California is a strange state for the gaming industry in that it is not a big participant but it represents such a big opportunity that it can often feel like it has an outsized impact.
This year, California spent the summer on center stage of the gambling industry as a trio of verticals challenged what operators can and cannot do business in the state.
Daily fantasy sports
After 18 months without a response, California Attorney General Rob Bonta’s office issued an opinion on daily fantasy sports (DFS) that espoused the beliefe that all forms of DFS ran afoul of the law, including everything from Pick’em to the slate-style games DraftKings and FanDuel have been offering in the state for more than a decade.
In advance of the opinion, Underdog tried and failed to take Bonta’s office to court to keep it from being released. However, to date, there has been no enforcement action when it comes to Bonta’s stance on fantasy games. Gov. Gavin Newsom was quick to decry the opinion and vocally expressed a desire to reach some sort of compromise with the DFS operators in the state.
Though Bonta said in interviews that he intended to seek enforcement action after the opinion cam out, to date no DFS operators have exited the state.
Sweepstakes casinos and sportsbooks
At the start of the year, the status of sweepstakes casinos and sportsbooks in California was far from clear and the state was one of the largest markets for the surging industry. By year’s end, a bill outlawing the controversial industry and criminalizing those who supply to or promote the sites had been signed into laws.
What was behind the anti-sweeps push? California tribes arguably deserve the most credit for the changing of the legal tide. Just a week before Bonta’s office issued its DFS opinion, Assemblyman Avelino Valencia gutted and amended Assembly Bill 831, turning a bill that tweaked wording in tribal gaming compacts into a full-on sweepstakes casino ban.
The move meant the billwas already through the Assembly and onto the Senate even though the bill the Assembly approved bore no resemblance to the new iteration. Some lawmakers questioned the urgency of passing the bill, but the legislation managed to get through the Senate, the Assembly and on to Newsom’s desk without a single vote in opposition.
The two sweepstakes casino trade bodies, the Social and Promotional Games Association (SPGA) and the Social Gaming Leadership Alliance (SGLA) fought hard against the bill, as did local operators like the World Poker Tour, but failed to gain any traction, even after some sweeps operators inked economic partnerships with smaller California tribes currently uninvolved in gaming.
The sweeps ban is set to take effect on Jan. 1.
Prediction markets
California tribes celebrated victories with the sweeps ban and the DFS opinion, but one area where they were less successful this year was the rapidly exploding world of prediction markets.
A group of California tribes have a pending lawsuit against Kalshi and its partner Robinhood in the Northern California District Court. Unlike many of the other Kalshi lawsuits, this legal proceeding does not involve a state gaming regulator. Moreover, Kalshi and Robinhood are the defendants, not the plaintiffs.
So far, the court has ruled in the favor of the financial firms. In the suit, tribes alleged that the two groups were conspiring to offer illegal sports betting on tribal lands in violation of the Indian Gaming Regulatory Act (IGRA). The suit also took issue with Kalshi’s advertising campaign, which proclaimed that sports betting was now legal in all 50 states, suggesting it violated the Lanham Act regarding false advertising.
The tribe requested a preliminary injunction for the court to pause the marketing campaign and to force Kalshi to gelocate tribal lands out of his sports contract offerings. The judge denied that request, finding the argument around the Lanham Act particularly thin. The tribes are currently appealing that decision in the Ninth Circuit Court.
Meanwhile, the year is ending with Fanatics Markets, DraftKings Predictions, PrizePicks and Underdog Sports all offering sports contracts in the state. The former two are geolocating tribal lands out of operations, but the latter two offer contracts statewide, which certainly means California will continue to be a contentious place for tribal groups and major operators to spar in 2026.
