Underdog Fantasy Sues to Block Anticipated California DFS Ban

• Lawsuit argues DFS is a skill game, not gambling
• Underdog seeks restraining order against anticipated legal opinion
• Company claims tribal lobbying influenced California’s AG decision

Daily fantasy sports operator Underdog Fantasy has filed a lawsuit that seeks to prevent California Attorney General Rob Bonta from declaring daily fantasy sports (DFS) to be an illegal form of illegal gambling under state law.

The word is that Bonta plans to issue legal guidance on DFS soon, which could effectively shut down the industry in the nation’s most populous state. While attorney general opinions are not binding, they carry significant weight.

In a preemptive lawsuit filed with the Sacramento County Superior Court on June 28, Underdog argued that such an opinion would “poison a thriving industry that serves millions of Californians” and potentially constitute overreach of the Attorney General’s authority.

Massive Market

The company’s platform hosts hundreds of thousands of users in California, where sports betting is illegal following the failure of two ballot initiatives in 2022.

“At its core, all fantasy sports are contests of skill,” Underdog’s petition states. “To be successful, contestants must engage in significant research, taking into account statistics, matchups and other performance-related data.”

Under California law, a game’s outcome must be largely determined by chance to be deemed illegal gambling.

According to Underdog, that ambiguity gives Bonta no authority to unilaterally declare the contests unlawful.

“The Attorney General lacks jurisdiction to issue an opinion on a question that is not a matter of law or that has become moot,” the filing asserts, citing the expiration of former State Senator Scott Wilk’s term. Wilk, whose term ended in 2024, had originally requested Bonta’s opinion on the legality of fantasy sports.

Political Power

The petition also raises concerns about political influence. Underdog alleges that tribal gaming interests, which have long opposed expansion of digital gaming, are lobbying the Attorney General to issue an opinion that would preserve their market dominance.

On information and belief, the tribes have met numerous times with Attorney General Bonta and his representatives and lobbied for the opinion to be issued,” the filing claims, without naming specific tribes.

Underdog is requesting a court-issued writ of mandate and an immediate temporary restraining order to block the anticipated opinion. The company, valued at $1.2 billion as of March following a funding round led by Spark Capital, says it would face “imminent irreparable harm” if forced to exit California.

The Attorney General’s office has not commented on the litigation.