• California’s AG goes after DFS operators
• His legal opinion is that DFS is illegal and punishable under the Penal Code
• However, Bonta’s opinion hardly constitutes law

First, they came for prediction markets. Then, they came for sweepstakes operators, and now, if the legal opinion of California Attorney General Rob Bonta issued on Thursday is any indication, they are after daily fantasy sports.

In a statement, Bonta wrote that his office had concluded that DFS is just another form of illegal gambling and ought to be prohibited by section 337 because it involves betting on sporting events. Pick’em and draft-style games are also on the hook as these games are akin to DFS and, once again, offer betting on sports.

DFS is now targeted in the California AG’s unfavorable opinion

While most high-ranking officials have seen eye-to-eye on most matters, the status of DFS is not one of those issues. In fact, Gov. Gavin Newsom has opposed the legal interpretation of Bonta, who insists that these contests ought to be sanctioned under the state’s Penal Code, and the section already outlined.

Spokesperson Izzy Gardon said that the AG’s opinion did not reflect the Governor’s Office’s. The governor does not agree with the outcome, Gardon said, but added that Gov. Newsom was open to engaging in a constructive dialogue with all stakeholders.

There is nothing to worry about just yet, however, as the Attorney General’s legal opinion is just that, and it hardly constitutes a law. However, it could embolden anti-DFS sentiments and lead to lawsuits that could then require a harder look at the existing legislation, potentially leading to changes in the DFS’ status of regulation.

Some have already stepped forward. Underdog Sports, a DFS company, has already launched a lawsuit against Bonta, trying to prevent the AG from issuing his opinion.

Industry leader tried to prevent the AG from issuing his opinion

The lawsuit also named the California Department of Justice, arguing that the legal interpretation of the AG would cause harm to the industry and the company’s operations.

"If issued, the opinion will poison a thriving industry that serves millions of Californians. It will cast a legal cloud over companies that organize digital fantasy sports contests and deter the businesses who make these contests possible by processing payments, hosting the platforms that Californians use to participate in digital fantasy sports, and providing critical financing," the complaint filed with the Sacramento Superior Court reads.

Underdog Sports fears that such statements could depress the investment climate in the state, lead to job losses, and deprive California of taxable revenue.

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