Underdog Sports activities, a outstanding operator within the fantasy sports activities business, has filed a lawsuit in Sacramento Superior Courtroom in an effort to cease California Legal professional Basic Rob Bonta from issuing a authorized opinion that might declare digital fantasy sports activities platforms illegal within the state. The transfer is available in anticipation of a broadly anticipated opinion that, if printed, may have far-reaching penalties for Underdog and related platforms providing paid fantasy sports activities contests.
This authorized problem precedes the precise launch of Bonta’s opinion, which the Legal professional Basic’s workplace has steered may arrive by July 3. In keeping with Underdog’s filings, the anticipated steering would undertake a broad interpretation, successfully deeming most types of day by day fantasy sports activities (DFS) as unlawful beneath state regulation—a transfer that might destabilize the business inside California’s borders.
Core Authorized Arguments In opposition to the AG’s Opinion
Underdog’s authorized group is requesting the court docket to situation a brief restraining order, a preliminary injunction, and a writ of mandate to forestall Bonta from releasing the opinion. In keeping with paperwork printed by The Closing Line, the corporate argues that the Legal professional Basic lacks the statutory authority to situation such a ruling beneath California Authorities Code Part 12519. The regulation, they assert, limits the AG to issuing authorized opinions which can be primarily based solely on questions of regulation and that should pertain to the duties of the official requesting the opinion.
Underdog emphasizes this distinction in its court docket submitting:
“Absent reduction from this Courtroom, Legal professional Basic Rob Bonta will situation an opinion later this week that can decimate fantasy sports activities in California. Legal professional Basic Bonta needs to be enjoined from doing so, not as a result of he’s unsuitable in his views on the legality of fantasy sports activities — although he actually is — however as a result of by statute, the Legal professional Basic can solely situation opinions on questions of regulation and might solely reply questions that relate to the duties of the official requesting the opinion. Neither is true right here.”
The transient additionally challenges the validity of the unique request that prompted the opinion. It notes that former State Senator Scott Wilk—who initiated the inquiry into the legality of DFS—has since left workplace as a result of time period limits in 2024. As such, Underdog contends the request not holds authorized weight, and issuing an opinion now would set a troubling precedent, permitting outgoing legislators to affect coverage effectively after their tenure has ended.
Additional, Underdog argues that the underlying query at hand ventures into prosecutorial territory, which falls inside the area of the manager department, not the legislative. As a result of the query entails potential enforcement and fact-finding, Underdog asserts that it falls exterior the purview of the AG’s advisory position.
Underdog: Enterprise at Danger, Trade Affect Imminent
Underdog’s lawsuit claims that the forthcoming opinion poses an existential menace to its operations in California, which account for about 10% of its complete income. In authorized filings, the corporate cited conversations with representatives from Bonta’s workplace who allegedly acknowledged that the workplace intends to make use of the opinion as leverage, threatening enforcement actions to stress Underdog to stop providing its companies within the state.
“The Legal professional Basic’s workplace confirmed that after releasing the opinion, the objective could be to make use of the specter of an enforcement motion—beneath the interpretation of California regulation that the Legal professional Basic will impermissibly announce within the opinion—to stress Underdog into agreeing to depart California solely,” one submitting revealed.
Underdog additional referenced the authorized fallout from a 2016 Texas opinion issued by Legal professional Basic Ken Paxton, which led FanDuel to tug its DFS merchandise from that state. Whereas FanDuel ultimately reentered the Texas market in 2018, Underdog’s transient factors to this precedent as proof of the damaging ripple results such opinions could cause.
The corporate’s authorized group argues that the opinion course of shouldn’t be used as a mechanism for conducting investigations or fact-finding missions, one thing they imagine Bonta’s workplace has carried out over the previous 18 months. Throughout that point, the AG’s workplace reportedly consulted numerous DFS operators, solicited business enter, and examined market practices—actions Underdog claims transcend decoding present regulation.
Firm Expresses Confidence in Authorized Standing
Regardless of the excessive stakes, Underdog maintains its confidence within the authorized standing of its fantasy sports activities choices in California. An organization spokesperson acknowledged to The Closing Line:
“Any potential opinion is flawed as a result of it has to depend on factual determinations the opinion course of can not and mustn’t resolve, in keeping with California regulation. The final two Attorneys Basic, Kamala Harris and Xavier Beccera, didn’t situation opinions, and Legal professional Basic Bonta has been in workplace for greater than 4 years with out questioning fantasy sports activities video games. We’re optimistic the regulation will likely be adopted and are assured within the legality of fantasy sports activities in California. If a adverse opinion is issued, fantasy sports activities will prevail on the deserves, no totally different than in New York and Illinois the place courts rejected the equally unsuitable opinions of these states’ attorneys common.”
On the middle of the authorized storm are Underdog’s fantasy decide’em contests, which require customers to foretell the statistical performances of gamers in real-world video games. Although much like parlay sports activities betting in format, Underdog contends these video games depend on ability and are protected beneath present fantasy sports activities laws.
Outlook Forward of July Deadline
In keeping with lawyer David Gringer, who represents Underdog, a consultant from the AG’s workplace confirmed throughout a June 26 dialog that the opinion could be launched no later than July 3 and would broadly declare digital fantasy sports activities unlawful in California.
Gringer’s declaration additionally detailed how the AG’s workplace has taken cues from Texas’s authorized mannequin, utilizing related authorized interpretations to pressure DFS operators out of state markets. The assertion claims Bonta’s group is following a comparable technique, which may lead to Underdog—and probably different operators—exiting the California market.
The subsequent steps now relaxation with the Sacramento Superior Courtroom, which should determine whether or not the Legal professional Basic’s workplace needs to be allowed to proceed with issuing the opinion or whether or not Underdog’s arguments about authorized overreach maintain sufficient weight to delay or block its publication. Because the July 3 deadline nears, the result of this dispute might have vital penalties for the way forward for paid fantasy sports activities in California—and probably past.
