A California court has denied Underdog's attempt at an emergency injunction to stop the state's Attorney General from releasing a legal opinion on daily fantasy sports (DFS). A decision from Attorney General Rob Bonta is expected by Thursday and could have sweeping consequences for the DFS industry in the nation's most populous state.
Key Takeaways
- Court denied Underdog's attempt to block DFS opinion.
- AG opinion could arrive by Thursday and immediately impact operators like UnderDog, PrizePicks, DraftKings and FanDuel.
- PrizePicks has already shifted strategy to avoid legal risk in California.
Underdog filed a Temporary Restraining Order (TRO) on June 30, asking the court to block Bonta from issuing his opinion and to leave fantasy operations unchanged in the state. Underdog argued that attorney general opinions have to be legal interpretations rather than factual investigations.
The operator also questioned Bonta's authority to issue the opinion in the first place, noting that the request came from a legislator no longer in office.
In its court filings, Underdog warned that a negative legal opinion could "decimate fantasy sports in California" and cause significant financial damage to operators in the space. The company revealed that California accounts for approximately 10% of its revenue.
Judge denies Temporary Restraining Order
Despite Underdog's arguments, Judge Jennifer Rockwell denied the TRO request on July 2. In her ruling, Rockwell stated that Underdog had "ample time" to challenge:
“To the degree that Petitioners challenge the Attorney General’s authority to issue Opinion No. 23-1001, which they acknowledge has been pending for more than 18 months, Petitioners had ample opportunity to raise such a challenge at any time after the Attorney General’s acceptance of the question posed by Senator Wilk in October of 2023.
"The fact that Petitioners delayed filing this action does not constitute a basis for ex parte relief."
Rockwell also emphasized that the Attorney General's opinion, while potentially influential, does not change the law.
While Underdog could still pursue further legal action, the ruling allows Bonta's office to proceed with releasing the opinion.
What's at stake?
Although the Attorney General's opinion will not directly outlaw fantasy sports, California courts and enforcement agencies often give such opinions significant weight in determining policy and future litigation. A broad ruling against DFS could lead to Underdog Fantasy to stop accepting customers in the state, as well as additional lawsuits or new legislation.
A ban would also have significant implications for other national DFS operators like PrizePicks, DraftKings, and FanDuel.
PrizePicks proactively halted its popular pick' em games in California on June 30 and now offers only peer-to-peer “Arena” contests in the state. In this format, players compete against one another based on fantasy projections, with prize pools distributed to top finishers. This model, similar to DraftKings’ Pick6, is designed to better align with traditional fantasy sports and potentially avoid regulatory scrutiny.
