California AG Says Daily Fantasy Sports Are Illegal

Daily fantasy sports games are prohibited under California state law because they “involve betting on sports,” California’s attorney general said in an opinion issued on Thursday. 

The 33-page opinion from California AG Rob Bonta says exactly what was expected: daily fantasy sports games, including pick’em and draft-style games, are prohibited under the California penal code. The opinion notes that “numerous” public comments were received and considered on both sides of the matter.

“Like traditional sports wagering, daily fantasy sports games enable participants to win or lose money based on the outcome of sporting events played by third-party athletes,” the opinion says.

Underdog Sports had sued to try and stop Bonta from issuing the opinion—arguing the mere issuance of it represented an “imminent, existential threat” to its business—but on Wednesday the company was rejected in that attempt. The California state judge noted that Underdog has been aware of the impending opinion for a year-and-a-half and “have not established that they will suffer any harm as a result of the issuance of [the opinion].”

In response, Underdog issued a statement to Front Office Sports Wednesday saying it would continue to offer its daily fantasy sports contest in California. 

The California Department of Justice tells FOS it “expects companies to come into compliance with the law,” but would not comment on whether it might bring enforcement actions should companies choose not to do so. “Any specific action beyond that is premature,” they said.

Underdog has argued its daily fantasy sports offerings are games of skill, not chance—and that courts in New York and Illinois have found as such—so they are allowed under California law, even though traditional sports betting is not legal under California law. 

Among the primary reasons some states have refused to legalize sports betting is because they are considered games of pure chance, rather than skill. Underdog argues its daily fantasy sports offerings require contestants to do “significant research,” including some that take place over the course of an entire season and necessitate ongoing monitoring.

But the California AG doesn’t agree: “Just because the operator is not betting against the players does not mean that the players are not betting against each other,” the opinion says.

A spokesperson for DraftKings tells FOS the company “respectfully disagrees” with the interpretation expressed in the opinion with respect to peer-to-peer fantasy sports contests, and that “we believe peer-to-peer fantasy sports contests… are legal in California, and we intend to continue offering them — as we have done without challenge or issue for over 13 years.” 

“We intend to work with stakeholders, including the Office of the Attorney General, to try to find an amicable resolution,” the statement says. 

A spokesperson for FanDuel tells FOS: “We look forward to meeting with the Attorney General’s office to talk through our next steps.”

A representative for Underdog did not immediately respond to a request for comment Thursday afternoon.