Over the past decade, we’ve seen the meteoric rise of sports betting platforms and, more recently, prediction markets. Despite producing some of the most competitive teams in American sports, California still has a full ban on sports betting platforms in early 2026. Nevertheless, prediction markets continue to operate in the state as a separate entity.
California & Sports Betting
While other states like New Jersey and Delaware pursued sports betting legalization in the 2010s, California has never allowed the practice. They have gotten close to legalizing it several times, most famously with Prop 26 (in-person tribal betting) and Prop 27 (online and mobile betting), but both failed at the ballot box. It wasn’t a close result either, which is probably why it hasn’t returned to the ballot since 2022.
The interest hasn’t died down in some communities, however. Tribal casinos generally want in-person legalization, but there are the fantasy sports giants like FanDuel and DraftKings, who want online betting. Those DFS giants laid the groundwork for legal sports betting in other states, but they stick to their legacy fantasy sports services in California. For example, DraftKings Pick6 allows users to bet on the stats posted by two to six athletes. Like many of the apps to bet on sports in California, it offers sign-on bonuses to sweeten the deal and compete with other fantasy/prediction services.
Prediction Market Regulation in California
Driven by the success of Kalshi, prediction markets have swept the nation as a way to bet on virtually anything. From weather predictions to the words spoken in political speeches, these markets let users cash in if they are correct. They’re so all-encompassing that most have a section for sports outcomes and in-game events.
In California, this creates an interesting landscape where direct sports betting is illegal, but using a prediction market to buy a stake in a sports outcome isn’t. This is because prediction markets are derivative exchanges regulated by the Commodity Futures Trading Commission (CFTC). They issue contracts for different outcomes; you buy them like shares, and they inevitably surge towards $0 or $1, indicating the failure or fulfillment of the prediction. Each prediction is closer to a financialized asset than a betting slip.
Seeing the success of prediction markets, fantasy sports operators have started to host their own versions. Pick6 is partly based on it, and DraftKings has a larger Predictions platform. Meanwhile, influencer-turned-fighter Jake Paul is launching Betr Picks, and FanDuel has already launched its Predicts platform to trade predictions.
If we had to guess, it’s only a matter of time before California seeks clarification regarding the legal status of prediction markets. Then the state will have to decide if it wants to allow this kind of indirect sports betting or if it wants to limit these markets. It could have the opposite effect; it could make full legalization more likely when the next proposition hits the ballot. In the meantime, users in California and many other states in the US can use prediction markets legally.
