Underdog Sports has filed a lawsuit against California Attorney General Rob Bonta to stop his office from declaring daily fantasy sports (DFS) illegal in California. The New York DFS operator also seeks a temporary restraining order to prevent an expected crackdown on the industry.
Bonta’s office plans to issue an official opinion by July 3, potentially changing the legal status of fantasy sports in California, a key U.S. market.
DFS has operated in California for over a decade without regulation, but this changed in October 2023 when former State Senator Scott Wilk requested a review of DFS legality, specifically newer pick ’em-style games akin to sports bets.
Critics note that these contests resemble parlay bets used in legal sportsbooks. Underdog Sports alleges Bonta aims to classify these games as illegal under current law, despite the lack of fantasy sports regulation in California.
The lawsuit claims such a decision would harm the industry financially, affecting operators, payment providers, platform partners, and customers. California accounts for 10% of Underdog’s revenue.
Underdog challenges both the potential content of Bonta’s opinion and his authority to issue it, arguing he can only answer questions related to an official’s duties. They claim the request from a now-former legislator does not meet these conditions and accuse Bonta’s office of using enforcement threats to push operators out of California.
Industry response has been swift. Underdog remains confident in the legality of DFS in California, pointing out that neither of Bonta’s predecessors targeted the industry despite its growth. They reference legal cases in New York and Illinois where courts rejected state efforts to ban fantasy sports.
The Coalition for Fantasy Sports, including companies like Betr and PrizePicks, urges Bonta to consider public sentiment, noting the popularity of DFS in California and potential public backlash if games are banned.
If Bonta issues his opinion, it could lead to local enforcement actions. Underdog seeks a court order to delay such a risk and plans formal legal challenges if necessary. Without clear regulations in California, the outcome could influence other states where DFS legality is uncertain.
The lawsuit’s implications extend beyond California, questioning the distinction between DFS and traditional sports betting, especially amid evolving pick’em-style contests. If California bans these games, it might prompt other states to reconsider their DFS stance. Underdog’s legal action aims to resolve the issue before regulatory actions can damage the market. All attention is now on Sacramento, with time running out.
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- Source: SCCGManagement.com