A class action lawsuit has been filed against Fliff for allegedly offering what amounts to illegal California online sports betting. The outcome of this pending litigation could send shockwaves throughout the daily fantasy and free-to-play apps—not just in Cali, but throughout the entire United States.
This lawsuit isn't only about online sports betting in California. Fliff is being sued across multiple states, including Ohio, which has committed to cracking down on predatory and illegal gambling operations. The Buckeye State is actually investigating a host of companies similar to Fliff: Lucra Sports, Prediction Strike, TeamStake and Dynasty Owner.
By now, you might be wondering: What is Fliff? The company self describes themselves as "a new sports betting experience that is social and rewarding." Users are encouraged to "play for free and earn rewards to experience the sweat without the financial risk!" Though still considered a relatively niche application, the Fliff app is available for download in 49 of 50 states. The Apple application echoes Fliff's own description, calling it a "new play-for-fun predictive gaming experience for sports fans everywhere. Play with Coins in the social sportsbook to move up the leaderboards, complete challenges, unlock badges, and earn loyalty rewards."
So, why is Fliff being sued for allegedly offering online sports betting in California? What will be the end result of this process? And could these proceedings have any impact on the future of California sports betting?
Let's dig into the details.
The Lawsuit States That Fliff is the "Epitome" of a California Online Sportsbook
Essentially, the lawsuit accuses Fliff of providing sports betting services in a state that has repeatedly failed to legalize it. Here is Gaming Today's Brant James with more details from the official court filing:
"In California, Fliff is described as 'the epitome of an online sportsbook' in a class action suit filed by plaintiff Bishoy Nessim. Court documents deem the “free-to-play” app in violation of the Wire Act, the California Unfair Competition Law, and anti-bookmaking laws there. The suit seeks $5 million and the stoppage of Fliff doing business in the state. The June 6 filing takes particular umbrage with so-called Fliff Cash, which has a dollar-for-dollar equivalence to actual money and can be withdrawn and wired directly to the users’ bank accounts.
"'Despite that public rebuke, Fliff facilitates the ability for California residents to make online sports wagers to win real money without any approvals, regulations, oversight, or taxing,' the suit claims. 'To avoid any regulation or legal oversight, Fliff claims to be a free-to-play operator of sweepstakes with the chance for users to play sports prediction games for entertainment. But, in the real world, alleged sports prediction games are nothing more than online sports gambling.'"
Many believe it was only a matter of time before companies like Fliff were put under the microscope in California. States were cracking down on similar business models in the years prior to sports betting laws changing. While there has been a lull in push back since 2018, when state gambling policies started evolving, the market has begun scrutinizing for-profit companies such as Fliff that operate in places without legal sports betting.
Is This a Repeat of Previous Investigations into DraftKings and FanDuel?
Fliff better hope this ordeal isn't deja vu.
Years ago, back when DraftKings and FanDuel were strictly daily fantasy operations, they were heavily scrutinized by plenty of states for circumventing anti-gambling laws. Those investigations didn't work out too well for them.
Both FanDuel and DraftKing wound up pulling the plug on their operations in Nevada at the time—and they've yet to return. They were also bounced entirely from The Empire State and only allowed back in following the official legalization of sports betting in New York.
Though Fliff has pushed back against the idea that their app users are sports bettors, this kind of attention doesn't bode well for them. California already voted against online sports betting during the 2022 elections. Any companies offering any services even loosely resembling mobile gambling could be shut out the market.
It also has to hurt Fliff's chances that they're being investigated in Ohio. The Buckeye State has legal sports betting, but the state believes the company might technically be a sportsbook operating without a license.
How Will This Lawsuit Impact the Future of California Online Sports Betting?
On the bright side, the timeline for legal sports betting in California shouldn't be impacted by the Fliff lawsuit or any other litigious matters that arise in the daily fantasy and free-to-play industries. On the not-so-bright side, the timeline for legal sports betting in California remains without a concrete end.
Tribal operators are still unwilling to entertain the entry of corporate sportsbooks like FanDuel and DraftKings. Unless that matter is resolved, online sports betting in California is likely years away. In-person operations might get the stamp of approval sooner. But mobile wagering has little chance of getting the green light before 2025.
This isn't to say the lawsuit against Fliff will be without consequences. It will surely impact sports fans looking for betting alternatives. Without access to daily sports and free-to-play models, many Californians will be driven offshore.
Granted, this isn't technically a problem for the user experience. There are plenty of reputable sites from our reviews of the best online sportsbooks that allow just about anyone in the United States to create an account. In the grand scheme, though, this could be an issue for the state at large.
Companies like Fliff at least pay taxes on their earnings. Revoking their rights to operate will drain revenue from the state. Could losing that profit stream motivate lawmakers to legalize California sports betting during next year's round of legislative meetings? Time will tell.
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