Daily Fantasy Sports In California

Updated on November 13, 2019

California is the biggest market in daily fantasy sports (DFS). It houses more than 120,000 active DFS players who make up 10% of all entries across the US.

The Golden State is sitting on a lucrative daily fantasy market. The only problem is that state legislators have yet to regulate this form of gambling.

So, can you legally play DFS in California? We’ll address this and more while discussing the current situation with CA daily fantasy sports.

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Is daily fantasy sports legal in California?

Strictly speaking, daily fantasy sports (DFS) is not legal in the state of California. That is to say, there is no law explicitly making it legal.

California lawmakers began considering daily fantasy sports legislation in 2015. In fact, the California Assembly passed a bill seeking to legalize, regulate and tax DFS in January 2016. However, the Senate has not acted on the bill in the 18 months since it passed through the Assembly.

This doesn’t mean there is no DFS in the state though. In actuality, major DFS operators, including FanDuel and DraftKings, still accept players. The sites do not believe DFS constitutes illegal gambling.

Instead, DFS operators consider it a skill game. As a result, the sites believe a clause in the 2016 Unlawful Internet Gambling Enforcement Act allowing real-money fantasy sports supports this theory.

Ultimately, these sites believe DFS is legal in California in the absence of a law making it illegal.

Biggest DFS sites in California

Of course, FanDuel and DraftKings are the two most popular DFS operators in California. In fact, FanDuel and DraftKings have reportedly cornered more than 90 percent of the DFS market across the United States.

In November 2016, the two companies entered into a merger agreement. In July 2017, the deal fell apart after the Federal Trade Commission moved to block the merger.

In the wake of the failed union, DraftKings occupied a stronger market position; FanDuel’s CEO Nigel Eccles left the company, and it conducted a round of layoffs in December 2017.

How popular is DFS in California?

As the most populous state in America and a known hotbed for professional sports, California represents the largest market for DFS.

Estimates suggest DFS sites are pulling in as much as $20 million in revenue annually from California players. In fact, the state is responsible for more than 10 percent of all DFS contest entries in the United States.

It is estimated California has almost 120,000 active DFS players, the most of any state. Plus, those players are responsible for more than $200 million in annual entry fees, the most of any state by a rather large margin.

California DFS regulation

There is no legal framework, fees, or taxes associated with DFS operations in California.

The California Assembly passed a bill seeking to legalize, regulate, and tax DFS by a 62-1 margin in January 2016. However, it stalled at the Senate level. The California Assembly was actually the first legislative body in the United States to approve a bill regulating DFS.

The bill was a little light on specifics. However, it clearly sought to establish a licensing process for DFS operators in California. If the bill became law, operators would pay a licensing fee and a quarterly tax based on gross income. However, the bill  the Assembly passed did not specify what exactly the fee or tax rate would be. The Assembly expected the Senate to weigh in on these specific details and amend the bill to include them before voting on it.

The bill also included language surrounding a self-exclusion program for problem players and requirements that sites differentiate between DFS players and beginners. It also imposed a minimum player age of 21.

California 21st District Assemblymember Adam Gray introduced the bill. He maintained it aimed at protect the hundreds of thousands of Californians already playing DFS. These players continue to play in the unregulated market in California.

What California’s AG says about daily fantasy sports

In 2015, Assemblymember Marc Levine asked then-California Attorney General Kamala Harris to examine the legality of DFS in the state. More specifically, Levine wrote a letter to the AG’s office asking Harris to clarify that DFS is illegal. Then, Levine hoped he would order FanDuel, DraftKings and other fantasy sports betting websites to immediately discontinue business in the state.

At the time, several media outlets reported that Harris declined to comment on the letter, citing potential interference with a pending DFS investigation. It was also widely reported that Harris would not confirm nor deny the state, or her office, were investigating DFS operations in the state.

Nothing ever came of this. Harris never commented on DFS again. In November 2016, Harris was elected to serve in the United States Senate. Xavier Becerra took over as Attorney General of California in January 2016. Governor Jerry Brown appointed him to the post. Becerra has not made any public statements regarding DFS in California.

Which DFS sites would try for licenses in California?

If California regulated daily fantasy sports, it would attract many potential operators.

Card rooms, racetracks and tribal casinos would explore the opportunity. They could also partner with existing sites to get off the ground immediately.

For example, a major card room or casino could align with DraftKings. Such a move would give it access to an operator with reliable DFS software and a history of success.

Operators would likely be required to cover a licensing fee and taxes. They’d also need to be vetted by gaming regulators and approved for a license.

Of course, these conditions are common in regulated DFS markets. Many operators would still be interested in serving California’s population of 40 million.

