The Takeaway: An FAQ About California Fantasy Sports As AG Opinion Looms
Gambling news roundup: Massachusetts sends cease-and-desist letters to offshore sportsbooks; controversy at the World Series of Poker; no sports betting tax hike in Ohio.
Every Thursday in The Takeaway, The Closing Line provides commentary on trends and news in the gambling industry.
News dropped last night that California’s attorney general is about to declare that real-money fantasy sports is illegal in the state. My initial reaction overnight here, and the first report from KCRA here.
I can now confirm the KCRA report via my own sources, and I can also tell you that multiple sources say the opinion aims to cover all forms of real-money online fantasy sports. More on that in a bit.
I’ve been covering the legality of daily fantasy sports for a decade, including in 2015 when there was chatter about then-AG Kamala Harris potentially weighing in on DFS. So I am going to try to give you as much backstory and context as I can as we approach what could be a seismic moment for the fantasy sports industry in the United States.
What will the AG opinion on California fantasy sports say?
The original KCRA report was pretty vague on what would be covered, just saying that “online fantasy sports platforms” would be deemed illegal.
I don’t know anyone who has seen the actual opinion, but multiple sources confirm that the opinion is being framed as covering all real-money fantasy sports. That could mean any platform where you play a fantasy contest and transactions happen on the platform. That could include:
Fantasy pick’em against the house.
Peer-to-peer fantasy pick’em.
Traditional daily fantasy sports (the original version offered by FanDuel and DraftKings).
Season-long fantasy sports leagues and platforms, where the platform gets involved with payments.
Souces believe all of these things will be covered by the AG opinion, but the devil may be in the details of the actual language.
Wait, this would impact season-long fantasy?
Yes and no.
The vast majority of fantasy sports leagues in the US take place without the platform getting involved in the transactions. They are done among friends, family members, co-workers, etc., and the finances are handled outside of the fantasy platform. It’s difficult to believe that the AG’s opinion would interfere with any of that.
There are some fantasy platforms that deal in transactions for season-long. Some larger fantasy operators, like Yahoo and CBS, do offer “prize” leagues where they add a fee for doing the league finances and they hold and distribute prize money. Those leagues are already not offered in some cohort of states, depending on the operator. Yahoo, for instance, doesn’t run them in a dozen states.
A rising format in recent years is Best Ball, where you draft a team before the season and there’s no roster management necessary.
Bottom line: There’s no universe in which season-long fantasy goes away in California. The free-to-play version — where finances aren’t on platform — isn’t going to be impacted.
The rest might be.
What is the impact of an AG’s opinion on fantasy sports?
AG opinions in California don’t carry the force of law. Here’s what they do, according to the AG’s website:
The Attorney General’s opinions are advisory, and not legally binding on courts, agencies, or individuals.
Nonetheless, Attorney General’s opinions are usually treated as authoritative by the officers and agencies who have requested them,
In addition, Attorney General’s opinions are often treated as persuasive authority by courts.
After the opinion comes out, it will be interesting to see 1. if the AG follows up on the opinion with cease-and-desist letters and 2. how operators react.
So how will operators respond to an AG opinion?
That’s hard to know, and operators are probably still grappling with this question. I gather some pick’em operators have been aware of the AG opinion before yesterday. But smaller operators may be learning about this in real time.
What we do know is that California is a large part of current revenue for fantasy pick’em/parlay operators like PrizePicks and Underdog. If California were to come off the map, that’s a huge part of their addressable market and revenue disappearing in a heartbeat. I don’t think anyone would leave California without a fight.
Some possible outcomes:
The AG opinion comes out, and no one leaves, and nothing happens. How likely is that? It’s at least in the range of outcomes. I would imagine the AG opinion could create issues downstream for fantasy operators, namely payment processing. But could it be business as usual for some fantasy operators in the short term? It’s at least feasible.
The opinion comes out, and some cohort of fantasy pick’em app companies challenge this in court, in some way.
The AG follows up with cease-and-desist letters, and the issue ends up in court somehow.
No matter what, I don’t see the AG opinion coming out, followed by everyone packing it up and calling it a day immediately. California is too big, and too important.
Stay tuned.
So what’s the current legal status of daily fantasy sports?
I would need another couple of emails to do this topic justice, so we’ll just hit the highlights. States fall into roughly five buckets when it comes to the legality of daily/paid-entry fantasy sports:
States where real-money fantasy has long been considered illegal because of existing state law or attorney general opinions.
States where there are fantasy sports laws on the books that allow for almost all types of fantasy.
