Daily Fantasy Sports in California: A State of Semi-Limbo
On July 3, the California Department of Justice – under Attorney General Rob Bonta – released an opinion that classified daily fantasy sports as gambling. Although the opinion doesn’t have the force of law, it deems daily fantasy illegal in California.
However, almost immediately, California Gov. Gavin Newsom – Bonta’s boss – released a statement disagreeing with his AG’s assessment. Not surprisingly, fantasy sports operators also quickly weighed in, including DraftKings and FanDuel.
With the NFL season rapidly approaching, let’s set the table with what’s happened and where things possibly end up.
Dueling Statements
Bonta’s opinion stems from an interpretation of California Penal Code 337a, which prohibits wagering on sports. The California DOJ statement reads:
“We conclude that daily fantasy sports games constitute sports wagering and therefore violate section 337a. … We conclude that participants in both types of daily fantasy sports games – pick ‘em and draft style games – make ‘bets’ on sporting events in violation of Section 337a.”
A day later, the governor’s office backed away from the stance of its attorney general.
“The attorney general, in his independent capacity, issued this opinion — not the governor’s office,” Newsom spokesperson Izzy Gardon said. “While the governor does not agree with the outcome, he welcomes a constructive path forward in collaboration with all stakeholders.”
Bonta’s office itself rightly notes the opinion serves only as an effort to describe existing law. So the opinion doesn’t have enforceable power yet.
“The Department doesn’t have the authority to make new law or change the law. Only the Legislature and the voters of California can decide whether to change the law.”
Sacramento County Judge Jennifer Rockwell ruled against an injunction brought by Underdog Fantasy to block the opinion’s release. However, Judge Rockwell offered clarity on the force of the opinion.
“The attorney general’s issuance of an opinion … does not effect any change in the law.”
Operators Respond
DraftKings and FanDuel, the two behemoths in the fantasy sports space, both quickly countered the California AG’s opinion. From DraftKings:
“DraftKings respectfully disagrees with the interpretation expressed with respect to peer-to-peer fantasy sports contests in the non-binding advisory opinion issued by the attorney general of California. We believe peer-to-peer fantasy sports contests … are legal in California, and we intend to continue offering them – as we have done without challenge or issue for over 13 years.
“… We intend to work with stakeholders, including the Office of the Attorney General, to try to find an amicable resolution.”
Both FanDuel and DraftKings maintain that daily fantasy sports are games of skill, not betting. FanDuel, which also continues to offer daily fantasy in California, issued a much shorter statement in the wake of the opinion.
“We look forward to meeting with the Attorney General’s office to talk through our next steps.”
Also on July 3, the Coalition for Fantasy Sports – made up of PrizePicks and Underdog Fantasy, among others – planted its flag with the governor’s office, in a statement from executive director JT Foley.
“We agree with Gov. Newsom – AG Bonta got it wrong. As the [Sacramento County] Court said, this opinion ‘does not effect any change in the law’ and does ‘not carry the weight of law.’
“The law has not changed, a fact the last two attorneys general, Kamala Harris and Xavier Becerra, recognized as they specifically declined any similar action. We are hopeful the attorney general heeds the governor’s call to find a constructive solution that preserves the games that California sports fans love.”
Tribal Position
Bonta’s opinion has the support of the California Nations Indian Gaming Association. Currently, most legal gambling in the Golden State is via 73 tribal-operated casinos. Other than for horse racing, California sports betting is illegal, and the AG’s opinion ties daily fantasy to sports betting.
So CNIGA wants to see enforcement follow that opinion.
“Untold millions if not billions have been illegally wagered over the past decade,” CNIGA chairman James Niga said in a statement released following the AG’s opinion. “Where is the enforcement? Where is the accountability? It is now imperative that the state back up this legal opinion with strong enforcement, and that lawbreakers be held to account.”
Bonta, in a July 22 interview with Sacramento NBC affiliate KCRA, indicated he wants to do just that.
“The next step is enforcement, and laws are meant to be enforced,” he said.
However, that may require the California Legislature actually crafting a bill that outlaws daily fantasy sports. Short of that, at least as of this moment, daily fantasy apps remain available in the Golden State.
Check back for updates as this issue develops.
Image Credit: Imagn