DraftKings finds loophole in California law to bring prediction markets to the state
(NBC, KYMA) - DraftKings is using a loophole in a California law to bring, not sports betting, but prediction markets to the state.
In 2022, there were two propositions on the ballot for california voters that had to do with sports betting.
One of them, Prop 27, was specifically about online and mobile sports wagering outside tribal lands. Voters did not support this.
They also didn't support Prop 26 which would have allowed it on American Indian lands.
So, overwhelmingly, no sports betting in California, but what if it wasn't sports betting, and instead it was called predictions? That's what companies Polymarket and Kalshi found.
Top competitors in the prediction space where users fund what are called "event contracts," and those kinds of bets, in the prediction markets, are categorized differently than other kinds of gambling.
They're federally regulated through the Commodity Futures Trading Commission, meaning they can avoid state level restrictions or bans in place for sports betting today.
Now to DraftKings. In June, they shared an update saying it was available in California through their website for their predictions platform.
Right now, users are betting on everything from the top song on Spotify this year to who may win the next presidential election.
When asked why California is such a lucrative place for platforms like this, James Siva, Chairman of the California Nations Indian Gaming Association (CNIGA), said, "It's fairly simple its the size of the market California is the golden goose when it comes to gaming."
"Because of that, all of the gaming operators are looking at California as an essential piece of what's going to make them viable as they move forward," he added.
Siva said the recent move from Draft Kings could take away from tribal communities that count on casinos for jobs and funding.
It's important to note CNIGA was a staunch supporter of failed Prop 26, and opposed to failed Prop 27.
Now, the question is what will happen next as California grapples with this new prediction market that's here. despite voters opposing sports betting either online or on tribal lands.
