California Officials Take Aim at Daily Fantasy Sports

With California sports betting on the backburner for the time being, The Golden State’s tribes are taking aim at another gaming issue: Daily fantasy sports.

To begin February 2024, the California Indian Nations Gaming Association (CNIGA) submitted official comments on the practice of daily fantasy sports in California. Their stance, as expected, argues that DFS providers are no different from general online sportsbooks in the United States. And therefore, members of CNIGA want to see policymakers nudge these operators out of the market.

Will California’s tribes ultimately get what they’re seeking? Does their reasoning track with how other states are handling daily fantasy activity? And does this debate have any link to the future of sports gambling in The Golden State?

Full Details of California Tribes’ Attempt to Shut Down Daily Fantasy Sports

As Mike Mazzeo outlined for Legal Sports Report, CINGA is now trying to have daily fantasy sports in California formally made illegal:

“A large faction of California tribes referred to controversial daily fantasy sports pick’em games as “illegal sports wagering” in a letter to the state attorney general. The California Indian Nations Gaming Association (CNIGA) submitted its daily fantasy sports comments on pick’em games in a Jan. 31 letter to state Attorney General Rob Bonta.

"There are 52 members tribes in CNIGA, which submitted the letter in response to Bonta’s call for opinions as part of his inquiry into DFS in the state.The letter, submitted by CNIGA chairman James Siva, states: ‘The State has not yet taken any actions against or made any determinations regarding the legality of the operation of Pick’em Games within the State. However, even assuming fantasy sports wagering is legal under the laws of the State, the Pick’em Games offered by major operators of said games, such as Underdog Fantasy and PrizePicks, do not qualify as lawful fantasy sports or contests but illegal sports wagering.’”

Current gaming laws in California give exclusive rights to the state’s federally recognized tribes. Any change to this exclusivity must invariably include collaborative restructuring with them.

This, of course, means that tribes in The Golden State wield a great deal of power. And that’s why CNIGA’s collective voice matters when it comes to all things gaming—including both daily fantasy sports and attempts to legalize sports betting in California.

Pick ‘Em Games Have Always Operated in a Legal Gray Area

To date, daily fantasy sports in California have operated inside a gray area. The business is considered neither legal nor illegal. Daily fantasy sports sites such as Betr, PrizePIcks, Underdog Fantasy, et al. have interpreted this ambiguity as a license to launch inside the market. And that logic has largely worked—until now.

Members of CNIGA are not the only ones suddenly focusing on the legality of daily fantasy sports in the United States. DFS providers have been thrust under the microscope in a variety of locations over the past few months. This includes states that have legal sports betting.

Daily fantasy sports sites ceased operations in New York sometime last year. More recently, a handful of DFS providers are preparing to leave Florida in March 2024 after officials questioned the legality of their operations. Notably, sports betting is legal in both New York and Florida.

For states with sports gambling, state and tribal officials have expressed concern that Pick ‘Em sites are trying to exist under a loophole. Opponents believe that DFS contests are basically sports betting services offered by operators without sports gambling licenses.

Identical logic is being applied by CNIGA. Except, because sports gambling in California remains illegal, they believe that Pick ‘Em games are flat-out illegal rather than invalid workarounds. As Mr. Siva wrote in his letter to the attorney general:

“First, participants of Pick’em Games are not managing a fantasy or simulation sports team, as is generally associated with competing in fantasy sports contests. Second, operators of Pick’em Games often permit participants to place a single bet on the performance statistics of two athletes who participate in two completely different types of sporting events.”

Bad News Likely Awaits Daily Fantasy Sports Players in California

If the recent mass exodus of daily fantasy sports providers across different markets is any indication, Californians should prepare to kiss their own DFS interests goodbye. States have so far been inclined to side skeptics of Pick ‘Em contests—especially when the opposition originates with tribal parties.

California doesn’t seem like a state that will break this trend. The House and Senate have generally supported CNIGA on nearly all matters of gaming laws. Heck, consider what has happened whenever legal sports betting in California gets put on the table.

In 2022, there were two California sports betting bills on the electoral ballot. One would have legalized California online sports betting. The other sought to legalize California retail sports gambling at tribal sites. Members of the House and Senate heavily supported the latter.

What’s more, at the start of 2024, a coalition led by two business people from the tech sector proposed another round of legislation that would have legalized California sports gambling. However, the sponsors reportedly didn’t consult members of CNIGA when authoring the measure. The state’s tribes, in turn, spoke out against the bill. And wouldn’t you know it, policymakers in the House and Senate followed suit.

This is all to say: Given the influence CNIGA clearly holds over gaming laws, it would be genuinely surprising if daily fantasy sports isn’t forced to shut down operations inside California sometime in the near future.

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