Summary
- California Attorney General Targets Daily Fantasy Sports Operators
- His legal opinion is that daily fantasy sports (DFS) are illegal and subject to punishment under the Penal Code.
- Bonta’s opinion does not carry the force of law.
Initially, they targeted prediction markets. Next, sweepstakes operators were in their sights. Now, if the legal interpretation by California Attorney General Rob Bonta on Thursday is any indication, their focus has shifted to daily fantasy sports. Bonta stated that his office has determined daily fantasy sports (DFS) to be a form of illegal gambling, which should be banned under section 337, as it involves wagering on sporting events. Additionally, pick'em and draft-style games are also implicated because they resemble DFS, offering similar sports betting opportunities.
DFS is now targeted in the California AG’s unfavorable opinion
While most high-ranking officials have generally agreed on various issues, the status of DFS (Daily Fantasy Sports) is not one of them. Governor Gavin Newsom has opposed Attorney General Bonta's legal interpretation, which argues that these contests should be regulated under the state's Penal Code, as specified in the existing sections. Governor Newsom's spokesperson, Izzy Gardon, stated that the Attorney General’s opinion does not align with the Governor's Office. Although the governor disagrees with the current interpretation, Gardon noted that Governor Newsom is willing to participate in constructive discussions with all involved parties. As of now, there is no immediate cause for concern, as the Attorney General's opinion is only an interpretation and not a law. However, it could encourage anti-DFS sentiments and result in lawsuits that may necessitate a reevaluation of current legislation, potentially altering the regulation of DFS. In response, some have already taken action. Underdog Sports, a DFS company, has filed a lawsuit against Attorney General Bonta to prevent the issuance of his opinion.
Industry leader tried to prevent the AG from issuing his opinion
The lawsuit also includes the California Department of Justice, claiming that the Attorney General's legal interpretation could negatively impact the industry and the company’s operations. If issued, the opinion will harm a thriving industry that serves millions of Californians. It will create legal uncertainty for companies that organize digital fantasy sports contests and discourage businesses that facilitate these contests by processing payments, hosting platforms for Californians to participate in digital fantasy sports, and providing essential funding, states the complaint filed with the Sacramento Superior Court. Underdog Sports worries that such statements could deter investment in the state, result in job losses, and deprive California of taxable revenue.
