Underdog Fantasy Challenges California Attorney General's Decision on Daily Fantasy Sports Opinion
In the heart of the Golden State, the future of daily fantasy sports (DFS) is hanging in the balance. The California Attorney General, Rob Bonta, is expected to issue an opinion on the legality of DFS as early as this week, which could have significant implications for the industry.
Currently, DFS is considered illegal under the AG's interpretation in California. Major DFS operators like DraftKings and FanDuel have vacated the state, while Underdog Fantasy, a rising player in the industry, has adapted by switching to a peer-to-peer format to avoid classification as a house. However, the AG's office may still view this platform as facilitating illegal wagers.
Underdog Fantasy, which generates more than 10% of its annual revenue from California, is now fighting to stay in the market. The company has filed an emergency lawsuit in Sacramento Superior Court against Attorney General Bonta, aiming to stop him from issuing a potential opinion on the legality of DFS in California.
The legal argument is based on procedural grounds. Underdog claims that Bonta lacks the statutory authority to release the DFS opinion, as he is only authorized to issue legal opinions in response to questions that pertain directly to the duties of the requesting official. The company alleges that the AG's office is disregarding internal guidance on issuing formal opinions.
If Bonta's opinion declares all forms of DFS (peer-to-peer, house-based, or otherwise) illegal under California betting law, the consequences could be devastating for Underdog Fantasy and the broader fantasy sports industry. The company fears customer flight, loss of bank and payment processor relationships, investor concerns, and long-term reputational damage.
The legal sports betting industry, including DFS, has existed in a legal gray area in California for years. The situation reflects broader tensions between the DFS industry, tribal gaming interests, and legislative efforts to regulate or potentially outlaw certain sweepstakes and betting formats in California.
The court's decision on the challenge remains to be seen. If Underdog's lawsuit is successful, it could preserve the current state of legal ambiguity in California, allowing the DFS industry to continue without regulation or taxation. However, if Bonta's opinion stands, it could set a precedent for other jurisdictions and potentially force DFS operators out of the state.
[1] "California Attorney General Declares Daily Fantasy Sports Illegal", TechCrunch, [Link] [2] "Underdog Fantasy Sues California AG Over Daily Fantasy Sports Opinion", Sports Handle, [Link] [3] "California AG's Opinion on Daily Fantasy Sports Challenged in Court", Legal Sports Report, [Link] [4] "Underdog Fantasy Switches to Peer-to-Peer Contests in California", Fantasy Labs, [Link] [5] "California's Daily Fantasy Sports Battle: A Tale of Two Sides", Sports Handle, [Link]
- The legal argument presented by Underdog Fantasy in their lawsuit against California Attorney General Rob Bonta aims to prevent him from declaring daily fantasy sports (DFS) illegal, specifically targeting the statutory authority issue as Bonta is only authorized to issue legal opinions in response to questions that pertain directly to the duties of the requesting official.
- If California Attorney General Rob Bonta's opinion declares all forms of daily fantasy sports (DFS), including peer-to-peer or house-based platforms, illegal under California betting law, it could lead to devastating consequences for companies like Underdog Fantasy, causing customer flight, loss of bank and payment processor relationships, investor concerns, and long-term reputational damage.
- The potential issuance of an opinion by California Attorney General Rob Bonta on the legality of daily fantasy sports (DFS) could have significant implications for the industry, setting a precedent for other jurisdictions and potentially forcing DFS operators out of the state, as seen in the case of major operators like DraftKings and FanDuel who have vacated the state.
