Coalition for Prediction Markets spends US$50,000 on California lobbying in just four months

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The Backstory

California remains the industry’s hardest test

The Coalition for Prediction Markets’ California lobbying push lands in a state where gambling policy is shaped less by conventional partisan lines than by tribal sovereignty, ballot-box history and the economic weight of the nation’s largest untapped sports betting market. California has not legalized sports betting, and any viable path to doing so has long been understood to run through tribal governments that hold central authority over the state’s legal gaming industry.

That context makes prediction markets a sharper political issue than a narrow dispute over financial regulation. Platforms such as Kalshi, Crypto.com, Robinhood and Coinbase argue event contracts are federally regulated financial products overseen by the Commodity Futures Trading Commission. Tribal leaders and state gaming interests argue sports-linked contracts function like wagers and can bypass the compacts, licensing rules and voter approvals that govern gambling in California.

The coalition’s spending in Sacramento reflects a broader effort to define the sector before states do it for them. The group was created to press for a federal framework at a time when operators face enforcement actions, lawsuits and legislation across multiple jurisdictions. Its founding members framed the campaign as a response to fragmented state oversight, arguing the industry needs one national standard rather than 50 state interpretations. That strategy was outlined when Kalshi and Crypto.com launched a prediction markets advocacy coalition with other major trading and consumer finance platforms.

Tribes shifted attention from fantasy sports to event contracts

California tribes have spent years guarding their position in gaming policy, but the immediate threat perception has shifted. Daily fantasy sports and sweepstakes remain part of the regulatory debate, yet tribal leaders have increasingly described prediction market apps as the more urgent challenge because they can offer sports-related products statewide without a tribal compact or state sports betting law.

That concern became explicit when California’s tribal gaming leaders targeted prediction market apps and identified sports event contracts as a direct challenge to sovereignty and gaming revenue. The criticism has focused on companies including Kalshi, Crypto.com and Robinhood, whose products allow users to take positions on sporting outcomes while the companies maintain they are operating exchanges, not sportsbooks.

The dispute has also moved into federal court. Three tribes sued Robinhood and Kalshi, alleging the companies were offering unauthorized sports betting products in California, including on tribal lands. The lawsuit seeks to block the companies from operating in the state and requests damages. Kalshi and Robinhood have argued an injunction would cause substantial and irreparable harm, underscoring how important California is to their growth plans even without legal sports betting.

The stakes are amplified by reported trading volume around major sporting events. Kalshi reportedly handled hundreds of millions of dollars in contracts tied to March Madness and the NBA Finals, while Robinhood began offering NFL and college football prediction markets through a Kalshi partnership. To tribes, that activity resembles sports betting entering through a financial-market side door. To operators, it reflects consumer demand for federally supervised event trading.

A 2022 defeat still shapes every California pitch

The lobbying campaign also unfolds against the memory of California’s failed 2022 sports betting ballot fight. Commercial operators and tribes spent heavily on competing measures, and voters rejected both. The outcome demonstrated that deep-pocketed national betting companies could not simply buy market access in California and that tribal opposition could define the public debate.

Since then, the largest sports betting operators have changed tone. DraftKings and FanDuel used the Indian Gaming Association’s annual convention in San Diego to acknowledge past mistakes and signal that any future California sports betting proposal would need to be tribal-led. Their executives described tribal sovereignty as the starting point for any workable framework, not a detail to be negotiated after the fact. The shift was evident when FanDuel and DraftKings made peace with California tribes over sports betting expansion.

That reset matters because prediction market operators are now entering the same political terrain without the same history of tribal partnerships. DraftKings and FanDuel are trying to rebuild trust after a public defeat. Prediction market companies are arguing they do not need state gambling approval at all. For tribal governments, that distinction can make the newer platforms appear more threatening than companies seeking eventual licensing through negotiated compacts.

The political lesson from 2022 is that California gaming policy punishes strategies that sideline tribes. Even if prediction market companies prevail in federal arguments, they still face state lawmakers, attorneys general, tribal litigation and public campaigns that could complicate consumer access, advertising partnerships and long-term legitimacy.

