California Daily Fantasy Sports Deemed Illegal

Attorney General Rob Bonta has made a final determination on the legality of California daily fantasy sports. His conclusion: They are illegal.

This boils down to his interpretation of gaming laws in The Golden State. Right now, sports betting in California remains illegal. And as Bonta noted in a release, according to ESPN’s David Purdham, “state law prohibits draft and pick 'em-style daily fantasy contests ‘because they involve betting on sporting events.’”

Though this comes as little surprise to anyone familiar with how The Golden State has operated, it is generating furor among California daily fantasy sports enthusiasts. The state is one of 10 that have yet to legalize traditional sports betting. And while the stamp of approval is considered inevitable, it isn’t yet clear whether a sports betting measure will make the 2026 ballot.

There are a multitude of reasons why traditional sports wagering has failed to get over the hump in The Golden State. By eliminating daily fantasy sports from the equation, though, California is taking more of a hard-line stance against all forms of gambling. And the impact could be potentially tremendous.

California Daily Fantasy Sports Operators Not Yet Vacating the State

Despite the recent statement made by Attorney General Bonta, Purdham writes that California daily fantasy sports companies aren’t intending to shudder their operations, and that they appear to have the support of Governor Gavin Newsome:

“A spokesperson for California Gov. Gavin Newsom told KCRA 3 News Sacramento that the governor does not agree with the opinion. ‘He welcomes a constructive path forward in collaboration with all stakeholders,’ the spokesperson added. Fantasy companies maintain that daily fantasy contests offer games of skill and should not be considered gambling…DraftKings said it disagrees with Bonta's opinion and that it continues to offer its contests in the state as it has for over 13 years. ‘Notably, the overwhelming body of law from 24 states and Congress confirms that fantasy sports contests are games of skill,’ a DraftKings spokesperson told ESPN in a statement. ‘We intend to work with stakeholders, including the office of the attorney general, to try to find an amicable resolution.’

“Fantasy operator Underdog says it plans to continue to offer its fantasy contests in the state. The company sued to stop Bonta from releasing the opinion earlier this week, but the case was dismissed by a California state judge, who suggested that the opinion would not change state law. California accounts for approximately 10 percent of annual revenue for Underdog, according to a company spokesperson.”

As the reactions to the Attorney General’s release show, this conclusion is an opinion rather than a mandate. However, it isn’t just California daily fantasy sports operators who are being put under the microscope. Other states are doing the same thing. Florida, as one example, sent cease and desist letters to daily fantasy operators within the past year.

California Tribes are on Board with the Opinion from the Attorney General

California’s situation, of course, differs from Florida. If the Governor’s office is not on board with the ruling, it creates additional hurdles to shutting down California daily fantasy sports businesses. Support in other states was more sweeping across the various governments.

Still, tribes in California hold a ton of sway. And for what it’s worth, they have thrown their weight behind Bonta’s opinion. As James May, the chairman for California Nations Indian Gaming Association (CNIGA), says in a statement:

“Untold millions if not billions have been illegally wagered over the past decade. 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."

This stance from CNIGA is hardly surprising. Tribes are granted gambling exclusivity in their gaming compacts. That is why legalizing California sports betting has proven so difficult. Tribes believe it should be limited to them, while premier operators of online sports betting in the United States are pushing for a market that lets them offer independent services.

Lawmakers have by and large sided with the tribes on this front. It is not immediately clear whether that will remain the case on the California daily fantasy sports front, since they are currently viewed as “games of skill” rather than forms of gambling.

Could This Set Back Efforts to Legalize California Sports Betting?

Attempts to green light California sports betting are already facing a ton of ambiguity. Tribes and online operators have a more collaborative relationship than they did in 2022, back when separate gambling measures flopped at the polls. But a timeline has remained uncertain even with them working together.

This wrinkle probably isn’t going to help matters. At least one of the companies pushing back the most, DraftKings, is a marquee operator trying to work with tribes on getting sports betting legalized. Can they really outwardly oppose the tribe’s views on California daily fantasy sports and still maintain a peachy-keen dynamic on sports gambling?

Granted, this presupposes both sides of the traditional sports betting coin are even in sync. It has seemed like online operators are fine entering the market in limited capacities. For now, anyway. That could change. Heck, this latest disagreement could accelerate what feels like an inevitable divergence. We can’t know for sure. Eventually, though, we will.

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