Underdog Sports, one of the top Daily Fantasy Sports operators in California, claims an expected legal opinion from California’s attorney general would cause the company “irreparable harm.”
A lawsuit filed by the DFS and sports betting platform seeks to stop Attorney General Rob Bonta from issuing an opinion on DFS operators.
The lawsuit reads:
“Underdog faces imminent irreparable harm – from fleeing customers, risk-averse banks and payment processors, and the loss of investment and goodwill – if the attorney general issues the opinion as planned.”
No opinion has been issued
The lawsuit shows that operators like Underdog intend to fight any action to shutter DFS operations in California. The suit is attempt by Underdog Sports to get out in front of expected action from Bonta’s office.
Underdog said it knows how the attorney general feels about DFS operations.
“The Attorney General’s Office confirmed that after releasing the opinion, the goal would be to use the threat of an enforcement action – under the interpretation of California law that the attorney general will impermissibly announce in the opinion – to pressure Underdog into agreeing to leave California entirely.”
Action by the AG could be consequential for all DFS companies operating in the state. FanDuel, DraftKings, Fliff, and Betr (and others) all have a fantasy sports presence in the state.
California sports betting remains illegal, so residents’ lone betting option is DFS. As such, California is one of the biggest players, if not the biggest, in DFS operations.
Underdog certainly thinks so, according to its lawsuit.
“Underdog has operated in California since 2020, and the state accounts for more than 10% of the company’s annual revenue.”
Underdog says request for opinion outdated
Underdog Sports’ lawsuit claims that Bonta shouldn’t even be in a position to offer an opinion on DFS. The company said a senator who is no longer in the Legislature is the one who originally submitted the request to investigate the legality of DFS companies. Former Sen. Scott Wilk submitted the request in October 2023.
The lawsuit argues that since Wilk is no longer in office, this nearly two-year old request shouldn’t elicit an opinion from Bonta.
“The request for Opinion No. 23-1001 does not comply with the requirement that an opinion ‘relate’ to the requesting official’s ‘respective offices.’ Because Sen. Wilk is no longer in office, he no longer has an office for the opinion to “relate” to. For that reason alone, the statute does not permit a response to the request.”
Underdog Sports’ suit also said there is no harm in delaying any opinion on the matter for that same reason.
Defining DFS is a complicated matter. California isn’t the only state grappling with the issue. But since there isn’t a clear-cut consensus on what constitutes DFS, the lawsuit contends that a statement from Bonta wouldn’t be a matter of fact.
“The request falters out of the gates because it asks the attorney general to express his views about the legality of a category of products – ‘daily fantasy sports betting platforms’ – that does not have a consensus factual, much less legal, definition. There is no agreed upon set of contests that fall under the umbrella of ‘daily fantasy sports.'”
CA tribes aren’t on board
California’s tribes have a significant say in the state’s sports betting space. And it’s worth noting that both the California Nations of Indian Gaming Association (CNIGA) and the Tribal Alliance of Sovereign Indian Nationals don’t want DFS to be legal in the Golden State.
The two organizations penned a letter to California lawmakers in late June. The letter urges lawmakers to wait to make any sort of ruling on DFS until Bonta releases his rumored opinion, CNIGA Chairman James Siva told KCRA 3.
“While we have not yet seen the attorney general’s pending opinion, we are happy to hear that Attorney General Rob Bonta is standing up for the people of California by ensuring that state laws are followed,”
His statement also referred to DFS operations as “illegal and unregulated gaming,” calling it a “problem in California for decades.”
As we’ve seen before with attempts to legalize sports betting in the state, California’s tribes must approve.
