California Attorney General Declares Daily Fantasy Sports as Illegal Betting
California’s Attorney General, Rob Bonta, recently expressed a strong stance against daily fantasy sports (DFS), arguing that these games should be classified as illegal betting under state law. This viewpoint raises significant questions about the future of DFS in California, an issue that has garnered attention in the face of evolving sports entertainment.
Bonta’s legal opinion was prompted by inquiries from Assembly member Tom Tackey, who sought clarity on the legality of DFS activities that have become widely accessible through various online platforms. In his analysis, Bonta concluded that the operational structure of DFS mirrors traditional sports betting, which is prohibited under California Penal Code section 337a. He emphasized that participants pay to enter these contests, with the potential to win real money based on the performance of players, drawing a direct parallel to illegal betting practices.
Analyzing Bonta’s Perspective
The Attorney General specifically scrutinized various types of DFS, including pick’em games where players forecast athlete performances and draft games where competitors assemble teams based on player selections. Bonta argued that these activities resemble proposition betting and represent an indirect method of wagering on sporting events.
The decision was bolstered by a rejection of arguments from DFS operators who insisted their games were skill-based competitions. Bonta maintained that the distinction between skill and chance was irrelevant in the context of California’s absolute prohibition against any betting forms. By framing entry fees as implicit wagers, he solidified the view that entering DFS contests constitutes illegal gambling.
Rebutting Operator Defenses
Bonta systematically addressed defenses offered by DFS companies. One common assertion was that the games constituted competitions rather than bets; however, he differentiated between active participation in contests versus placing monetary stakes to benefit from others’ athletic performances. He dismissed this contention, ruling that the mere act of paying to join, irrespective of competitive structure, constituted illegal wagering.
Furthermore, he countered claims referencing the federal Unlawful Internet Gambling Enforcement Act (UIGEA), clarifying that state law takes precedence over federal provisions in defining betting regulations. The location of the operators, whether inside or outside California, was also deemed irrelevant, emphasizing that marketing DFS games to California residents remained illegal regardless of the service provider’s physical presence.
A Wider Context
This opinion is not singular in the landscape of U.S. gambling regulations; other states have similarly classified DFS as betting, prompting legislative measures to clarify and enforce those definitions. Bonta referenced rulings in Virginia, Arizona, Wyoming, and Florida, where state regulators have echoed his findings regarding the dangers of treating DFS as a non-gambling activity.
With section 337a designed to prevent addiction and protect consumer welfare, Bonta’s statement landed weighty implications for the DFS industry in California. Should this opinion serve as a guiding precedent, it may pave the way for definitive legislative actions aimed at regulating or outright banning DFS games.
Future Implications
While Bonta’s opinion lacks legal enforceability on its own, it signals a crucial moment for DFS operators, many of whom are responding defensively. Companies like Underdog, which generates approximately 10% of its revenue from California, have openly contested the opinion’s implications. Attempts to preemptively challenge the issuance of Bonta’s opinion faced judicial roadblocks, ultimately allowing it to publicize and potentially jeopardize the operator’s standing within the state.
In light of this legal landscape, consumer advocacy groups have wasted no time capitalizing on the situation. Multiple class action lawsuits have been launched against major DFS platforms, including FanDuel and DraftKings, alleging violations of state laws related to online betting. These lawsuits assert a duty to transparency regarding the nature of DFS, highlighting the potential for consumer deception under the guise of fantasy sports.
As the legal and consumer responses unfold, the future of daily fantasy sports in California remains precarious, with both operators and enthusiasts left to navigate the ramifications of this significant legal development.