California Attorney General Rob Bonta wrote an opinion last week that said daily fantasy sports operators are in violation of the state’s gaming laws.
Bonta said DFS contests are illegal because they “involve betting on sporting events” in a state in which bans sports betting. Bonta released his opinion in response to a request from state Assemblyman Tom Lackey (R-34).
Both “draft-style” and “pick’em-style” DFS contests were mentioned as illegal violations of California law.
Millions of dollars at stake
California’s laws state that betting “upon the result ... of any trial or contest of skill, speed or power of endurance” involving persons or animals is forbidden. Bonta declared that DFS contests meet this criterion since players can only win or lose money depending on the performances of real athletes.
According to Section 337a of California’s Penal Code, violations can result in up to a one-year imprisonment in county jail and a fine of up to $5,000. The AG's decision impacts dozens of DFS operators like FanDuel, DraftKings, and Underdog. Some companies have offered DFS in California for more than a decade.
California, the most populous state in the country, is one of 10 states that have not legalized sports betting in any form. It had the largest DFS market in the country in 2024 with approximately $200 million in yearly entry fees, assisted by the lack of traditional betting opportunities.
DFS operators have existed in a "gray" area of California law, in which they were implicitly but not expressly banned. Because of that, operators have not been required to be licensed, and therefore, do not pay taxes on revenue to the state.
Bonta’s declaration mirrors opinions of officials in states such as Florida and Arizona, which determined that DFS contests are a form of sports betting. Hawaii, Idaho, Montana, Nevada, and Washington have outright banned DFS.
Just an opinion
Bonta’s opinion stated that whether DFS operators are located inside or outside of state lines, they are in violation of California laws. That could open them up to receiving cease-and-desist orders, which have been the preferred tool of many state regulators wanting to rid their market of unlicensed operators.
So far, Underdog and DraftKings are undeterred. Company officials have said they plan to continue offering DFS contests in the immediate future. Underdog tried to sue Bonta to stop issuance of the opinion, saying it presented an “imminent, existential threat.” That attempt was denied a day before the opinion was released.
Notably, the court decision that denied Underdog’s claim said that “the opinions of the California attorney general are advisory only and do not carry the weight of law.” That seems to mean that until further action is taken, DFS operators can continue to operate in the Golden State.
There is still a possibility of future action from state officials, attorney and US gaming law expert Dan Wallach told Front Office Sports.
“They are now on notice that the California AG has taken the view that these contests are illegal and there is a potential for enforcement action.”
A spokesperson for California Gov. Gavin Newsom (D) said the governor didn't agree with Bonta’s opinion, and the governor would be willing to talk with operators.