FanDuel’s Daily Fantasy Sports Contests Are Illegal in California, Class Action Lawsuit Alleges

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A proposed class action lawsuit claims that FanDuel is aware of the longstanding ban on gambling in California but still operates its “FanDuel Fantasy” daily fantasy sports contests while wrongfully promoting them to consumers in the state as entirely legal.

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The 46-page lawsuit contends that FanDuel, self-described as the nation’s number-one sportsbook, has deceived California residents by leading them to believe that its daily fantasy sports contests are legal forms of gambling even though the state legislature has broadly said otherwise for more than 150 years.

Daily fantasy contests, often referred to as “FanDuel Fantasy” games, are short-form variants of traditional fantasy sports games, in which users build teams of professional athletes across a sports league, most commonly the National Football League (NFL), and compete against other users for points based on individual player performance. However, rather than span the entire season, daily fantasy sports are an accelerated week-long or single-day competition in which the participant with the most points receives a share of a pre-determined pot funded by player entry fees, the suit explains.

Notably, a portion of the pot in FanDuel Fantasy contests returns to FanDuel, the case says, citing recent examples where the sports-betting company retrieved between 11 percent and 20 percent of the total pot.

“[U]nlike traditional fantasy sports, which generally last throughout an entire sports season (e.g., the NFL regular football season), FanDuel Fantasy generally involves short periods of participation and are designed to entice multiple rounds of repeat betting over the course of a day, a weekend, or a week,” the complaint argues.

Regardless of which type or structure of FanDuel Fantasy contests a user engages with, their operation, like the majority of other commercialized gambling enterprises in the state, is not legal in the state of California, the case contends.

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The class action lawsuit, citing the California Penal Code, shares that any person who conducts or engages in any banking or percentages game— where the house is a participant in a game or collects a portion of the bets made within it— with real value stakes in the state is guilty of a misdemeanor.

Though many of gambling prohibition laws were outlined and enacted in the 19^th and 20^th centuries, the complaint relays, California lawmakers doubled down on the state’s anti-gambling stance as recently as 2008, reaffirming that “no person in this state has a right to operate a gambling enterprise except as may be expressly permitted by the laws of this state” (Cal. Bus. & Prof. Code § 19801), which covers activities like the state lottery and Native American tribal casinos. Similarly, the case notes that the California electorate rejected two ballot initiatives in 2022 that could have legalized additional forms of gambling in the state, like sports betting.

Despite the “resounding defeats” against sports-betting at the ballot box, the case argues that online gambling enterprises like FanDuel have attempted to circumvent the law and find ways to reach the pockets of California consumers. This conduct is further promoted by FanDuel’s advertisements on television, social media, and in-game executive sponsorships, all of which promote the idea that its operation (specifically daily fantasy sports in California) is perfectly legal, the complaint alleges.

“FanDuel has a comprehensive marketing and customer solicitation strategy, that includes soliciting new and existing customers to use FanDuel, including within California,” the case states.

The plaintiff, a California resident, created a FanDuel account several years ago after viewing several ads that depicted California as a state in which the company was legally authorized to operate in. Had FanDuel truthfully disclosed the “unlawful nature” of its gambling business in California, the complaint conveys, the plaintiff would not have placed bets online through its website nor made an account in the first place.

“Put simply, FanDuel intentionally and strategically leads—in fact, misleads— consumers into believing that its operation of the Gambling Websites in California is legal. It is not,” the suit declares.

The FanDuel Fantasy class action lawsuit looks to cover all California residents who placed an online bet on the company’s website while in California. Check out ClassAction.org’s lawsuit list for current class action lawsuits