Some card rooms, tracks and tribes could also launch solo operations that don’t involve partners. Tribal casinos, which aren’t keen on sharing the gaming market, might especially explore their own DFS ventures.

This route typically isn’t popular in online gambling given the costs and time associated with developing proprietary software. However, some land-based gaming or racing businesses might still brave the daily fantasy market solo.

What’s holding DFS back in California?

The biggest problem with CA daily fantasy sports legislation is that the current gambling powers can’t agree.

The three main groups that create California’s gambling industry are card rooms, racetracks and tribes.

Card rooms are land-based venues that offer poker and player-banked table games. They’re controlled through state regulation and enjoy a degree of political power in the state.

Racetracks aren’t as popular as they used to be. Still, California is one of the biggest states for horse racing, and the tracks boast powerful political connections.

The tribes collectively own almost 70 casinos throughout the state. They head an $8 billion California casino industry and hold the most power in the gambling sector.

Tribal interests are more than happy with the status quo. They’re not entirely opposed to new forms of gambling, but they also don’t want to give anything up to the tracks, card rooms, or outsiders.

Californians are already using unregulated DFS sites. The tribes seem fine with this as long as the other main groups aren’t benefiting.

Tribal casinos are mostly unhappy with a large number of card rooms in the state. They don’t want to agree with any form of gaming – DFS or other – that could potentially give their rivals a boost.

Games to expect if California legalizes DFS

The Golden State would feature the same types of DFS contests found in other regulated markets, e.g., Massachusetts, New York and Virginia.

Common game types found in these states include 50/50, double up, head-to-head and guaranteed tournaments.

Here’s a brief explanation of each:

  • 50/50: Exactly half of the field wins an equal prize.
  • Double up: Winners receive double their entry fee.
  • Guaranteed tournaments: Players compete for a prize pool, with around 10-15% of the field cashing.
  • Head-to-head: Match between two opponents.

The main difference between 50/50 and double-up contests is that the latter doesn’t pay half the field; it only pays double the entry fee.

DFS sites typically take out a 10% fee from buy-ins. Therefore, only around 45% of the field can cash because winners receive double their entry.

Guaranteed tourneys can feature huge prize pools worth millions of dollars. These events are the most popular in daily fantasy sports.

Leagues covered by California DFS

Although DFS doesn’t cover the broad range of markets that sports betting does, most sites feature various leagues.

The average daily fantasy site offers contests based on the MLB, NBA, NFL and NHL. Some of the larger operators also cover men’s college basketball and football.

The available leagues and sports will depend on the season. In the winter, for example, you’ll find NBA and NHL contests on offer.

How to use CA DFS sites

Assuming DFS becomes a reality in California, many sites should open in the aftermath. If you’re not familiar with DFS sites, you can use the following steps to get started.

Browse a prospective site

You don’t want to sign up and deposit at any site blindly. Instead, you should first look over one or more DFS operations to ensure that they offer what you need.

Aspects to consider during this vetting process include navigation, available markets, promotions and banking options. The goal is to make sure that any site you like meets all of your criteria.

If you’re a big NHL fan, for example, you want to choose an operator that offers lots of hockey contests. If bonuses excite you, you may want to find a site that features plenty of promotions.

You can also read reviews on daily fantasy sites for a second opinion on whether a site is worth considering.

Register for an account

After finding a quality DFS site in California, you’ll need to register for an account to get started. You’ll be asked to click on the signup button on an operator’s homepage to bring up an account form.

The form will request specific details, such as your name, address, email, birthdate, and username and password. You’ll also be asked to agree to the site’s general terms and conditions (T&Cs).

You will submit your account for approval after filling everything out and agreeing to the T&Cs. Your account should be approved as long as you’re at least 21 years old and inside California state lines.

Make a deposit

The next step to playing in real-money DFS contests involves making a deposit.

Hopefully, you followed the first step and browsed the site’s banking options to ensure that it offers one you can use.

Bank transfers, credit cards, debit cards, e-wallets and prepaid cards are all commonly available at daily fantasy sites. Assuming DFS sites partner with land-based operators, you should also be able to make deposits in-person, aka, cash at the cage.

The banking method you use will affect how quickly your funds arrive. Credit and debit cards offer instant funding.

Enter daily fantasy sports contests

Visit a California DFS site’s lobby to look for contests to enter. These lobbies feature filters that help you sort games.

You will be able to enter any contest that’s within your budget. Also, you will have the option to change your mind and back out of any event, provided the athletes associated with it haven’t started playing their games for the day.

Daily fantasy sports allow you to create multiple entries in any multiplayer contest. For example, you can submit entries in a large, guaranteed tournament.

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