CA Assembly Member Asks Atty. Gen. Kamala Harris to Shut down Daily Fantasy Sites

The daily fantasy sports industry has come under attack in recent months and prompted lawmakers across the country to question its legality. While California Assembly Member Adam Gray introduced a bill in September which would license and regulate DFS operators, some believe that the state needs to start by clarifying whether it considers the game to be based on luck or skill.

DFS Illegal No Matter How Much Skill Involved

Assembly Member Mark Levine penned a letter to California’s Atty. Gen., Kamala Harris, earlier this month asking that she immediately shut down the DFS sites operating in the state.

Levine says that Golden State law specifically makes betting on fantasy sports illegal, as it has not been explicitly sanctioned by the government. He cites section 19801 of the Business and Professions Code in his argument: “no person in the state has a right to operate a gambling enterprise except as may be expressly permitted.”

Operating in something of a gray area, daily fantasy operators claim that the game they offer is skill-based, and therefore should not be considered gambling at all. The UIGEA federal legislation seems to back up that logic, as it creates a carveout for the fantasy sports industry. Opponents say that the law was written before DFS was even invented, and it should therefore be re-examined.

Can DFS Sites Be Trusted?

Even if the games are ruled to be skill-based, Levine says, “they should still specifically be regulated under California law before the games can operate in California.”

He believes that consumers deserve some protections from the DFS industry, which up till now has operated somewhat in the shadows, asking that its users simply trust them to do the right thing. That trust was tested earlier this year when a DraftKings employee accidentally published private company data, leading some to believe that its workers have access info which could give them an upper hand while playing at other DFS sites.

Nevada Takes Action

In his letter, Levine mentions that regulators in Nevada recently studied the issue and came to the conclusion that DFS is gambling, and have shut down daily fantasy operators until they acquire the appropriate gambling license.

The New York Atty. Gen. also recently stunned the industry by making a similar claim and ordering DFS sites out of the state. FanDuel has stopped accepting deposits from players there, but DraftKings has continued to operate. Both sides will challenge the ruling in court.

If the ban is upheld there, it will be a big blow for the DFS industry, which counts New York players as about 10% of its user base. Cutting off California from DFS would be an even bigger blow, as the population of the Golden State is over two times that of New York.

While politicians debate the future of the industry, it’s important to keep in mind that strict, state-by-state, regulation of DFS would likely spell its end. Much like online poker operators, daily fantasy sites depend on large pools of players to offer big contests with large cash prizes for the winners. If lawmakers decide to ring-fence and restrict the games by state, it would likely be a death sentence for DFS.