Underdog Sports has filed a lawsuit in California against Attorney General Rob Bonta to block the release of an opinion against daily fantasy sports (DFS).
The fantasy sports operator has preemptively struck in a bid to prevent Bonta from setting off a chain reaction that could see DFS banned in California.
As reported last week, Bonta is expected to release an opinion against DFS in the coming days. Underdog’s lawsuit hopes to obtain a preliminary injunction, temporary restraining order, and writ of mandate preventing Bonta from issuing the opinion.
The lawsuit, filed in Sacramento, stated, “Attorney General Rob Bonta will issue an opinion later this week that will decimate fantasy sports in California.
“Attorney General Bonta should be enjoined from doing so, not because he is wrong in his views on the legality of fantasy sports — though he certainly is — but because by statute, the Attorney General can only issue opinions on questions of law and can only answer questions that relate to the duties of the official requesting the opinion.
“Neither is true here. Thus, Attorney General Bonta lacks authority to issue the opinion and should be enjoined from doing so.”
Can DFS Survive Against AG Opinion?
The lawsuit went on to state, “If a negative opinion is issued, fantasy sports will prevail on the merits, no different than in New York and Illinois where courts rejected the similarly wrong opinions of those states’ attorneys general.”
In 2015, New York’s Attorney General, Eric Schneiderman, declared DFS illegal gambling under state law. He stated: “Daily fantasy sports are neither harmless nor victimless… FanDuel and DraftKings are the leaders of a massive, multibillion-dollar scheme intended to evade the law and fleece sports fans across the country.”
Schneiderman filed cease-and-desist orders against DraftKings and FanDuel, leading to a brief exit from the market, but New York state legislature passed a law explicitly legalizing and regulating DFS as games of skill, overriding the AG’s stance in 2016.
In 2018, a state trial court ruled that the DFS legalization law was unconstitutional, agreeing it was still gambling under the constitution.
The New York Court of Appeals reversed that decision in 2020 and upheld the 2016 DFS law, affirming the legislature’s ability to regulate DFS as skill-based contests.
Since the original AG opinion in New York, the state has legalized sports betting, but voters rejected a proposal to bring sports betting to California in 2022.
Underdog Legal Troubles
Even still, Underdog hopes the eventual ruling in New York will add weight to their case in the Golden State. The company has faced difficulty in New York despite the ruling, however. It entered the market by operating under Synkt Games’ temporary DFS license, but the New York State Gaming Commission (NYSGC) ruled that the company was offering games that overlapped into sports betting, not covered by the license.
Underdog agreed to pay a $17.5 million settlement fee and exit the state in March this year. The platform relaunched in May offering a limited version of its DFS games, which do not include against-the-house or the P2P version of the Underdog pick’em product.
Additionally, the company was fined $391,850 for offering illegal daily fantasy games in Maine and withdrew its pick’em games from the state. Regulators in Massachusetts, Arkansas, Florida, Maryland, West Virginia, and Wyoming also instructed Underdog to cease operations, citing illegal sports wagering without a license.
Illinois DFS Still A Gray Area
In Illinois, Attorney General Kwame Raoul issued an informal opinion in 2023 declaring that DFS pick’em contests are a form of unlicensed sports wagering, not fantasy sports. In the pick’em contests, users can effectively place prop bets, and Raoul stated that this should require a sports betting license.
The AG commented, “Fantasy contests where participants bet on outcomes of individual player performances against the house are not protected under Illinois’ fantasy sports exemption.”
PrizePicks and other operators stopped offering pick’em DFS in Illinois following the opinion, but Underdog has continued offering the games. The opinion issued by Raoul was not a court ruling, and no legislation has been implemented to specifically ban the pick’em contests.
Underdog continues to argue that its pick’em contests are games of skill and therefore should not require a betting license. The company operates a sportsbook in North Carolina, and has also obtained sports betting licenses in Ohio and Colorado, as well as applying for a license in Missouri with plans to launch when the state opens up sports betting later this year.
Bonta’s opinion is expected to be issued no later than July 3, and from Underdog’s filing, it is expected to state that all fantasy sports are illegal under California law. Underdog is estimated to collect 10% of its revenue from the state and hopes the lawsuit has been filed in time to prevent a long-drawn-out process, as was seen in New York with multiple court cases needed before a judgment allowing DFS.
Adam is an experienced writer with years of experience in the gambling industry. He has worked as a content writer and editor for five years on sites such as Oddschecker, CoinTelegraph and Gambling Industry News, bringing excellent knowledge of the world of sports betting and online gambling. Adam focuses on emerging stories in the ever changing landscape of betting in the US. Read the latest on prediction markets, changing legislation, and sweepstakes.
