Nevada’s experiment with so-called ‘entity betting’ mutual funds has resulted in federal securities regulators filing legal complaints against two funds.

On Monday, the US Securities and Exchange Commission (SEC) published complaints it filed late last week against two Nevada-licensed sports wagering entities – Nevada Sports Investment Group LP and Contrarian Investments LLC – for violating federal securities laws.

According to the Nevada Sports complaint, the group raised slightly over $1m from 35 betting clients in around 20 US states after registering in Nevada in September 2015. The SEC claims the company failed to determine its clients’ status as accredited investors and also failed to file a registration statement, despite not qualifying for an exemption from said registration.

Contrarian raised over $437k from some 25 investors in 12 states and Canada, but similarly failed to do proper vetting of its customers or file the necessary registration statement.