DraftKings Launches Prediction Market in California, Sports Betting’s Holy Grail

Sports betting remains illegal in California but residents now have another option to stake money on Dodgers and 49ers games.

DraftKings launched DraftKings Predictions this week in California, the state with the largest economy in the US that’s home to nearly 40 million people. Despite Californians soundly rejecting Proposition 27 in 2022, a ballot referendum to authorize sports betting, with more than 82% opposition, DraftKings now allows traders to make financial trades on sports.

DraftKings Predictions joins Kalshi and Polymarket in operating prediction markets in California.

California is considered the sports betting industry’s holy grail, as access to 40 million people and the fourth-largest economy in the world would be a goldmine for sportsbooks like DraftKings.

Tensions regarding sports betting between California’s tribal casinos, commercial cardrooms, and out-of-state gambling companies remain high, with the groups deeply divided over how the market should be structured and controlled. The resulting gridlock and competing political campaigns contributed to voters overwhelmingly rejecting the 2022 sports betting ballot measure.

Prediction Markets vs. Sports Betting

Unlike traditional sports betting, where bettors wager against the house, prediction markets pit traders against participants holding the opposite side of an event outcome.

In theory, prediction markets operate in a peer-to-peer arrangement, with share prices reflecting probabilities determined by the wisdom of the crowd. In practice, many trades are made against financial institutions such as Susquehanna International Group, a global trading and market-making firm that helps prediction markets with liquidity.

Backers of prediction markets offering sports trading, which includes the Commodity Futures Trading Commission (CFTC), the federal regulator of the exchanges, contend that buying shares of the Dodgers winning the World Series constitutes a financial endeavor. Critics liken what the CFTC calls “innovative trading” to illegal sports gambling.

DraftKings Campaigns

Coinciding with its prediction markets debut in California, DraftKings Predictions launched an advertising campaign in several coveted untapped sports betting states.

Aldrin, a prediction markets research firm, reports that DraftKings Predictions is aggressively marketing in California, Texas, and Georgia. The prediction market is also advertising in Florida, where the Seminole Tribe’s Hard Rock Bet has a monopoly on legal sports gambling.

The DraftKings Predictions ads offer new accounts $200 in bonus trades after depositing $5.

DraftKings calls DraftKings Predictions its “financial market.” Along with sports, DraftKings Predictions offers trading on the stock market, cryptocurrency prices, the weather, politics, and culture.

For example, DraftKings Predictions has New York City Mayor Zohran Mamdani as the front-runner to be named TIME’s Person of the Year, with his odds at +156 (implied probability of 39%). Pope Leo XIV is next at +426.