Question of the Day - 14 September 2025

What you're missing comes down to ... tribal exclusivity. 

California's Penal Code Section 337a, which explicitly bans bookmaking, pool-selling, and betting on games of chance, including sports outcomes (except horse racing), dates back 116 years (to 1909). The law, combined with failed legislative and voter initiatives to overturn it, have prevented sports betting from being legalized.

Complicating matters are California's powerful Native American tribes, who hold exclusive rights to operate casinos in the Golden State under the Indian Gaming Regulatory Act (IGRA). As such, the tribes view sports betting as a threat to their gaming monopoly. The California Nations Indian Gaming Association (CNIGA), which represents nearly half of the 109 federally reconized tribes in California, has consistently blocked proposals that would allow commercial operators, such as DraftKings and FanDuel, to enter the market without tribal partnerships. 

In the latest attempt in 2022, more than $600 million was spent on Propositions 26 (allowing sports betting on tribal lands) and 27 (allowing online sports betting outside of the reservations) and both went down in flames. Californians rejected 26 by a vote of 67% to 33% and 27 by a whopping 82% to 18%. Similar initiatives for the 2024 and 2026 ballots were withdrawn or stalled due to tribal opposition; CNIGA has indicated that tribes won't pursue the issue on the 2026 ballot, delaying progress until 2028 or later.

Prediction markets add another wrinkle to the California conundrum. These are peer-tor-peer exchange platforms on which users trade contracts that pay out based on the outcome of future real-world events, such as sports, politics, economics, and crypto. Sports betting, reportedly, has emerged as the dominant prediction-market category. The legality of prediction markets in the U.S. is anything but uniform and has been subject to years of regulatory and legal battles. However, the primary regulator is the federal Commodity Futures Trading Commission (CFTC), which oversees derivative markets and has softened its stance recently against betting. Again, the tribes vigorously oppose prediction markets and are doing everything in their considerable power to prohibit what they consider this end-around to state and tribal sovereignty. 

These days, public opinion polls show about 60% support for legalization of sports betting by Californians, but the deep divisions among stakeholders ensure that the battle over it will continue to be bitter and costly and the odds of near-term change are long indeed.