Underdog Sports is suing in California Superior Court to stop Attorney General (AG) Rob Bonta's office from issuing an opinion declaring most paid fantasy sports games illegal under state law.
The company claims this opinion would cause it significant financial harm, jeopardizing around 10% of its overall revenue, derived from California customers.
Key takeaways
- Underdog Sports sued to block AG Rob Bonta’s opinion threatening the legality of paid fantasy sports.
- The California AG’s forthcoming opinion could deem all online fantasy platforms illegal statewide.
- Underdog claims the AG doesn't have the legal right to declare fantasy sports illegal and is overstepping his reach.
Underdog's legal filing requests the court grant an immediate injunction preventing Bonta from releasing the opinion into the public domain until the court decides whether his office has the authority to make it available. Underdog alleges the AG's office wrote the opinion and laid out how it intends to use it to guide future enforcement or legislative action.
The company's case depends on three points. First, it argues attorney general opinions have to be legal interpretations rather than factual investigations. This is provided as proof of overreach in investigative authority based on the 18 months since then-Sen. Scott Wilk first requested the office open the investigation. Underdog contends the opinion strays from interpretation because there's uncertainty around the definition of daily fantasy sports.
Second, the lawmaker who requested the opinion, Sen. Wilks, is now out of office after serving his term limit, which Underdog claims makes the request for the opinion invalid. Lastly, Underdog stipulates the power to prosecute a vertical rests with the executive branch, not the AG.
Sweeping opinion hanging over fantasy sports industry
Underdog's preemptive strike materializes as Bonta is said to be about to release a legal opinion that would make all paid fantasy sports websites, like Underdog Fantasy, illegal gambling operations under California law.
Since the opinion will probably enshrine a ban, the industry might be forced to close statewide. Meanwhile, tribal groups like the California Nations Indian Gaming Association embraced the AG's intervention, invoking consumer protection concerns.
California joins sweepstakes casino crackdown
The crackdown follows a move against sweepstakes casinos. California lawmakers introduced legislation to outlaw sweepstakes casinos, following a similar law passing in New York and regulatory enforcement actions in Mississippi and Louisiana, where more than 50 cease-and-desist letters were issued recently.
Although California bill language hasn't emerged, it will make promoting and facilitating sweepstakes-style gambling illegal. Targets in its sights are financial institutions, payment processors, software providers, geolocation services, media affiliates, and celebrities who promoted the sites.
The law's impetus is the state constitutional framework, where gambling is restricted to tribal reservations. If enacted, it would reinforce that legal framework and close sweepstakes casino websites already accessible to Californians.
