DraftKings Launches California Sports Betting Alternative

DraftKings has officially launched its prediction-markets business across a variety of states. In doing so, they are providing a (highly contested) California sports betting alternative.

When DraftKings initially announced it would traffic in sports prediction markets, many thought they would avoid bringing them to The Golden State. Along with FanDuel and other companies, they have collaborated with tribes in hopes of facilitating the legalization of sports betting in California. Providing prediction markets will almost certainly nuke any goodwill DraftKings and other sportsbooks have built up with tribal nations in The Golden State since both parties saw their attempts to legalize California sports betting fail back in 2022.

Yet, DraftKings appears unconcerned by the consequences. Not only have their prediction markets launched in California, but The Golden State is among the first in which it launched services.

Will Prediction Markets Impact the California Sports Betting Timeline?

This question implies there even is a timeline for California sports betting. There does not appear to be. If there were, DraftKings may not have deemed launching prediction markets as essential.

Then again, this move could represent a falling out between sportsbooks and the tribes. For so long, it has been assumed tribal nations would allow online sports betting apps in the United States to enter the market as partners. Some even go as far as to say tribal nations want them to be glorified IT departments. That sounds harsh, but it makes sense. California tribes have gaming exclusivity right now. They are making it clear they want to preserve that if and when California sports betting gets legalized.

After providing plenty of push back in 2022, sportsbooks appeared to have resigned themselves to partnering with tribes. DraftKings and FanDuel have traveled great lengths, relative to their standards, to cozy up to tribal officials.

Nearly four years later, though, no new California sports betting framework seems to be on the horizon. Entering the prediction-market business could be a sign that DraftKings, FanDuel, and inevitably others, are tired of waiting to operate in California, which is considered the most lucrative market for online sports betting in the United States.

It is not clear whether this stance will accelerate the tribal push to legalize sports betting. And we may not know for some time. The California state legislature will convene in January 2026. But as of now, it does not appear as if sports betting legalization is near the top of the agenda. Even if it is, there’s no guarantee enough progress is made in the House and Senate to green light it.

Expect California to Counter the Emergence of Sports Prediction Markets

Given the circumstances, a legal contest of California prediction markets feels inevitable. There is too much overlap with sports betting, which again, The Golden State hasn’t even legalized.

Prediction market operators will argue their industry contains enough distinction from sports betting. At sportsbooks, you bet against “The House.” The linemakers set the stakes, and users make their picks from there. Prediction markets, however, are supposedly more like the stock market. Each transaction is an event-based contract based on a yes-or-no outcome. (I.E. Will the Los Angeles Rams win the Super Bowl?) The prospective payout is determined by how many people are “investing” in either side of the outcome.

As such, supporters say prediction markets are a subset of derivatives. This basically means they are not subject to state licensing. They adhere to federal regulation. This is how DraftKing is able to launch its prediction markets in states without legal sports betting…like California.

Offerings on predictions are also more limited. Customers are not allowed to build parlay-style contracts, either.

The scope of prediction-market justification is not acceptable to everyone. Twelve states are so far pushing back against these transactions: Arizona, Arkansas, Illinois, Iowa, Maine, Montana, Nevada, Ohio, Pennsylvania, Tennessee, Washington and Vermont.

To this point, prediction markets have yet to receive official bans anywhere. With that said, it says a lot that DraftKings opted against launching their services in all 12 of the states listed above.

California could decide to follow their lead. State officials predominantly want to protect tribal gaming exclusivity. And even if they don’t, there’s an incentive to ban prediction markets. It makes the prospect of California sports betting much more valuable.

This Move by DraftKings Could Lead to Some Clarity

As contentious, awkward and confusing as the current state of affairs has become, it could all lead to some long-awaited clarity.

Will California sports betting get fast-tracked in response to prediction markets? What will it look like if it does? And if it doesn’t, will California seek to ban prediction markets in the meantime? Would such an attempt even be successful? If it is, will any damage be done to the already-iffy relationship between tribes and sportsbooks?

One way or another, it feels like a California sports betting timeline will emerge from this latest development. If it fails to, it will probably say more about the state’s stance on sports betting altogether. Or it could be a harbinger of prediction markets undermining the sports betting industry.

The exact end result is a giant unknown. Rest assured, though, we will get one. It might take a while. It could be years. But this is a development that will not stand quietly. And however it all plays out, you better believe the rest of the country will be watching. Because whatever happens with California sports betting and currently active prediction markets, it will likely set a precedent for how other states and companies operate moving forward.

Take a look at this list of the top online sportsbooks so you can find one that works for all of your sports betting needs: