DraftKings Predictions faces California class-action suit over prediction markets
A California man filed a class-action lawsuit in U.S. District Court for the Central District of California alleging that DraftKings Predictions' event contracts constitute unlicensed sports betting. DraftKings Predictions is already available in California, where traditional sports betting remains banned, and the company is currently running advertising campaigns there and in other large states with sports betting restrictions. The suit frames the contracts as illegal gambling operating outside state licensing regimes rather than as regulated financial instruments.
DraftKings Predictions now faces the same state-court test that Washington's order against Kalshi has already triggered. The California suit argues that CFTC event-contract status does not immunize the product from state gambling law. If a federal judge agrees, DraftKings must choose between costly geofencing or voided contracts in the nation's largest state. The timing is sharp: DraftKings just ramped advertising in California, Florida, Georgia, and Texas, betting that federal branding would keep state regulators at bay.
A ruling that CFTC registration is not a safe harbor there would force the same compliance rebuild Kalshi is already executing. The precedent would hit every CFTC-registered platform with California users. DraftKings' sportsbook heritage offers no protection; state attorneys general have already shown they treat event contracts as gambling regardless of federal label.
DraftKings Predictions joins Kalshi and Polymarket in facing state-level legal challenges that erode the shield of federal CFTC registration.