DraftKings is currently facing a class-action lawsuit filed in federal court in California, alleging it has engaged in illegal sports betting through prediction markets. The suit was initiated on August 13, 2026, in the U.S. District Court for the Central District of California, by plaintiff Ricardo Andrio, who seeks both injunctive relief and financial compensation for himself and other affected Californians.
The complaint argues that DraftKings has recently attempted to avoid state laws prohibiting its sportsbook operations, introducing products that mirror sports betting in states where such activities are illegal. It asserts that, by marketing its platform as a legitimate 'prediction market,' DraftKings misleads consumers into believing they are participating in a trading platform rather than engaging in sports betting. This includes criticisms regarding the lack of responsible-gaming measures, unrestricted access for users aged 18 and older, and transferring all legal risks to consumers through its terms of use, particularly amid ongoing litigation and regulatory concerns about the legality of event contracts.
Andrio aims to represent California residents who purchased sports event contracts via DraftKings Predictions and subsequently incurred losses. The lawsuit alleges that these individuals would not have participated had they been aware that Predictions effectively operates as an unlicensed sportsbook.
The filing also points out that DraftKings is utilizing its established reputation and market position as a licensed sportsbook to promote Predictions, while changing terminology to make it seem less like sports betting does not change its fundamental nature. "DraftKings markets these sports prediction product[s] as 'event contracts' or 'trading,' rather than sports betting, thereby creating the misleading impression that the product[s] are materially different from, and more lawful than, traditional wagers," stated the plaintiffs’ counsel.
The lawsuit, claiming violations of California's Unfair Competition Law and False Advertising Law, seeks to block DraftKings from offering Predictions in the state and to recover expenses incurred by users, with total claims potentially exceeding $5 million.
DraftKings has previously confronted class-action lawsuits regarding illegal gambling in California. A separate federal judge recently permitted another related class-action suit around its daily fantasy sports offerings to proceed.
Initially, DraftKings launched its Predictions product in December 2025, making California one of the first states to receive its sports event contracts. This rollout followed the introduction of Spanish-language features the previous November, aimed at expanding its reach into growing demographics in the U.S., particularly in states like Texas and California.
Since its inception, DraftKings has integrated sports prediction markets into its all-encompassing app, positioning event contracts alongside its state-regulated gambling options, with product availability adjusting based on user location.
In tandem with legal challenges, DraftKings has ramped up its marketing efforts in California and other states where sports betting is prohibited. Recent research from Aldrin Research indicated that the company has launched targeted advertisements in California, Florida, Georgia, and Texas, encouraging new customers with promotions mirroring sports betting offers, such as $200 in bonus trades after a $5 deposit.
A company update in late June confirmed the national expansion of Predictions, heavily emphasizing its California availability. During a recent earnings call, DraftKings CEO Jason Robins highlighted the need for broader consumer understanding regarding the company's services in states without legal online wagering. He anticipates that, as awareness grows, particularly around the NFL season, customer acquisition will significantly accelerate.
