California Sports Betting Push Could Get Ugly

If you are not paying attention to the daily fantasy sports saga brewing in The Golden State, it is time to start doing so. Because believe it or not, it might just wind up redefining the push for California sports betting moving forward.

Attorney General Rob Bonta recently released an opinion in which he made it clear that, according to California gambling laws, Daily Fantasy Sports (DFS) is a form of sports betting and therefore in violation of state and federal laws, as well as in direct conflict with the gaming compact agreed upon with the tribes. His statement was kind of, sort of, brushed off upon first reading. As many noted, his sentiments were an opinion, not gospel or letter of the law. Governor Gavin Newsom also made it clear he disagreed with the Attorney General’s conclusion, and DFS sites continue to operate within California state lines.

However, Bonta has since indicated he intends to enforce his findings, based on what he believes is in the spirit of California sports betting laws. “The next step is our enforcement, and laws are meant to be enforced,” he recently explained to KCRA 3.

The endgame here is clear. Attorney General Bonta wants to shut down California daily fantasy sports sites. Less apparent is how he will go about it, and whether he will be successful. In the event he gets it done, though, it could increase tension between California tribes and commercial sportsbooks for one major reason.

What is Attorney General Bonta’s Plan for Daily Fantasy Sports Sites?

Before we dig into the potential fallout from this fast-unfolding saga, here is Sam MacQuillan of Legal Sports Report with what may await DFS operators in California:

What enforcement might look like in California remains unclear.

“In denying a request from Underdog to block the opinion, a Sacramento Superior Court noted that attorney general opinions are ‘advisory only and do not carry the weight of the law,’ and thus it was not evident how Underdog would suffer harm from its release. ‘It is 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 said. ‘Laws are meant to be enforced and we expect our legal opinion to be followed and complied with.’ His office did not identify steps or a timeline for action.”

This approach from the Attorney General and his office is beyond opaque. If we had to guess, they send cease and desist letters to DFS sites. Those letters will probably cite how sports betting in California isn’t legal, and how that applies to daily fantasy as well.

Shutting Down DFS in California Won’t Be Easy

Still, those orders don’t always mean anything. Sure, they carry some weight. DFS operators have shut down in other states upon receiving them. But they can also take time to enforce. Plus, as MacQuillan adds, they don’t always work:

“Bonta is the latest state official to weigh in on DFS, an industry long scrutinized over whether contests are games of skill or chance. A patchwork of states have addressed legality through legislation, agency rulings, or court decisions, though in others it remains ambiguous due to lack of enforcement. In Texas, for example, Attorney General Ken Paxton issued a non-binding opinion in 2016 deeming DFS illegal gambling. Nearly a decade later, operators still serve the state, and the matter remains unresolved in court.”

DFS operators are bound to push-back against any cease-and-desist action. California is too lucrative of a market for them to simply leave. That is undoubtedly why they didn’t flinch in Texas nearly a decade ago.

It might be a different story in other markets. Especially those that already have sports betting. In this case, with California sports betting still illegal, they have less of an incentive to shut down. Daily fantasy is the closest residents currently come to partaking in legal sports gambling. That makes it a potential cash cow.

If Californians could bet on sports, DFS sites might simply shudder their services. Daily fantasy wouldn’t be the only game in town. And some of those operators, such as DraftKings, may have sportsbooks licenses. That diminishes the upside of offering DFS for them.

Of course, this is not the case. California sports betting appears to be on an upward trajectory but remains a ways off from legalization. So DFS is that much more important to certain company business models.

This Issue Could Delay California Sports Betting Even Further

That brings us to how this will impact the sports betting push. It starts and ends with DraftKings. They currently offer daily fantasy sports in California and already released a statement outlining their disagreement with Bonta’s opinion.

On the flip side, tribal nations in California have shown support for the Attorney General’s stance. This comes as no surprise. Their gaming compact with the state gives them exclusivity over all gambling activity. If DFS is considered gambling, it is in violation of that arrangement.

This invariably puts tribes and corporate DFS sites, some of whom operate general sportsbooks, on polar opposite ends of the spectrum. That is a risky development given how combative the two sides were during the 2022 push to legalize California sports betting. Tensions have since cooled. Tribes and sportsbooks like DraftKings now have a better working relationship. That is largely because operators seem to be deferring to tribes on the matter. These sites at one time were not okay with entering the market in a limited capacity. They root for more open-ended online sports betting in the United States. Over the past couple of years, though, they seem more on board with entering the market in a partnership capacity. This shift has led many to believe California sports betting legalization might get over the hump in 2026. But that sentiment may change if tribes end up blocking DraftKings from providing DFS in The Golden State.

So yeah, the stakes are high on this daily fantasy issue. The end result will have implications that extend beyond DFS itself. Those consequences might even spill into the next round of general sports betting discussions.

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