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Read Full BioAs California’s Attorney General prepares to issue a legal opinion on the future of daily fantasy sports (DFS) in the state, Underdog Fantasy has failed to block it, which could effectively ban its contests.
At the same time, rival PrizePicks has already pivoted to a peer-to-peer model in anticipation of this shift.
California Attorney General (AG) Rob Bonta is expected to issue a long-awaited legal opinion on DFS legality as soon as today. The opinion, although technically advisory, is likely to have a significant ripple effect on operators and potentially reshape the state’s multibillion-dollar DFS market.
Underdog Challenged Bonta’s Upcoming Decision
Underdog Fantasy, one of the biggest DFS operators in the country, filed a lawsuit on June 30. It asked the courts to block Bonta from issuing the opinion.
The operator argued that DFS contests are games of skill, not chance (which constitutes gambling).
The company also questioned Bonta’s authority to issue such an opinion. It pointed out that the opinion would be a response to a request made by Sen. Scott Wilk, who is no longer in office.
Furthermore, Underdog claimed that a potential DFS ban would only serve to benefit native tribes. The tribes, which have exclusivity over legal gambling in California, have long argued that unregulated sectors, such as fantasy sports, are illegal gambling.
Court Denies Underdog’s Lawsuit
On July 2, Sacramento County Superior Court Judge Jennifer Rockwell denied Underdog’s motion for a temporary restraining order.
One of the reasons Judge Rockwell refused to block Bonta’s upcoming opinion was that Underdog did not demonstrate that the opinion would cause them immediate, irreparable harm.
Additionally, the judge noted that since Sen. Wilk made the request in October 2023. That means Underdog had over a year and a half to challenge it. The delay weakened the operator’s argument for emergency relief.
Rockwell also emphasized that the AG’s opinion does not change the laws:
“Further, the Attorney General’s issuance of an opinion of pursuant to Government Code section 12519 does not effect any change in the law,” citing case law stating that “the opinions of the California Attorney General are advisory only and do not carry the weight of law.”
As a result, Rockwell concluded:
“Accordingly, Petitioners have not established that they will suffer any harm as a result of the issuance of Opinion No. 23-1001. The Ex Parte Application is denied. No hearing will be held.”
It remains unclear whether Underdog will appeal the decision.
PrizePicks Changes Offerings in California
Underdog’s rival, PrizePicks, took a different approach in anticipation of Bonta’s anticipated opinion.
The company changed its product format in California, discontinuing the popular against-the-house Pick ‘Em games on June 30. It now offers only its peer-to-peer “Arena” contests in the state.
In both formats, users select performance projections for two to six players. For example, if a quarterback will throw over a certain number of yards. The difference is that in the now-discontinued format, users play against the house, which determines the odds and payouts.
Meanwhile, in the “Arena” peer-to-peer, the odds and payouts are determined by each user’s performance relative to the other players in the pool, similar to traditional fantasy contest leaderboards. The prize pool is distributed among the top finishers.
PrizePicks’ pivot is not unprecedented. The company introduced peer-to-peer contests as a response to regulatory scrutiny in several states over the past few years.
As a similar scenario is unfolding in California, PrizePicks is likely aiming to position itself on firmer legal ground. California is the largest DFS market in the US, making the stakes particularly high.
In its lawsuit, Underdog Fantasy stated that the state accounts for approximately 10% of its revenue. That suggests that PrizePicks may face a similar level of exposure.
If California were to ban DFS, it would result in severe financial consequences for PrizePicks, Underdog, and other operators, such as DraftKings and FanDuel.
AG’s Opinion Could Come Today
Bonta’s office has not confirmed when he will release his opinion. Still, Sacramento news outlet KCRA 3, which first broke the news, claims multiple sources have indicated the AG would deliver it by today.
When Underdog filed its lawsuit, some speculated that it might delay Bonta’s decision. However, with Judge Rockwell denying the lawsuit, it now appears to remain on schedule.
Still, if Underdog files an appeal, it could mean additional delays.
It’s important to note that, as the judge emphasized, Bonta’s legal opinion does not change the law.
Still, McGeorge School of Law adjunct professor Chris Micheli notes that California courts traditionally grant “a fair amount of deference” to the Attorney General’s legal opinions. That means they can strongly influence future enforcement and policy decisions.
