California AG Rules Daily Fantasy Sports Illegal

Defining DFS as Sports Betting

Bonta’s opinion labels both pick’em and draft-style DFS games as violations of California’s ban on sports wagering. Pick’em games, where players bet on individual athlete performances like Steph Curry’s points, are “materially indistinguishable” from parlay or prop bets, Bonta argues, citing section 337a’s prohibition on wagers tied to athletic contests.

Draft-style games, where players build teams and earn points based on real-world performances, fare no better; entry fees are deemed bets, as financial outcomes hinge on sporting events. “Players aren’t competing in the games themselves; they’re wagering on others’ performances,” the opinion states, dismissing claims that DFS is a distinct contest of skill.

The ruling sidesteps whether DFS qualifies as a lottery, noting that determining if skill or chance dominates is a factual question beyond the Attorney General’s scope.

Yet, Bonta emphasizes that skill-based arguments don’t exempt DFS from section 337a, which allows bets to involve judgment without altering their illegality.

This stance, requested by Assemblymember Tom Lackey and former Senator Scott Wilk in 2023, clarifies a legal gray area where DFS operators like DraftKings and FanDuel have thrived for over a decade.

Industry Pushback and Legal Limbo

The ruling blindsided DFS operators, who face potential losses in the billions. California accounts for 10% of Underdog Fantasy’s revenue, and the state’s $200 million DFS market is a cornerstone for DraftKings and FanDuel, which have called it a “staple for millions of Californians.”

Underdog sued in Sacramento Superior Court to block the opinion, arguing it’s a “mixed question of law and fact” exceeding Bonta’s authority and that Wilk’s retired status in 2023 invalidated his request. The court rejected their Temporary Restraining Order, citing delay and the opinion’s advisory nature, which “does not carry the weight of law.”

Still, Underdog persists, fearing “immediate, irreparable harm” to a “thriving industry.” PrizePicks, meanwhile, shifted to a peer-to-peer “Arena” format, hoping to evade scrutiny by pitting players against each other rather than the house.

The California Nations Indian Gaming Association (CNIGA) and Tribal Alliance of Sovereign Indian Nations, representing $8 billion in tribal casino revenue, championed Bonta’s opinion. They view DFS as “illegal and unregulated gambling” that risks fraud and underage betting, undermining their regulated enterprises.

“This protects our communities from predatory platforms,” said CNIGA chairman James Siva. Their lobbying, which pressured lawmakers to delay DFS-friendly legislation, reflects a broader turf war, as tribes guard their economic stronghold against digital upstarts. Yet, the Coalition for Fantasy Sports, including Underdog, PrizePicks, and Betr, counters that 75% of California voters support DFS, per internal polls. “It’s shocking to take this away from fans,” said coalition director JT Foley, decrying “hypocrisy” when crypto trading faces less scrutiny.

Governor Gavin Newsom, however, distanced himself, with spokesperson Izzy Gardon stating, “AG Bonta got it wrong,” and urging a solution that preserves DFS. This echoes the restraint of former Attorneys General Kamala Harris and Xavier Becerra, who avoided similar action