Ask California Attorney General Rob Bonta and he will tell you that daily fantasy sports is and has always been illegal in the Golden State. In an opinion released last week, Bonta concluded that DFS constitutes sports betting, which itself is illegal.
Bonta’s opinion drew praise from opponents of daily fantasy, including each of the four panelists during Wednesday’s The New Normal webcast with Victor Rocha.
Yet while they appreciated the “thorough” and “well-written” opinion, it means nothing without follow-through on enforcement. And until authorities begin to act upon the opinion and actually crack down on DFS operators such as FanDuel and DraftKings, they will continue to operate in California.
“While it’s good to have an opinion like this or a statute that provides clarity,” said Joe Webster, managing partner at Hobbs, Straus, Dean & Walker, LLP, “unless there’s [follow-through] on enforcement, it doesn’t really get you very far.”
Gov. Newsom does not agree with AG opinion on DFS
Webster called Bonta’s opinion “a victory,” as “it really closes the door” on arguments that daily fantasy is not sports betting.
Webster threw in a caveat, however, which was the “unfortunate” news that came out of the governor’s office.
“The Attorney General, in his independent capacity, issued this opinion – not the Governor’s office,” a spokesperson for Gov. Gavin Newsom told KCRA 3 News in Sacramento. “While the Governor does not agree with the outcome, he welcomes a constructive path forward in collaboration with all stakeholders.”
“I think those are the types of things that, frankly, aren’t helpful in terms of trying to get enforcement,” Webster said on The New Normal. “I think you look at it [as] a victory, getting the opinion out there. But now it’s, again, keeping the pressure up to make sure that this is acted upon.”
Opinion: No matter the DFS format, it constitutes sports betting
Rocha, conference chair of the Indian Gaming Association, said that daily fantasy sports has evolved drastically over the years, resembling a gambling product more and more as technology advanced and transformed the vertical.
With that evolution, Rocha said, you could “feel it in the air – something’s changed.”
Scott Crowell, a prominent tribal gaming attorney and founding partner with the Crowell Law Office, emphasized, though, that Bonta’s opinion concluded that DFS is not legal now, rather that it has always been illicit in California.
“Attorney General Bonta used the fact that this opinion was being written, frankly, as an excuse to do nothing in terms of enforcement action against this illegal activity,” Crowell said. “During the two years that the opinion was being written, the volume of DFS in California continued to grow.”
That said, the opinion did close up some gaps so daily fantasy operators can’t “play whack-a-mole” to keep offering their products. Bonta noted the different DFS formats and made it clear that each one is illegal.
Jason Giles, executive director of the National Indian Gaming Association, then pointed out footnote No. 74 in Bonta’s opinion to drive Crowell’s point home:
“We are told that some operators offer pick’em as a peer-to-peer competition, in which participants compete against each other to make the highest number of correct predictions. In our view, this version of pick’em also constitutes sports wagering because the entry fees satisfy the definition of a ‘bet’ or ‘wager’ under section 337a.”
Rocha: State needs to redefine gambling vs. entertainment
Again, though, the opinion is simply words on paper, the panelists agreed, unless authorities follow through on enforcement. Crowell holds out hope that an announcement would come soon detailing how California officials will crack down on DFS platforms.
Newsom’s response to the opinion, however, also creates skepticism for follow-through. In fact, Crowell said, that rhetoric “is an invitation to continue to do the illegal activity that has been going on when the purpose and intention of the opinion was to bring this illegal gaming to an end.”
He added: “Hopefully, people will take this opinion and use it for the explosive impact that it should have to bring this activity to an end.”
Crowell and Rocha were on the same page that sweepstakes casinos are “dead in the water” as California legislators continue to advance AB 831 to ban online sweeps operators. Daily fantasy, however, may take longer to eradicate.
Especially considering there does not seem to be clear definitions of “gambling” and “entertainment.” Those terms, Rocha said, need to be redefined.
“I can’t wait to sit at the table and help them redefine what this industry is going to be in the future,” Rocha said. “Welcome to California. We have an opportunity to redefine everything, and we’re going to take it. Is it going to be a fight? Absolutely. Can we win it? Absolutely.”
Daily fantasy sports operators will continue to offer contests
Crowell recalled a recent trip to Temecula, attending an event that also featured representatives from FanDuel and DraftKings. At the time, the opinion had yet to come out but rumors swirled that it was coming soon.
According to Crowell, those reps were expressly asked if FanDuel and DraftKings would close up shop if Bonta’s opinion affirmed the illegality of daily fantasy. Per Crowell, the company officials assured they would not offer illegal gaming in California. However, after Bonta’s opinion landed, the two companies maintained that DFS is not gambling but rather a game of skill.
A FanDuel spokesperson told ESPN that the company looked forward to speaking with the attorney general “to talk through our next steps.” DraftKings, meanwhile, said it would continue to offer daily fantasy in California as it had for 13 years.
“Notably, the overwhelming body of law from 24 states and Congress confirms that fantasy sports contests are games of skill,” a DraftKings spokesperson told ESPN. “We intend to work with stakeholders, including the office of the attorney general, to try to find an amicable resolution.”
Underdog also said it would continue to offer fantasy contests. The company filed suit to prevent Bonta from releasing his opinion. A California state judge, though, dismissed the case, indicating that Bonta’s opinion would not change state law. Which brings back the point repeatedly hammered home on The New Normal: There needs to be follow-through on enforcement.
“To me,” Webster said, “I think that’s the key now is to really put the pressure on the state actors and say, ‘OK, this is the attorney general’s assessment of the law; it needs to be enforced.’”
