California Attorney General Rob Bonta says the state's lack of lawsuits against prediction market platforms like Kalshi should not be interpreted as approval, keeping the industry in suspense.
Nevada and Arizona have already launched legal offensives against prediction market platforms. California, the largest consumer market in the United States, has mostly watched from the sidelines. That restraint is not an endorsement, according to Attorney General Rob Bonta, who recently made clear that the state firmly disagrees with the idea that federal oversight from the Commodity Futures Trading Commission strips states of their regulatory authority.
Prediction markets have exploded into the mainstream over the past year. Platforms like Kalshi, Polymarket, and Crypto.com now offer "event contracts" in all fifty states, allowing users to wager on outcomes ranging from presidential elections to the price of Bitcoin. These companies insist their products are regulated financial derivatives governed by the CFTC, not traditional gambling subject to state law. It is a legal argument that has triggered a patchwork of state-level responses, with some AGs filing suits and criminal charges while others hang back. California's approach, or lack thereof, carries outsized weight simply because of the state's economic scale. Any regulatory crackdown here would immediately disrupt the user base for these platforms.
Complicating the political optics is Bonta's acknowledged contact with Evan Corder, his former chief of staff who now lobbies for Kalshi and other prediction market operators, including the daily fantasy sports platform Underdog. Bonta told Business Insider that he will have a conversation with anyone, regardless of whether he agrees with their position. Sometimes those discussions only reinforce his opposition, he noted. While there is no indication that these conversations have shaped official policy, the connection highlights the tight-knit nature of regulatory and industry circles in state politics. Corder declined to comment on the nature or timing of those discussions.
Tribal Gaming Interests Weigh Heavy
California's gambling ecosystem is heavily anchored by Native American casinos operated by tribes like the Pechanga Band of Indians and the San Manuel Nation. Legal gaming in the state is largely confined to these tribal operations, and they view prediction markets as a direct threat to their exclusivity. Tribal gaming interests have been significant financial contributors to Bonta's campaigns, a relationship Politico reported on last fall. The industry has not been shy about applying pressure. Victor Rocha, a prominent tribal gaming official, publicly labeled Kalshi CEO Tarek Mansour a "lying little twerp" last summer, articulating the frustration many in the tribal community feel toward the prediction market upstarts.
Despite that friction, Rocha told the publication he views Bonta as an ally. He pointed to the Attorney General's office issuing an opinion last year declaring daily fantasy sports illegal in California, as well as recent moves to restrict cardrooms that compete with tribal casinos, as evidence that Bonta is willing to act when the moment calls for it. Bonta's office described the prediction market landscape as new and noted that courts are still actively determining the legal boundaries of what these platforms can offer.
The Regulatory Patience Has a Limit
For entrepreneurs and investors operating in the prediction market and broader crypto space, California's position is a masterclass in strategic patience. Bonta is not ignoring the sector. He is signaling that the state reserves the right to act, and that no one should assume the current permissive environment is permanent. The CFTC's framework for event contracts is still evolving, and court rulings in the coming months could fundamentally alter how states exert control. Any platform betting on continued regulatory ambiguity in California is making a risky wager. The infrastructure for a crackdown, from legal precedent to political will from tribal allies, is already being assembled.
