DraftKings Faces California Class-Action Suit Alleging Predictions Operates as Unlicensed Sportsbook

DraftKings faces allegations of illegal sports betting via prediction markets in a new class-action lawsuit filed in federal court in California. The suit arrives as the company ramps up advertising in the largest states where online sports wagering remains prohibited.

The class-action suit was filed in the U.S. District Court for the Central District of California on Aug. 13. It seeks injunctive relief and financial damages for plaintiff Ricardo Andrio and other Californians. The complaint suggests aggregate claims could exceed $5 million.

“After years of refraining from operating in these states, DraftKings has now sought to evade and circumvent state laws that bar its sportsbook operations,” reads the complaint. It accuses DraftKings of deceiving consumers by marketing Predictions as a legitimate prediction market rather than a sports betting product.

Allegations Center on Misleading Marketing Practices

Andrio seeks to represent California residents who bought sports event contracts through DraftKings Predictions and lost money. The suit claims they would not have placed those wagers had they known the company was allegedly misleading consumers about the product. It alleges violations of the state’s Unfair Competition Law and False Advertising Law.

Counsel for the plaintiffs stated that DraftKings leverages its reputation as a licensed sportsbook by promoting Predictions to the same customer base despite offering an unlicensed product. The operator launched Predictions in December 2025, with California among the initial states. A separate class action over its daily fantasy sports offerings was allowed to advance last month.

Advertising Expansion in Restricted Jurisdictions

DraftKings has intensified marketing for Predictions in California, Florida, Georgia and Texas. Research firm Aldrin Research noted state-specific ads offering new customers $200 after a $5 first trade. The ads reference event contract trading offered by DraftKings Predictions, a CFTC-registered entity.

Jason Robins referenced these cross-country efforts on a recent earnings call. “I do believe there’s an education period that needs to occur for people to understand that, actually, if you are in California or Texas, you can use DraftKings now,” Robins said. According to reporting by SBC Americas, the company debuted Spanish-language functionality ahead of the Predictions launch to target demographics in these states.

The Legal Risks in Prediction Market Expansion

This case exposes specific vulnerabilities in how prediction products are positioned relative to state sports betting bans. The complaint highlights the absence of responsible-gaming safeguards, the 18-year-old minimum age, and terms that shift all legal risk to users amid acknowledged regulatory uncertainty. Outcomes here could prompt parallel challenges in other large jurisdictions, forcing operators to reassess marketing language, app integration, and compliance perimeters before NFL-driven customer acquisition accelerates.

Reporting: SBC Americas

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