Understanding California's Possible Fantasy Sports Ban

Work in progress?

There has been a heated debate in California regarding the legality of people betting on fantasy sports. Now, the state's Attorney General, Rob Bonta, has ruled that they are illegal, but does that automatically mean they will be banned, or will the operators and punters find a clever solution to circumvent the ruling? For now, everything is calm, so let's have a look at the background and forecast where things might go.

Looking back

Sports betting in California has been illegal since the state enacted Penal Code section 337 in 1909. The law banned wagering on games of chance (which includes betting on the outcome of a sporting event). Currently, the only places where wagering is legal in the state are on tribal lands in brick-and-mortar venues. Many people had hoped that when the United States Supreme Court struck down the PASPA Federal Ban on sports betting as unconstitutional in 2018, California would relax its own sports betting law. Despite mounting one of the most intensive and expensive lobbying and advertising campaigns ever staged, Californians rejected legalizing sports betting in a public poll in November 2022.

The current situation

However, just because something is illegal does not mean that people refrain from doing it. There are various options that Californians pursue. A survey from UCLA revealed that a quarter of Californian adults wagered on sports.There are several gray areas available to Californians who love their sports. Many choose to gamble with real money at offshore, unregulated platforms on actual sporting events. Others have chosen to bet on fantasy versions of those games. While the state authorizes neither of these options, they operate in a legal gray area. What the latest ruling has done is erase one of those gray areas.

Playing casino games

There are also other options for Californians who enjoy playing at online gambling sites, and social and sweepstakes casinos operate legally in the state. This is because gambling laws do not cover sweepstakes at a casino, as players are not betting on the outcome of an event, and they play with virtual currency. However, they do have to adhere to strict rules to differentiate themselves from real-money casinos.

Online sweepstakes casinos are permitted everywhere in the US, except in Washington, Michigan, Idaho, and Nevada. To be permitted, all prizes must be identifiable before a player enters, all competitions must have a precise end date, and purchases must not enhance the chance of winning. They are also in the sights of California's lawmakers, but for now, all bets are off. However, things are more advanced when it comes to Fantasy Sports.

Fantasy sports duel

On one side of the debate is the Coalition for Fantasy Sports, which represents online sports betting companies including FanDuel and Underdog. On the other hand, the incredibly powerful California Nations Indian Gaming Association, which claims that daily fantasy sports (DFS) are just traditional sports betting in an alternative form. They want all forms of gambling to be restricted to tribal lands. The Coalition for Fantasy Sports, on the other hand, has maintained that they are games of skill that do not violate state law because people wager on the performance of individual players in mini fantasy teams that they have created.

Announcement without enforcement

While the Attorney General has released a legal opinion refuting that DFS is a game of skill, that is not the end of the matter. The legal opinion formally defines the games as illegal in the state. The AG's office states that it expects online companies to come into compliance; however, no specific enforcement actions have been taken to date.The statement issued said,

"In issuing this legal opinion, the department was tasked with describing existing law. The department doesn't have the authority to make new laws or change the law. Only the legislature and the voters of California can decide whether to change the law."

Back to the future?

So are we about to have a rerun of 2022? Then, both the lobbies put forward opposing propositions to legalize sports betting in California. Rather than working together, they attacked each other and put voters off the whole idea. If a ballot on online gambling is to be rerun, industry insiders are recommending that the two sides try to win over the electorate by cooperating and working together.

Hopefully, lessons will have been learned, and the major online sports companies will have understood that their attack ads in 2022 offended the tribes and did nothing to enhance their standing with Californians. If the two sides do decide to cooperate, there could be a vast amount of money to be made. However, first they need to persuade the legislature and then the voters that DFS games should be legalised rather than outlawed.

New York model

One argument that could counteract the negativity would be for California to follow the New York model, where a 51% tax rate on online sports betting was successfully implemented. It must be remembered that revenue is currently flowing directly into the coffers of offshore companies, and the Californian treasury is missing out. As the study cited earlier revealed, a quarter of Californians gamble, and currently, the state generates no revenue from it. By comparison, New York announced in April 2025 that since its launch in January 2022, the state had earned over $3 billion in revenues. California could afford similar rates because its population, and therefore the market potential, is so vast. The online operators know that it would be an operating cost that they could absorb, as it is estimated that California could generate $3 billion a year!

Best behaviour

For now, the best the operators can hope for is to neutralise the situation by complying with the Attorney General's ruling rather than waiting for the legislature to respond. Everyone is aware that there is still a significant amount of bad feeling surrounding the bitter battle of 2022, and unlike many ballots, a new one might not be welcomed.If they are seen to be acting in accordance with the letter of the law for now, this might leave them in better stead for future changes.