California's tribal gaming leaders are concerned about Fanatics' new product, which they view as challenging their exclusive hold on gambling in the state. They are planning to respond both legally and politically.
Fanatics Markets has become the first major approved sportsbook brand to offer a prediction market product regulated by the CFTC, a federal agency. This product allows consumers to bet on sports-like events in states without legal online sports betting, like California.
Fanatics presents this as trading-regulated event contracts rather than traditional betting; however, many critics, including tribal leaders, see it as similar to sports betting.
California tribes are also in a battle to keep sweepstakes casinos out of the Golden State. On top of that, the Tejon Indian Tribe recently swung open the doors on California's newest casino.
Why California Tribes Are Responding
Tribal leaders in California believe that any platform allowing people to risk money on sports outcomes amounts to illegal sports betting under state law.
They argue this infringes on their exclusive gaming rights, as established in their agreements with the state. Leaders view these prediction markets, including those offered by companies like Fanatics, as a significant threat because they bypass existing regulations and could take away potential revenue from sports betting that tribes aim to control.
Recently, tribal leaders met in San Diego to plan their response to prediction markets.
These discussions involve several strategies, such as supporting legal actions with Attorney General Rob Bonta, considering their own lawsuits, launching public awareness campaigns against these forms of betting, and possibly exploring whether tribes should develop similar products to ensure they maintain control.
Role of Attorney General Rob Bonta
Attorney General Rob Bonta has taken a firm stance, considering daily fantasy sports and similar games as illegal sports betting in California.
Tribal leaders view him as a crucial ally in their fight against prediction markets. They think his office is working on steps to clarify that products like sports-event contracts aren't valid ways to circumvent state betting laws.
In California, prediction markets are labeled as "event contracts" and are regulated by the CFTC, a federal agency. However, sports betting, which involves betting on the results of sports games, is illegal under state law. Rob Bonta and tribal leaders argue that prediction markets are essentially the same as illegal sports betting.
Wider Context for Sports Betting and Prediction Markets
The issue with Fanatics' product is part of a larger shift.
National and tribal gaming groups are increasingly labeling prediction markets as unlicensed gambling when they're related to sports or politics.
Some major companies, like FanDuel in Nevada, have chosen to give up certain licenses rather than agree to complete bans on prediction markets. This indicates a divide in the industry: some are pursuing new opportunities, while others are focusing on maintaining traditional regulatory relationships.
For California, as national brands try to introduce prediction markets, they risk breaking trust with tribes, potentially making future agreements on digital sports betting more challenging.
