The legal landscape of daily fantasy sports in California could change drastically soon.
California daily fantasy sports is currently a legal activity. But that’s partly because there isn’t a law explicitly prohibiting it.
However, the California Attorney General’s office is looking into the matter. If the AG decides operators are breaking the law, DFS in California might become a thing of the past.
Sports betting in California is a hotly contested issue. Last year, DFS operators and tribal nations backed separate sports betting ballot initiatives. But both failed by wide margins.
On the bright side, the DFS investigation won’t directly impact the possible legalization of sports betting.
On the other hand, if the AG deems DFS contests illegal, then those operators will have trouble gaining support for any sports betting initiative. The biggest DFS operators, DraftKings and FanDuel, are the two largest online sportsbooks in the U.S.
California AG preparing opinion on daily fantasy sports
According to gambling information company Vixio Regulatory Intelligence, the California Attorney General’s office will soon offer an opinion on daily fantasy sports.
Recently, the California Attorney General’s office received a request from Sen. Scott Wilk, a Republican from Santa Clarita. Wilk wanted clarity on whether daily fantasy sports contests are allowed in the state.
The inquiry focuses on whether California law prevents in-state DFS players from using DFS platforms, regardless of the operator’s location.
Wilk wanted to keep FanDuel and DraftKings out of California sports betting
Wilk’s inquiry has nothing to do with sports betting. But it is important to note that Wilk was firmly against Prop 27 during the 2022 election cycle.
Prop 27 was the initiative backed by FanDuel and DraftKings that sought to allow out-of-state operators the ability to offer online sports betting in California. Wlk told local media the initiative “eliminates the sovereign right of the California tribes to operate gaming in California.”
The California electorate voted overwhelmingly against the measure.
Wilk previously expressed concerns about daily fantasy sports, saying that the games appear to be a ‘game of chance.’
That is a very important term in California. State law only prohibits games of chance in California tribal casinos and cardrooms. Therefore, if the AG agrees, DFS contests could be deemed illegal in California.
Other states are taking action against specific DFS contests
This comes at a time when DFS sites are already under the microscope.
Many state regulators across the county are looking to shut down pick ’em style games, which some say mimics prop betting. New York and Michigan regulators are already adopting changes to prohibit pick ’em games.
Meanwhile, Florida regulators have sent cease-and-desist notices to prominent operators spreading those contests.
However, the inquiry opens the door for the California AG to examine the industry as a whole. Not just pick ’em style games.
Could inquiry into DFS impact future of California sports betting?
In other states, the crackdown on pick ’em style DFS games has mainly impacted sites like PrizePicks, Underdog and Betr. The moves have not affected DraftKings and FanDuel.
But that might not be the case here if the California AG deems all DFS sites violate state law. They are the two biggest DFS operators in the country and two of the most influential companies in the gambling industry.
If two of the biggest gaming operators in the country are shut out of running DFS sites in California, what chance would they have of getting a sportsbook up and running? On top of that, what incentive would there be for them to back future sports wagering legislation in the state?
California Nations Indian Gaming Association Chairman James Silva has previously stated that California tribes must support any proposal legalizing sports betting in the Golden State. Shutting down DFS sites in California would nearly guarantee that the tribes would have complete control over the California sports betting market.