Fanatics Chief Says Prediction Markets Opened California Quickly

Michael Rubin had a line at Bloomberg that deserved more attention than it got. A year ago, he said, if you had asked what chance California, Texas, Florida and Georgia had of legalising sports betting, the answer was no chance. A year later, Fanatics is operating in all four.

He did not mean Congress acted. He meant the CFTC did — or rather, that Fanatics read the regulatory structure correctly and moved before the structure was tested. Fanatics Markets launched in December 2025, and sports event contracts regulated at the federal level gave the company access to states where the state legislature had said no and meant it. Georgia's House voted down H.R. 450 in March, 63 votes short of the threshold required. The voters said no through their representatives. Fanatics entered anyway, through a different door.

This is the part of the prediction market legal fight that the litigation framing obscures. Rob Schwartz, who spent years as general counsel at the CFTC before moving to Morgan Lewis, described the jurisdictional dispute at a New York conference this week as a litigation mess. He is right. The CFTC's Tyler Badgley laid out four distinct categories of legal conflict — operators suing states, states indicting operators, the agency seeking injunctions, and a growing tail of class actions and tribal suits. Arizona indicted Kalshi on twenty counts in March. A federal judge blocked that case in April. The map is genuinely incoherent.

But Rubin's move shows that the mess, as of now, advantages the federal entrant. You do not need the litigation resolved in your favour if the injunctions keep running long enough to establish a customer base. By the time a court settles the jurisdictional question definitively — if one ever does — Fanatics will have two years of user data from Texas and California. That is not an accident of timing. It is the strategy.

The marketing number makes the same argument from a different angle. Rubin told Bloomberg that Fanatics plans to spend between $800 million and a billion dollars on marketing in 2027, up from $350 million this year. He has the cash — roughly a billion in net cash, no debt, and projected free cash flow of around two billion this year. The spend is affordable. More to the point, it is rational specifically because the legal uncertainty is running in operators' favour right now. You spend aggressively into a window. When the window closes — if it closes — you have the installed base.

The consensus reading of this sector treats the regulatory litigation as the story, and the commercial competition as secondary. I think that is inverted. The litigation is the precondition; Rubin's capital allocation is the actual signal. He is not waiting for clarity. He is pricing in continued federal cover long enough to matter, and he is spending accordingly.

The prediction market anyone running this story should be watching is not about the Supreme Court petition or the next injunction. It is whether Fanatics captures double-digit market share in the prediction market segment before the jurisdictional question resolves. Rubin said the company has 10% of the sports betting market since entering in 2023. The same playbook, funded at twice the marketing rate, against a prediction market segment that is still forming its user habits — that trajectory is not priced into how people are talking about Kalshi and Polymarket's competitive position.