California DFS – or Daily Fantasy sports – has been thrown into uncertainty following a state order that could soon force major platforms to cease operations. The California Department of Justice issued letters to leading DFS companies, warning them to halt operations by early July or face potential enforcement.
The directive affects major DFS operators such as DraftKings, FanDuel, and Underdog Fantasy. While the state has long allowed DFS to operate in a legal gray area, the new order asserts that the contests violate California’s gambling laws. The DOJ’s move follows growing pressure from tribal gaming interests and lawmakers who argue DFS mimics sports betting, which remains illegal in the state without voter approval.
According to the order, California DFS contests may be considered games of chance rather than skill, which would classify them as illegal gambling under California law. A senior DOJ official noted that the games’ outcomes are not entirely within the players’ control, and entry fees meet the criteria for stakes or wagers.
Industry response has been critical. A spokesperson for Underdog Fantasy stated the company believes its contests are legal and plans to work with lawmakers to clarify the law. FanDuel and DraftKings have not yet made public statements in response to the directive.
The California DFS market is one of the largest in the country, with millions of users participating in fantasy contests. The potential shutdown could have significant economic consequences, including lost revenue for operators and marketing affiliates. Now the DOJ has not announced specific penalties, but indicated that noncompliance could lead to legal action. The crackdown marks a major shift in how California views and regulates daily fantasy sports.
