California Attorney General Rob Bonta, with Deputy Attorney General Karim Kentfield, has issued a landmark legal opinion declaring that all forms of daily fantasy sports (DFS) are illegal under California law.
Released earlier this month, the legal opinion targets both “pick ’em” and “draft-style” DFS contests, classifying them as unlawful sports wagering under Penal Code section 337a.
“California law prohibits the operation of daily fantasy sports games with players physically located within California, regardless of where the operators and associated technology are located,” the opinion stated.
This opinion stems from a request made by State Assemblymember Tom Lackey, seeking clarity on DFS’s legal status. For years, major DFS operators like DraftKings, FanDuel, and Underdog Sports have served California residents, despite the state’s prohibition on most forms of sports betting outside of licensed horse racing.
DFS companies push back
The opinion dismisses the industry’s long-held argument that DFS games rely primarily on skill, not luck, and should not be classified as gambling. Bonta and Kentfield emphasized that under California law, skill-based elements do not exempt a game from being considered illegal gambling.
“That is not a requirement for a ‘bet’ or ‘wager’ under [Penal Code] section 337a,” the opinion read. “The essential requirement of a ‘bet’ or ‘wager’ is that participants win or lose based on the outcome of an uncertain future event, such as a sports competition, even if skilled bettors consistently come out ahead.”
Underdog Sports, one of the rising players in the DFS space, filed a preemptive lawsuit challenging the legal opinion, stating it would “poison a thriving industry that serves millions of Californians.” However, their appeal was rejected by the court. Despite the ruling, both Underdog Sports and DraftKings have told Front Office Sports that they will continue to operate in California.
U.S. gaming law expert Attorney Dan Wallach told Front Office Sports that although Attorney General Bonta’s opinion isn’t legally binding, it serves as a serious warning to DFS operators. So far, the California Department of Justice has not taken any enforcement action, but has made its stance clear, stating that it “expects companies to come into compliance with the law.”
On the other hand, California Governor Gavin Newsom has disagreed with the Attorney General’s interpretation and is calling for a more collaborative approach to resolving the matter. In a statement to local media, Newsom’s spokesperson Izzy Gardon clarified: “The attorney general, in his independent capacity, issued this opinion—not the governor’s office.” Gardon added, “While the governor does not agree with the outcome, he welcomes a constructive path forward through engagement with all stakeholders.”
Potential impact on esports and betting industries
If the legal opinion were to be formalized into a ruling, it could have potential ripple effects far beyond traditional sports, particularly for esports and esports betting. In recent years, DFS platforms have increasingly featured esports competitions, allowing users to draft virtual rosters or predict match outcomes in popular titles like League of Legends, Dota 2, CS2, and VALORANT. However, these formats closely resemble the models now considered illegal under the Attorney General’s interpretation.
If enforced, the ruling may curtail DFS-based esports offerings within California, driving users and operators underground or out-of-state, and raising concerns about consumer protection and regulatory oversight. It could disrupt partnerships between fantasy operators and esports teams or tournaments based in the state. Furthermore, the legal opinion adds complexity to the broader U.S. esports betting landscape, where states vary significantly in their treatment of fantasy contests and prop-style bets.
For now, daily fantasy sports remains in legal limbo in California, a state with millions of users and one of the industry’s largest market shares. With major operators continuing business despite the Attorney General’s opinion and no immediate enforcement action underway, a legal battle seems all but certain. Fantasy sports enthusiasts, esports fans, and betting platforms are all closely monitoring the situation, as California’s stance could set a precedent and influence the broader debate on the future of DFS and online gambling.
