It's a theater across the street from the Kings arena. Probably cheaper to rent for the weekend and I'm sure Crypto aka Staples Center would rather host a concert on a summer Friday+Saturday as well.
What's the point in having the prospects and their families there if nobody who've been involved in picking the players are there? Are the players only going to shake Gary Bettman's hand instead of the GMs?
I'm sure the top players will still enjoy the camera time. Easy to forget that these guys are teenagers, so the spotlight of being on national TV (with your new jersey) is still alluring. I remember Scott Gomez telling a story about calling his friends to ask how he looked after being drafted with the final pick of the first round only to be told that the TV feed had already switched to a different event. I'll be curious if more of the 2nd day guys opt to stay home though.
I was under the impression that teams would still send a representative to make the pick (and greet the player). Instead of the GM (or somebody involved in the draft process), it would be a notable alumnus, current player, or celebrity fan. We got a taste of that this past draft with Joe Thornton, Connor Bedard, Celine Dion, Michael Buffer, and Anders Lee doing the announcement for their respective teams. Mix in other guys like Scott Niedermayer, Rick Nash, and Martin Brodeur who work for their teams. Last time the draft was in LA, the Islanders let actor Kevin Connolly announce the Brock Nelson pick.
As others pointed out, the NBA/NFL do their drafts this way as well. While I did enjoy the NHL teams physically being there, functionally it won't be that much of a different experience for the prospect. I think most of them would remember their requisite photoshoot and celebratory meal with their family than quickly meeting the hockey ops from the club that just drafted them. Most of the prospects will be in camp just a few days later to meet with their new team anyways.
While I did enjoy the optics of the teams physically being there, I totally get why teams pushed to decentralize so they didn't have to pay for flights/hotels.