DraftKings uses prediction-market format to enter California despite sports betting ban
DraftKings has launched DraftKings Predictions in California, exploiting a gap in state law that bars sports betting but does not clearly block CFTC-regulated event contracts. The move positions DraftKings alongside Kalshi and Polymarket in the nation's largest state without voter-approved sports wagering. California voters have previously rejected sports betting initiatives. The launch raises questions about how state legislators and regulators will respond.
DraftKings Predictions gains a beachhead in California that its sportsbook cannot match, turning the event-contract wrapper into a market-share weapon against Kalshi and Polymarket. The loophole depends on state law never contemplating federally regulated prediction markets, so any legislative fix takes months at minimum. DraftKings sportsbook brand recognition gives it lower customer acquisition costs than standalone prediction venues.
Rivals must now decide whether to accelerate their own California entry before lawmakers close the gap or risk DraftKings cementing a user base that crosses over if sports betting ever legalizes. The first state enforcement test case, whether AG lawsuit or CFTC warning, will set whether this template is replicable in other betting-hostile states.