADG and state authorities. The CFTC claims exclusive jurisdiction over prediction markets, and a judge sided with the federal organization, issuing an injunction to halt the criminal charges. 

Last week, Arizona appealed against the judge’s ruling to the Ninth Circuit. Kalshi has also appealed a Nevada ruling to the Ninth Circuit. In that case, judges have ruled in favor of Nevada’s state regulators, forcing Kalshi to withdraw from the state. 

Robinhood and Crypto.com have already withdrawn from Arizona, but Kalshi has shown no signs of being willing to surrender in any state. 

Residents in Arizona can legally wager on esports at licensed sportsbooks both in-person and online. The ADG reminded users to check that platforms hold valid licenses before depositing money or placing bets.