In a gaming battleground state, a major national gambling power is facing a significant challenge in the form of a class action lawsuit over the company’s daily fantasy sports practices. Per a national gaming report, a federal judge said the class action suit that began last year could result in an injunction blocking DraftKings from operating in California. As this same article notes, it “feels like 2015 again,” as DraftKings is once again facing a lawsuit over the legality of the daily fantasy sports product that was the original core of its business. This one has real potential consequences as well. Indeed, with this new pending litigation back at the forefront, the gaming giant now has to perhaps deploy its mighty financial resources to contend with a new challenger.
For this article, SBS will be going over the latest gaming news coming from the Golden State, along with a variety of other notes and resources you can only find here at SBS.
Noted in the same article, DraftKings and rival FanDuel sent the betting world into upheaval in the early 2010s when their DFS products exploded in popularity. State regulators grappled with whether the products were legal or illegal, gambling or games of skill (or both), and myriad other considerations. The repercussions of the companies’ success are still being felt to this day. Together, they control approximately 80% of the multibillion-dollar online sports betting market. Much of that success is owed to the brand recognition they built with their DFS products.
While the widespread legalization of sports betting rendered DFS a distant third (after casino) in DK’s portfolio, it remains widely available and popular in many states without a legal framework for traditional sports betting. California is one such state, and DFS players there have brought a class action suit against DraftKings. If it results in DraftKings geofencing California, that could cost the operator a sizable chunk of its DFS business.
At the center of the lawsuit is the idea that DraftKings has misrepresented its product as legal in California. Since the customers believed that playing DFS on DraftKings was legal, they lost thousands of dollars apiece on the platform. Had they known it was illegal, the lawsuit contends, the individuals never would have lost that money. Brandon Moore, Zhicheng Zhen, and Jonathan Smith are the named individuals in the case. They lost between $1,000 and $3,000 each, according to the lawsuit. DraftKings, through its own lawyers, contends that the customers did not suffer economic injury because the games they participated in were fair and accurately represented to them by the company’s communications.
Noted in the article, DraftKings filed a motion to dismiss. U.S. District Judge Charles Breyer was not persuaded and said the case will likely move forward. His opinion centered on DraftKings’ advertisements asserting that DFS is legal in California. If that was not material, he said, then why would DraftKings even advertise its legality? California Attorney General Rob Bonta released an opinion last year, just after the lawsuit was filed, that DFS products violate California gambling law. The law in question bars bets or wagers on: “…the result, or purported results, of any trial, or purported trial, or contest, or purported contest, of skill, speed or power of endurance of person or animal, or between persons, animals, or mechanical apparatus.” Bonta’s office can issue opinions, but those opinions don’t have the force of law.
If Judge Breyer declines the motion to dismiss, the case will continue. And he noted that if it does, the next step would be a possible preliminary injunction blocking California residents from accessing DraftKings. That would be a major blow to DraftKings for a couple of reasons. For one, DraftKings does not have access to California via either of its main businesses, sports betting and casino. Previous efforts to get legal sports betting to the finish line failed spectacularly, most notably in 2022 with Proposition 27. That garnered less than 20% of the vote.
Until that happens, DraftKings will keep peddling its DFS and prediction products, though the latter has failed to gain significant market share thus far. California is listed as a legal state by DraftKings Prediction, offering both sports contracts and other financial markets. Of course, California’s massive population also makes it more worthwhile than other markets for DraftKings’ less popular products. The lawsuit states that the market is worth around $200 million annually.
Once you’re up to speed on the latest gaming news from the Golden State, be sure to explore the full range of information available, which you can find only at SBS. For more analysis on the state in this report, the California online betting sites rundown is a must-read resource. Here, you can find more information about the latest California gaming updates and beyond. Switching gears for eligible patrons, if you are looking for a new sportsbook resource, then the BetOnline sportsbook review guide is a must-read page where you can learn about all there is to know about BetOnline and if it might make sense for you. Finally, for those on the go, the best betting apps breakdown is a must-read page that covers the perks of mobile wagering and whether it might be an appropriate avenue for customers to explore.
About the Author
Chris Boline is a Reno-based business development professional and freelance sports writer with over a decade of experience covering the NBA G League, Los Angeles Chargers, and national football and basketball. His expertise spans the NFL, NBA, UFC, boxing, golf, and motorsports, along with topical news, marketing, and promotional content. A proud University of Nevada graduate, Chris earned both his BS in Management & Economics (2015) and MBA (2023). He is active in the Reno community, serving on boards such as the Nevada Sagebrush Alumni Chapter, NCET, and the College of Business Alumni Association, where he was past president (2022–23). Notable honors include: - Two-time University of Nevada Alumni Chapter of the Year honoree (2017, 2021) - 2021 NCET Professional Services Organization of the Year (with TAC) - 2016–17 Reno Bighorns MVP, awarded by the Sacramento Kings - Nevada Press Association Award for Best Sports Column (2015) - Former Editor-in-Chief of The Nevada Sagebrush Chris blends his passion for sports with a strong background in sales, marketing, and community engagement.
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