States where fantasy pick’em vs. the house is not considered legal, but other forms of fantasy that are peer-to-peer are OK.
States where traditional DFS is considered fine, but pick’em of any type is not.
States where the law doesn’t say anything about fantasy sports, and DFS exists as a game of skill under existing state laws. (This is California, more later.)
There’s some nuance to all of the above, but that’s the top-level status. In practice, it can be a bit complicated as the states an operator serves vary greatly. At the operator level:
DraftKings offers its traditional DFS contests in 44 states. The same is true of FanDuel.
DraftKings Pick 6 — its P2P pick’em product — serves 34 states, including California. FanDuel Picks, a similar product, operates in a much smaller group of states, and not in California.
The map gets far more complicated for PrizePicks and Underdog, which serve different jurisdictions.
PrizePicks offers against-the-house pick’em in 18 states, California included. It offers the P2P version in 17 states:
Underdog has a robust page on states it doesn’t serve with different products. It is fairly aligned with PrizePicks, and does not offer pick’em in 16 states.
That’s just the biggest two operators; states served can vary wildly by operator based on risk tolerance, existing fantasy sports laws, and more.
Which operators will be impacted by the AG opinion?
The fantasy pick’em operators will be impacted the most. There are dozens of real-money pick’em operators; some of the biggest ones include:
PrizePicks
Underdog
Dabble
Sleeper
Betr
DraftKings Pick 6
As discussed above, some operations at season-long operators will be impacted. And of course, there’s DraftKings and FanDuel.
Does this impact FanDuel and DraftKings?
Yep.
It seems like Pick 6 will not be allowed in California. And it seems that DK and FD’s existing DFS and season-long contests might face legal issues as well.
On the latter point, it’s not clear that DraftKings and FanDuel would fight to keep their original DFS contests live. While DFS used to be all they do, sports betting and online casino now dominate the revenue at both companies. Losing DFS for California would be a rounding error on their ledgers.
It’s also possible they don’t exit without more explicit direction, and pending what the pick’em operators decide to do.
I think FanDuel probably doesn’t love that this is happening, but it won’t fight the opinion. Its DFS platform is pretty small, and Picks is a new product that’s not even in the state. The possibility of offering sports betting in California down the road via partnerships with the tribes is the prize that FanDuel covets.
DraftKings might have more of a decision on its hands, since it has the pick’em business already in California. But the same dynamic exists with the hope of legal sports betting in the state in future years.
We’ll see.
Does federal law make fantasy sports legal?
NO.
I wrote a rant about this a couple of years ago. Link here, excerpt below if you don’t feel like clicking:
The starting point for the legality of FanDuel and DraftKings contests in the early 2010s, and for the fantasy sports vs. the house industry now, has always been the federal Unlawful Internet Gambling Enforcement Act of 2006.
This post is not a legal or academic treatise. Plenty of very smart people have written about UIGEA more granularly than I have. I just want to make a couple of points:
The UIGEA doesn’t legalize anything, including fantasy sports.
The UIGEA is a law about payment processing.
Nothing in UIGEA makes paid-entry fantasy sports contests inherently legal beyond their intersection with processing payments under federal law. The law leaves states to determine what is legal and what is not when it comes to fantasy sports and if they venture into the realm of gambling. And it’s very possible and sometimes very clear that DFS can be considered “not gambling” under many state laws; I am just not sure how many of those states have really contemplated that issue. …
What I want is for people to stop waving “UIGEA MAKES FANTASY SPORTS LEGAL” in our faces as if it has an ounce of truth to it. UIGEA is not a bag of magic beans that lets you do whatever you want as long as you call it “fantasy sports.”
What does California law say about fantasy sports?
In reality, nothing. Fantasy sports is not mentioned in state code.
There are a number of laws that may or may not intersect with fantasy. I’ll leave the analysis to the AG, when we get the opinion. Here are a couple pieces of the code that may be invoked (here and here).
California uses the “predominance test” to determine what is gambling and what is not (ie is a game outcome primarily determined by chance or skill?)
Real-money fantasy sports exists on a spectrum; there’s certainly skill present in all of it, but not every contest, entry and league has the same amount of skill. Parlays, of course are offered as gambling around the US.
Why is this happening now?
That’s an interesting question that I can’t definitively answer.
What I do know is that tribal gaming interests have been focused on what they perceive as threats to their gaming industry. They are pushing for a bill to ban sweepstakes gaming that just surfaced. They’ve also been asking the AG’s office to act on a variety of fronts — including daily fantasy sports — for the better part of a decade.