The fight has already spread beyond California

California is not an isolated battleground. Prediction markets are drawing scrutiny in major betting states and tribal jurisdictions nationwide, creating the fragmented regulatory map the coalition says it wants to avoid. Connecticut ordered platforms to stop offering sports event contracts. Arizona and Nevada have pursued legal action involving Kalshi. Court rulings have temporarily restricted offerings from Kalshi, Polymarket and others in states including Michigan, Nevada and Washington.

New York shows the other path: legislation rather than direct enforcement. Kalshi registered to lobby there as lawmakers advanced bills that would create licensing requirements and age restrictions for event-contract platforms. The state is the largest U.S. sports betting market, making its response especially important to operators and incumbent gaming companies. The pressure was documented as Kalshi increased New York lobbying while lawmakers considered event-contract rules.

State legislators have framed the issue as a gap left by unclear federal direction. If the CFTC is the primary regulator, states may have limited ability to control sports-linked contracts even where gambling laws are strict. If state gaming agencies can treat the same contracts as wagers, prediction market operators could face licensing, tax, responsible gambling and market-access requirements similar to sportsbooks.

That unresolved jurisdictional question is the central business risk. A federal-first model could let platforms scale quickly across states, offering event contracts through familiar trading interfaces. A state-by-state gambling model would slow expansion, raise compliance costs and force deals with tribes, casinos or licensed operators. California, with its tribal governance structure and vast population, is the most consequential version of that choice.

Integrity concerns gave the coalition a second argument

The coalition’s message is not limited to market access. It has also leaned into integrity standards, particularly after high-profile concerns over insider trading on politically sensitive contracts. A controversial Polymarket wager tied to Venezuelan President Nicolas Maduro triggered scrutiny after a trader reportedly made a large profit from a well-timed position. The episode became a test case for critics who say event contracts can create incentives for misuse of private or government information.

The coalition responded by calling for transparent federal regulation and insider-trading restrictions, seeking to distinguish its members from offshore or less-regulated platforms. That argument was central when the Coalition for Prediction Markets responded to the controversial Maduro bet on Polymarket. The group’s position was clear: scandals should lead to national rules, not state-by-state bans.

For policymakers, the integrity debate cuts both ways. It gives prediction market companies a reason to ask Congress and federal regulators for clear standards. It also gives opponents evidence that the products carry risks similar to or greater than gambling, especially when contracts involve elections, government actions or sports. In California, tribal critics can combine integrity concerns with sovereignty arguments, making the policy challenge broader than consumer protection alone.

Sports partnerships raise the visibility and the risk

Prediction markets are also moving into mainstream sports culture, increasing pressure on regulators and gaming partners to define boundaries. Kalshi’s reported sponsorship deal with the Los Angeles Dodgers drew attention because the team also has a long-standing relationship with Yaamava’ Resort & Casino, owned by the San Manuel Nation. The San Manuel Nation has opposed prediction markets, arguing sports event contracts infringe on tribal gaming rights.

Those sponsorships illustrate why lobbying spending is rising. Prediction market companies want consumer recognition, sports audiences and political legitimacy. But visibility can create friction with tribes, casinos and leagues that have spent years building regulated betting partnerships under state law. A team sponsorship can turn an abstract regulatory argument into a local business conflict involving powerful community and tribal stakeholders.

The California push therefore sits at the intersection of finance, gambling, tribal sovereignty and sports marketing. The coalition’s spending is modest compared with the hundreds of millions spent during the 2022 ballot fight, but its timing is significant. Operators are trying to shape the rules before enforcement actions and lawsuits harden into precedent. Tribes are trying to prevent a parallel sports betting market from taking root before voters or compacting authorities approve one.

The outcome will influence more than California. If prediction market operators can maintain access in a state without legal sports betting and with strong tribal gaming rights, they will strengthen their federal preemption argument nationally. If tribes and state officials force restrictions, California could become the model for resisting sports event contracts elsewhere.