Underdog Sports has shifted its daily fantasy sports (DFS) offerings in California to a peer-to-peer (P2P) model, removing its popular against-the-house Pick'em contests as of Wednesday afternoon. While the Champions Pick'em format remains available, traditional Pick'em games, which pit players against fixed odds set by the operator, have been removed from the state.
Key Takeaways
- Underdog Sports has removed its against-the-house Pick'em contests in California, offering only peer-to-peer options.
- California's Attorney General has declared all paid fantasy contests, including P2P formats, violate existing state law.
- A judge recently denied Underdog’s motion to block California’s Attorney General from releasing the DFS opinion.
This decision follows heightened pressure from state legislators and regulators nationwide, who have expressed worries that against-the-house DFS competitions resemble unauthorized sports wagering. A California AG recently declared DFS games illegal in the state.
In answer, operators such as Underdog and PrizePicks have increasingly shifted towards providing peer-to-peer options to continue operating in specific markets.
Last year, Underdog Fantasy returned to Florida under a P2P framework after pulling its traditional Pick'em games following a regulatory order.
Despite the strategic pivot, California's legal landscape remains murky. The state Attorney General's recent opinion on fantasy sports legality notably did not distinguish between P2P and house-banked models.
Although the peer-to-peer versus house distinction has influenced regulatory decisions in other jurisdictions, it was treated only as a footnote in the California opinion.
On Wednesday, Underdog's website reflected the changes, showing that traditional Pick'em was disabled for California users, while Champions and draft contests remained live. The timing of the shift comes just two weeks after PrizePicks made a similar change, replacing its house-based contests in California with Arena, its peer-to-peer offering.
Court denies Underdog's bid to block AG's DFS opinion
On July 2, the same day PrizePicks adjusted its California offerings, a Sacramento Superior Court judge rejected Underdog's legal effort to prevent California Attorney General Rob Bonta from publishing a formal opinion on DFS legality. Underdog had requested a temporary restraining order to halt the opinion's release, anticipating unfavorable findings.
Judge Jennifer Rockwell dismissed the motion, stating that Underdog had ample time to challenge the issuance of an opinion legally. Over 18 months had passed since the Attorney General's office began reviewing DFS.
The court emphasized that Bonta's opinion, while influential, does not carry the weight of law, and therefore did not constitute immediate harm to the operator.
Less than 24 hours later, the Attorney General's office issued the opinion, asserting that all paid fantasy sports contests, including Pick'em, P2P, and draft formats, violate California law. The opinion places all major DFS operators, including Underdog, PrizePicks, and DraftKings, in a legally tenuous position.
Despite the potentially far-reaching implications, none of the major fantasy platforms has announced plans to exit the California market.
