by
You already know California sports betting is not legal. The Golden State is one of 11 states without a legal sports betting market — and the most lucrative and populous of all.
Obviously, there’s pressure to change that. Pressure from tribes that already monopolize casino betting in the state, but want in on the sports betting craze. There’s also pressure from top betting apps like BetMGM and DraftKings that want access to the rich market, but can’t due to the tribe’s sovereign rights. Pressure is also there from sports fans who dot the state and want action on their favorite teams.
So far, none of the pressure has done much to change the situation in California. But… there’s something else building in the state, and this one does have the chance to get legal betting going, at long last. Keep on reading and we’ll tell you what’s going on!
The Rise Of Prediction Markets
Prediction markets are sweeping the country. These are only sites where people can “buy markets” on different outcomes. Popular players are Kalsho and Polymarket, but there are tons out there. You can predict anything and everything on these sites (elections, box office results, music streaming stats, etc.), including sports events.
But here’s the thing: these prediction markets operate in a grey area. They’re not licensed as sportsbooks, but they’re still offering ways to bet on sports in California. Some might argue they’re doing so illegally, but as of right now, it’s allowed (more on that later).
Of course, that undercuts native tribes, who have a compact with the state that grants them the exclusive right to offer gambling. Offshore sportsbooks were already siphoning betting money for sports, now these prediction markets are doing the same. One prominent industry exec believes this added competition will force the tribes to act, as we cover in the next section.
DraftKings CEO Warns Of Prediction Markets
Jason Robbins is one of the biggest players in the sports betting industry. At DraftKings, he runs the second-biggest operator in the business. So usually, when he speaks, the industry listens. Earlier this year, he warned of the ongoing threat of prediction markets.
“I think that as it grows it’s going to be a powerful lever, basically, ‘This is happening whether you want it to or not,” he said. “If you’re a California tribe or a state that hasn’t legalized, the question is now ‘Do you want to be part of it or do you want to watch it happen led by someone else?’”
Heck, even DraftKings is feeling the heat too. But unlike their rival FanDuel, DraftKings seems to be backing off its original plan to directly launch a sports event contract exchange. Just last month, the company quietly pulled its application with the National Futures Association — a move that would’ve paved the way for DraftKings to sell derivatives and run its own prediction market.
But that doesn’t mean they’re out entirely of prediction markets. Word is, DraftKings may still be looking for a way in through the Commodity Futures Trading Commission (CFTC), possibly by acquiring or partnering with an existing Designated Contract Market.
Robbins’ comments came during an earnings call. He also mentioned how the “powerful lever” of prediction markets could not only force California’s hand, but also Texas — the two biggest dominoes left to fall in the legalized industry.
The Loophole That’s Keeping Prediction Markets Afloat
As mentioned, these new-age platforms are operating in a grey area. But as it stands, what they’re doing is perfectly legal, even in non-legal states like California. That’s because these prediction markets don’t fall under the California Gaming Commission. They fall under the Commodity Futures Trading Commission — a federal body. That’s how they’ve been able to offer “sports contracts” in all 50 states, including California.
It’s a loophole, and tribes are trying to close it. The California Nations Indian Gaming Association (CNIGA) sent a letter to the CFTC warning that these contracts “decimate” the value of tribal gaming compacts. And they’re not wrong — if Californians can bet on sports without going through tribal-approved platforms, that exclusively they have doesn’t mean much.
States like Nevada and New Jersey have already sent cease-and-desist letters. Now California tribes want the feds to follow suit. Maybe they get their wish, but it likely won’t be a quick solution. We could be years of litigation away from any solution here.
Tribes Are Fighting For Their Life In California
Tribes in California are facing an existential threat right now. Not only over sports betting and prediction markets, but their bread and butter too — casino betting.
Earlier this year, the tribes also sued card rooms that, as of now, legally operate in the state. They offer card-playing games only — which the tribes argue goes against their compact. Several tribes banded together to launch this lawsuit after a state bill granted them to the right to sue.
That’s going to be an ongoing legal battle, which begs the question: do the tribes even have the time or resource to deal with the threat of prediction markets? If they’re distracted, that could give prediction sites the runway to gain market share in California. It’s just a hypothetical, but a reasonable one given all that’s happening stateside right now.
Best Betting Sites 