iGaming Weekly Recap (June 23–29, 2025): Will DFS Be Deemed Illegal in California?

New Jersey has increased taxes on online sports betting and casino games to 19.75%, up from 13% for sports betting and 15% for online casino games. The goal is to address a $1.5 billion budget deficit and fund programs like the Casino Revenue Fund for seniors and disabled individuals. Governor Murphy initially pushed for a 25% rate, but industry pressure led to a compromise at 19.75%.

The betting industry fears higher taxes could drive players to unregulated offshore platforms, harming the regulated market and reducing long-term state revenue. They also worry about fewer promotions and less competitive odds. New Jersey’s tax hike is part of a broader national trend, with states like Maryland, Louisiana, and Illinois also raising betting taxes.

A coalition of 27 federally recognized tribes and seven tribal organizations, including the Indian Gaming Association and National Congress of American Indians, filed an amicus brief in the U.S. District Court for the District of Maryland. They opposed Kalshi’s request for a preliminary injunction to block a cease-and-desist order from the Maryland Lottery and Gaming Control Commission (MLGCC), which accuses Kalshi of offering unlicensed sports betting. Tribal leaders like Victor Rocha and James Siva categorically denied Kalshi’s claims of “productive talks” or “tribal collaboration,” calling them false.

The tribes acted because they view Kalshi’s contracts as illegal gambling that undermines their sovereignty under the Indian Gaming Regulatory Act (IGRA) and poses an “existential threat” to their gaming revenue. This revenue is a “lifeline” for tribal economies, funding education and healthcare. The tribes argue Kalshi’s operations violate public interest and the CFTC’s own Rule 40.11(a), which prohibits gaming-related contracts.

Massachusetts is engaged in a heated debate over legalizing online casinos through Senate Bill 235 and House Bill 332. Industry giants like DraftKings and FanDuel actively support these bills, claiming iGaming could generate $230 to $275 million annually in tax revenue (at a proposed 20% rate). They also argue legalization would create jobs, curb the $7 billion illegal gaming market in Massachusetts, and introduce age verification and responsible gambling tools. John Pappas of the iGaming Development and Economic Association suggests legalization could support up to 20 operators, boosting competition and state revenue.

However, labor unions and addiction prevention advocates strongly oppose the bills, raising alarms over potential job losses and increased addiction risks. Jamie McNeil of Local 26 Hospitality Workers’ Union warned that iGaming could eliminate 862 casino jobs and nearly 2,800 supporting jobs. No vote has been taken yet, and the bills’ fate hinges on balancing economic benefits with social risks before the legislative session ends on November 19.

Kalshi, a prediction market platform, achieved a $2 billion valuation after a successful Series C funding round, raising $185 million. The round was led by Paradigm, with participation from Sequoia Capital, Multicoin Capital, and Citadel Securities CEO Peng Zhao. This milestone makes Kalshi a “unicorn.” Kalshi plans to use the funds to hire tech talent for integrations with brokers like Webull and Robinhood and to accept cryptocurrency deposits via ZeroHash to reach a broader audience. Across the pond, Polymarket is reportedly on the verge of securing a $200 million Series C round, per Bloomberg.

Attorney General Rob Bonta is set to issue a legal opinion by July 3, declaring all Daily Fantasy Sports (DFS) platforms illegal in California. This decision could upend the operations of companies like DraftKings and FanDuel, which have been a staple for millions of Californians for over a decade.

Bonta’s decision is backed by the California Nations of Indian Gaming Association (CNIGA), whose chairman, James Siva, emphasizes the need to combat “illegal and unregulated gambling” that exposes players to fraud and minors to gambling. If Bonta’s opinion holds, it will impact 7 million Californians playing DFS. The Coalition for Fantasy Sports called the move “devastating.” While lawyers expect Bonta to file lawsuits to enforce the ruling, courts will have the final say, and their decisions may not align with the Attorney General’s opinion.