The Fantasy That Fooled America
Daily fantasy sports is not a game
Today we’re going to take a break from prediction markets and touch on daily fantasy sports. The California Department of Justice, as expected, put out a press release to announce its opinion on daily fantasy sports. The opinion concluded that daily fantasy sports constitutes “wagering on sports in violation of the Penal Code section 337a.”
The conclusion is correct, but the question that was presented to the Office of Attorney General was incorrectly framed from the beginning:
Does California law prohibit the operation of daily fantasy sports games with players physically located within California, regardless of whether the operators and associated technology are located outside the State?
The question looks … innocuous? It is anything but. The question presented presumes that daily fantasy sports is a game, when in fact it isn’t. As a result, even though the opinion reaches the correct conclusion, it achieves the result using the wrong framework.
This is an area that is near and dear to our heart. Back when in 2015, FanDuel and DraftKings were hanging by a thread, fighting for their lives. After six years and extensive litigation, including our participation via the filing of two amicus briefs, they survived, just barely. That whole saga wound up having substantial implications because daily fantasy sports was akin to a Trojan horse for state-regulated (but, ultimately, still unlawful) sports betting.
There are many legal technicalities at play here, which we will cover in additional posts. We produced a litany of content on this in the past and with this newly released legal opinion, many of these issues might be coming back; our content will finally find the right audience. Expect to hear from us extensively on this very topic, which will include a book with the working title Fooled, coupled with a law review paper.
Until then, simply remember this:
Daily fantasy sports is not a game.
