California Faces Major Legal Movements in Fantasy Sports

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00:00Okay, so let's get to California here. No sports betting update in the state of California. Just

00:04to be clear, Daily Fantasy is now under a little scrutiny here. Sam, what's the latest?

00:10Yeah, we're expecting an opinion tomorrow from Attorney General Rob Bonta of California.

00:16And it's expected to clarify the law saying that Daily Fantasy sports contests are illegal in

00:21California. And that would be just have a huge impact on, you know, not just the fantasy sports

00:26industry, but sports betting as well. Fantasy sports has kind of been a murky area in a lot of

00:31states for a long time. We've seen some states like Texas issue opinions, which haven't been

00:36enforced. But by all accounts, it's believed that this opinion will be enforced. And underdog fantasy

00:42in response is filing a lawsuit, actually just filed a lawsuit yesterday in Sacramento Superior Court,

00:48asking for a temporary restraining order that would prevent the Attorney General from issuing

00:52this opinion. It's a very unprecedented move. You know, we've seen underdog and other sorts of

00:58pickup companies or fantasy sports companies out there respond in states where they've been asked

01:03to leave by simply leaving or changing the way that their games work, going from a player versus

01:08the house model to a player versus player model. We've seen, you know, in New York, they paid 17 and

01:13a half million dollars in fines and agreed to leave the state. Florida, they agreed to leave the state.

01:18But California, they're now, you know, they have legal action on the table. So what they're saying

01:23here is that this goes beyond kind of the Attorney General's duties, and it would be making a policy

01:28decision where one is not warranted. It's also saying that, you know, more than 10% of our business

01:33is in the state of California, which is no surprise, because again, California doesn't have sports

01:38betting. So it's a huge market for these fantasy sports companies, really crucial to their business.

01:42Now we'll have to see what happens when the opinion comes out tomorrow. But I wouldn't be surprised if

01:47other companies like prize picks get involved as well. They've been very vocal through their

01:51lobbying group saying that this should be left up to the citizens in the state, we should give them

01:56a vote whether or not they want fantasy sports to be legal. Now the background behind all of this is

02:01of course that sports betting is still illegal. The tribes pretty much hold the key to allowing that

02:06to happen. They have tremendous influence in the legislature. They actually just sent a letter to

02:10the legislature, which it's believed by many killed a bill that would have legalized fantasy sports.

02:15And reportedly, they're close to a deal with the fan duels and the draft kings of the world to create

02:20framework to allow legal sports betting in California. The sports betting companies are very much against

02:25the fantasy sports companies, they see them as offering a product that they're not allowed to do. So it's

02:30kind of the enemy of my enemy is my friend sort of thing here. Right. But, and we're seeing the, you know,

02:35the fantasy sports companies respond this way. So, you know, as we talked about a lot of stuff on this show,

02:39I imagine all gets worked out in the courts eventually, but very messy. We'll have to see

02:43what happens tomorrow when the opinion comes out. Just want to add a disclaimer that if you play

02:47fantasy football or any of those kinds of leagues with your buddies, those wouldn't be threatened

02:50under this kind of law. It's only for companies that have payment processors, effectively acting

02:55like, you know, a sports book operator or a fantasy sports operator.