So far, since California Attorney General Rob Bonta’s office published its negative legal opinion on paid daily fantasy sports, no DFS operator has indicated that it intends to leave the state. The AG is prepared to force the issue.
This week, at a virtual press conference unrelated to DFS, Bonta spoke on his opinion for the first time since issuing it on July 3.
Asked by local media outlet KCRA 3 why he declared his position, Bonta said his office was “mandated” to do so once a formal request was made. He added that while the state’s last two attorneys general, including former Vice President Kamala Harris, did not make a public judgment on the gaming vertical, he was the first California AG to receive a formal request for a legal opinion.
“It’s our duty, not our discretion,” Bonta said. “We are mandated we shall respond and provide an opinion as appropriately requested under the law. We must, and we did.”
Earlier this month, California Nations Indian Gaming Association (CNIGA) urged state leaders to follow the opinion with “strong enforcement.” Bonta suggested that will be coming.
“It’s a violation of the law, as our legal opinion has indicated, to provide a platform in the state of California to California consumers for the daily fantasy sports at issue,” Bonta added. “The opinion is the first thing that we’ve been asked to provide, and we have. The next step is our enforcement. Laws are meant to be enforced and we expect our legal opinion to be followed and complied with.”
Directly asked whether we should expect to see him take action against the platforms that continue to operate in California, the state’s chief legal official replied, “absolutely.”
The legal assessment that was officially authored by Deputy AG Karim J. Kentfield is just the office’s opinion, albeit an authoritative one. It is not a legislative or regulatory change in its own right.
Nor does it have the support of several notable state figures. Gov. Gavin Newsom does not agree with the outcome, while California Congressman Ro Khanna called banning DFS a “dumb” idea.
But Bonta evidently intends to attempt to take operators to task for continuing to offer paid daily fantasy contests in the state.
What happens next?
The big question Bonta’s pledge poses is exactly what enforcement action will look like.
California, a state that has not legalized online sports betting, is believed to be the biggest market for DFS in the U.S. Californians have been playing such contests for years, and the Coalition for Fantasy Sports estimates that up to seven million state residents play fantasy.
Just because Bonta’s office has deemed DFS illegal does not mean that it is suddenly illegal. SBC Americas reached out to Bonta’s office seeking more information on what potential enforcement could look like.
Bonta’s office could look to apply pressure to DFS operators such as DraftKings, FanDuel, PrizePicks and Underdog by sending cease-and-desist letters or threatening litigation. C&Ds have become a widely used tactic by states and gaming regulators in attempts to shut down all kinds of gambling operations they deem to be unlawful, from offshore online casinos and sportsbooks to online sweepstakes offerings and prediction markets.
SBC Americas reached out to various operators and fantasy sports associations seeking more information.
“We’ve had initial discussions with the Attorney General’s office and look forward to continuing the conversation about the path forward in California,” said a FanDuel spokesperson in response.
Operators bending but not breaking
Where this will all end is uncertain, but Bonta has taken firm steps down the road by first issuing the opinion and now signposting that he will act on it. DFS is already an issue being contested in courts. Aside from Underdog’s request for a judge’s intervention in the Bonta situation, DraftKings and PrizePicks are the subject of class-action lawsuits in the state challenging fantasy contests’ legality.
In the meantime, most leading DFS operators have said they’re not going anywhere. Underdog and PrizePicks have both declared they intend to keep offering their fantasy products in the state and DraftKings concurred while also dismissing the argument that peer-to-peer fantasy equates to sports betting.
But operators’ stances haven’t been entirely hard-nosed.
Speaking of peer-to-peer play, both PrizePicks and Underdog switched to P2P play online in California this month after previously offering against-the-house fantasy play in the Golden State, which could be said to more closely resemble sports wagering. However, in the eyes of the opinion, there was absolutely no difference between peer-to-peer and against-the-house fantasy.
