Report: California AG Set To Say Daily Fantasy Sports Is Illegal
The legality of fantasy pick’em apps like PrizePicks and Underdog seemed to have been settled across the United States. But a report out of California has the potential to turn the daily fantasy sports industry on its head.
A story from KCRA, a TV station in the capital city of Sacramento, says California Attorney General Rob Bonta is set to issue an opinion that is “expected to deem all online fantasy sports platforms illegal.”
More from KCRA:
Within a matter of days, Bonta is expected to release a legal opinion with more details and why he came to this conclusion, according to several sources unauthorized to speak publicly about the decision. The opinion, which KCRA 3 is the first to report, could put billions of dollars at risk for the companies that have been operating in the state for a decade. …
In a statement to KCRA 3, the Coalition for Fantasy Sports said the opinion would be devastating news to the millions of California sports fans who love to play fantasy sports.
"We hope the Attorney General's office will consider the views of sports fans across the state before making a decision. Californians have been playing daily fantasy sports games for more than a decade, and it is shocking to think that the state would suddenly take them away," a spokesman said.
(I encourage you to click through to the link. It’s a big scoop and the site deserves the credit. There’s far more reporting than I am including here.)
I’ve heard rumblings of the AG opinion as well over the past week; I didn’t feel I had the sourcing to run with it. The legal status of daily fantasy sports in California has been in question for more than a decade, dating back to when Kamala Harris was the AG.
Fantasy pick’em — where users create parlays based on player statistics — faced pushback around the country for parts of 2023 and 2024. While they operate as a fantasy sports product, there’s functionally little difference between pick’em and placing a parlay on player props at sportsbooks. However, momentum against these apps had slowed.
The report also references a letter from the California Nations Indian Gaming Association circulating in the legislature, which you can see here. That letter alludes to the idea that an opinion on the subject would be issued.
On behalf of the undersigned tribal organizations, we write to inform you that certain fantasy sports operators may be seeking to introduce legislation regarding the legal status of fantasy sports games in California.
Since 2023, the California Attorney General has been reviewing the critical question: “Does California law prohibit the offering and operation of daily fantasy sports betting platforms with players physically located within the State of California, regardless of whether the operators and associated technology are located within or outside of the State?”
An official opinion from the Attorney General’s office is pending and expected this year. Despite this pending opinion, some fantasy sports interests are already approaching members of the Legislature to author and/or support a bill on this issue. We respectfully urge you to withhold any commitments or authorships until the Attorney General releases his opinion. It is essential that all stakeholders—including the Legislature—have the benefit of clear legal guidance and facts before proceeding with any legislation. Should a bill be introduced before the Attorney General’s opinion is released and fully evaluated, we will be compelled to oppose it.
The opinion on fantasy sports is still listed as pending on the California AG’s website.
Notably, PrizePicks has signed sponsorship deals with three Major League Baseball teams in California in recent months.
So what would be illegal?
As much reporting as KCRA did, it’s not exactly clear what Bonta would deem illegal. Would it be a narrow interpretation, or would it cover all forms of fantasy sports for real money?
There are varying versions of online fantasy sports, all of which have been treated slightly differently by regulators, policymakers and attorneys general. Here are the four buckets I would put them in:
Fantasy pick’em against the house, offered by dozens of companies, the biggest of which are PrizePicks and Underdog.
Peer-to-peer fantasy pick’em. That product is also offered by PrizePicks and Underdog in some parts of the country. DraftKings Pick 6 and FanDuel Picks also fall in this category; the former serves California, the latter does not.
Traditional daily fantasy sports. Think the original lineup-based version of DFS as offered by DraftKings and FanDuel for more than a decade. While this was once a massive business, it’s much smaller now between FanDuel and DraftKings moving into online gambling and the rise of fantasy pick’em.
Online fantasy sports for real-money. There are some platforms that offer seasonlong fantasy sports and also handle payment processing — see Fantrax, for example. For most fantasy sports leagues that go on around the country, payments are taken care of outside of the fantasy app or site.
Is Bonta targeting only pick’em? All DFS? All online fantasy sports? It’s not clear from the reporting. It would unquestionably sweep up fantasy pick’em against the house; it might include some of these other categories. We may not know the answer until we get the actual opinion or hear more details about it.
What’s next for daily fantasy sports in California?
Assuming the opinion is issued, and it’s negative for daily fantasy sports, we’re almost certainly going to see this end up in court.
PrizePicks, Underdog and perhaps other top fantasy pick’em operators would have no choice but to file a lawsuit to challenge the AG opinion in some way. California is a huge part of the addressable market these apps serve. Losing California might not be a death blow, but it would severely reduce revenue.
You could in theory continue to operate in the state if it’s just an opinion and there’s no accompanying cease-and-desist letters. But that would be fraught with peril and it’s possible payment processors get cold feet at that point.
While I am not sure exactly how it would manifest, operators would ask a court to stop any potential enforcement from the AG’s office or otherwise push back on the AG’s opinion on fantasy’s legal status.
Regardless, the issuing of an opinion by the AG is likely the start rather than the end of the pending saga around DFS in California.