We’ve also seen PrizePicks get more aggressive in California this year, signing deals with a trio of Major League Baseball teams in the state as an official daily fantasy partner.
While the issue has been percolating for years, it may have finally come to a head.
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Gambling news roundup
Attorney General’s Office Issues Cease-and-Desist Letters to Two Online Gambling Operators for Illegal Offshore Casino and Sports Betting Operations (press release): “The Massachusetts Attorney General's Office (AGO) today announced that it has issued cease and desist letters to two online gambling operators, BetOnline.ag and Sportsbetting.ag, for offering online gambling and betting products in Massachusetts without obtaining the required licensure from the Massachusetts Gaming Commission. According to the letters, BetOnline.ag and Sportsbetting.ag have been operating online gambling platforms that include casino-style games such as slots, blackjack, roulette, baccarat, and poker, as well as betting on most U.S. major league sports and horse races, without the necessary licenses issued by the Massachusetts Gaming Commission as required under Massachusetts law. The Attorney General's Office alleges that BetOnline.ag and Sportsbetting.ag have failed to secure proper licensure as required by the state, yet have actively promoted their services to Massachusetts residents, using marketing tactics that depict U.S. major league teams, players, and collaborations with U.S. sports and entertainment-related content creators.”
Ohio Will Not Increase Sports Betting Tax Rate in Latest Budget Deal (Sports Betting Dime): “At least one state will be keeping its sports betting tax rate the same. Ohio lawmakers recently agreed on the state’s new budget, but did not include a a proposed increase to Ohio’s sports betting tax rate. Gov. Mike DeWine (R) suggested increasing Ohio’s sports betting tax rate in his own budget proposal earlier this year.”
ClubWPT Gold sweepstakes promo at center of WSOP bracelet controversy (SBC Americas): “The World Series of Poker (WSOP) in Las Vegas may be the center of the poker world every summer but it is a promotion by one of its major competitors that is drawing attention. The results of the 2025 WSOP Millionaire Maker tournament are under investigation by the WSOP after public outcry that players allegedly colluded to help win a prize offered by the World Poker Tour’s sweepstakes poker product, ClubWPT Gold.”
Macquarie Raises 2025 Online Casino, Sports Betting Revenue Expectations (Legal Sports Report): “Chad Beynon of Macquarie raised his 2025 online gaming gross revenue forecast given the growth seen in online casino and sports betting so far this year. He now forecasts $31.6 billion in total iGaming revenue for the year, an increase of 25% from 2024. Beynon previously estimated a 20% increase in 2025. Online sports betting accounts for a majority of the revenue forecast at $18.9 billion, up 25% from last year. Online casino revenue is expected to hit nearly $12.7 billion, a 24% increase.”
YouTube Slots Influencers Hit The Jackpot (Casino Reports): “As Lady Luck HQ, the online slots influencer clad in a pink and black polka dot dress, she strode through the Seminole Hard Rock Hotel & Casino trailed by an entourage of family, friends, and content capturers. She mugged in front of a video board advertising her appearance that night with three contemporaries — the so-called “Slot-tastic Four” — and dutifully fielded questions from the casino social media staff on a makeshift red carpet.”
Riot decides that allowing sports betting sponsorships in top-tier League of Legends and Valorant esports is a good idea (PC Gamer): “Riot Games believes that "building the future of esports means investing in a sustainable ecosystem, not just for today, but for the long run," Riot's president of publishing and esports John Needham said today, and that's why the studio has decided to open the door to "betting sponsorship opportunities" for Tier 1 League of Legends and Valorant teams in the US and EMEA.”
"We know sports betting isn’t for everyone, and that some fans have strong feelings about it, and we respect that," Needham wrote in today's announcement. "However, the reality is that betting activity already exists around our sports and will continue whether we engage with it or not.”
BetConstruct to launch full-scale ecosystem for gaming affiliates (SBC Americas): “BetConstruct is aiming to improve how online casino operators and affiliates collaborate. The Armenian gaming solutions provider announced the launch of Affigates, an affiliate ecosystem that allows online operators and affiliates to partner and scale. The full-scale ecosystem provides a platform for software and program management for affiliates.”
More than 3,000 gathered in Toronto for Canadian Gaming Summit (SBC Americas): “The 2025 Canadian Gaming Summit concluded last week, breaking attendance records and setting the stage for the event’s evolution into SBC Summit Canada. In what marked both a culmination and a turning point, the 28th and final edition under the current name brought together key stakeholders from across Canada and beyond to reflect on challenges and chart a future course for the country’s gaming industry.”
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