So far there are only rumors of a forthcoming opinion from California Attorney General Rob Bonta’s office regarding the legality of fantasy sports. That is not stopping Underdog Sports from taking preemptive action though.
The fantasy and sports betting company has filed suit in a California Superior Court requesting a judge intervene and stop Bonta’s office from releasing the opinion, which is said to take a broad stance that most forms of paid fantasy sports run afoul of the law.
Underdog says 10% of business at risk of harm by Bonta opinion
Noting that 10% of its total revenues come from California patrons, Underdog Sports compelled the court to immediately stop Bonta from dropping the opinion while the case challenging whether or not he is even legally allowed to present such an opinion moves forward.
“The request seeks a preenforcement shot across the bow—a flexing of executive branch muscle in a way that is designed
to impair the businesses of Underdog and others in the fantasy sports industry,” the brief observed.
In the brief, Underdog also attested that representatives from the company have spoken with the AG’s office on multiple occasions and the office confirmed the opinion was forthcoming and would take a very negative stance towards the industry.
Bonta’s office planned to pressure DFS to exit state?
As Underdog tells it, the office also made its intentions of how they plan to utilize the opinion, which is simply the office’s interpretation of the law, once it was released.
“The Attorney General’s office confirmed that after releasing the opinion, the goal would be to use the threat of an enforcement action—under the interpretation of California law that the Attorney General will impermissibly announce in the opinion—to pressure Underdog into agreeing to leave California entirely.”
Argument focuses on three core points
The brief offers three core reasons why Underdog Sports believes Bonta cannot legally issue an opinion on the question of whether or not fantasy sports is legal.
#1: AG opinions need to be opinions, not fact finding ventures
The crux of the argument is that the nature of the fantasy sports opinion is not one of purely interpreting the law, but also one that required a substantial amount of fact finding. The brief pointed to the 18-month period since Sen. Scott Wilk requested the office produce the following:
“Legal opinion as to whether California law prohibits the offering and operation of daily fantasy sports betting platforms with players physically located within the State of California, regardless of whether the operators and associated technology are located within or outside of the State.”
Underdog pointed out that even defining daily fantasy sports is a complicated endeavor with no clear-cut answer as to what does and does not count as fantasy sports. Given the activity of the past 18 months, with states, regulators and operators debating what is and isn’t DFS, it is clear there is no consensus on what the vertical even entails.
Why does it matter that the question involved fact finding? Because under state law the Attorney General is supposed to limit the scope of opinions they issue to matters of law. Since the office has spoken with Underdog and other operators and clearly done diligence to find facts out about the industry, Underdog thinks the question addressed in the brief is beyond the scope of the AG’s office.
#2: The lawmaker who wanted the opinion is out of office now
Underdog’s second issue is that Wilk, the lawmaker who requested the opinion, was term-limited out of office in 2024. Given that he is no longer a lawmaker, the claim contests that the brief is no longer needed. Since the lawmaker who requested the clarity is no longer in office and his work no longer requires it.
Underdog noted that, if outgoing state representatives could request opinions beyond their term, the office could easily be flooded with requests of lawmakers exiting office for personal gain or reasons besides fulfilling their civic duties.
#3: Prosecutional queries are the executive branch’s turf
Finally, Underdog argued that, even if Wilk was in office, the nature of the request was not germane to his role as a senator. Instead, the filing argued that questions of whether or not to legally prosecute a person, a company or a vertical is the realm of the executive branch, not the legislature.
Underdog adamant opinion can’t see light of day
Underdog Sports implored the court to act quickly and ensure the opinion is not published, warning that any period of time where the opinion is available to the public jeopardizes the company’s business.
“The fallout from an attorney general’s opinion on the legality of fantasy sports is unmistakable: FanDuel and Draft Kings, two of Underdog’s competitors, faced such significant financial and legal pressures in the wake of an attorney general opinion in Texas and a cease-and-desist letter in Alabama that they were forced to withdraw all of their paid products from the states. In other words, the stakes for Underdog’s business in California are existential, and irreparable harm is likely to flow from the
opinion in the absence of an injunction.”
Underdog confident it’s on the right side of the law
When asked by SBC Americas why the company filed action in California, an Underdog Sports spokesperson offered the following statement:
“Any potential opinion is flawed because it has to rely on factual determinations the opinion process cannot and should not resolve, according to California law. The last two Attorneys General, Kamala Harris and Xavier Beccera, did not issue opinions, and Attorney General Bonta has been in office for more than four years without questioning fantasy sports games. We are optimistic the law will be followed and are confident in the legality of fantasy sports in California. If a negative opinion is issued, fantasy sports will prevail on the merits, no different than in New York and Illinois where courts rejected the similary wrong opinions of those states’ attorneys general.”
