California’s attorney general might be the next major public official to offer an assessment of whether daily fantasy sports is legal under state law, in the wake of the New York attorney general’s cease-and-desist order to DraftKings and FanDuel.
Momentum for California AG to look at DFS
The first hard evidence that California Attorney General Kamala Harris may examine — or is already examining — the DFS industry manifested in a letter sent to Harris’ office last week by Assemblymember Marc Levine. The letter and potential action was first reported by the OC Register’s Ryan Kartje.
Legal Sports Report obtained a copy of the letter, which you can read here. He makes the following request of Harris:
This letter is to respectfully request that your office take action to order FanDuel, DraftKings and other fantasy sports betting websites to immediately discontinue business in California.
Levine goes on to state that he does not believe that “fantasy sports betting” is allowed under state law.
Later he says “These games should be shut down in California until California law is made clear and consumers are protected.”
A report from NBC Bay Area indicated that an investigation is on the table:
The office of California Attorney General Kamala Harris declined to comment, citing potential interference with the pending investigation into daily fantasy sports teams.
California attorney Ian Imrich also offered this on Twitter:
State AG Kamala Harris will not confirm or deny CA investigations of #DFS sites w/ local media outlets; my sources say AG probes underway…
— IJI Law (@ijiLaw) November 11, 2015
DFS and the law in California
California has generally not been considered a “gray state” in terms of the legality of DFS. All DFS operators accept customers from the state, and at least a few are based in the state. (Of course, Nevada also fell into that category until the state attorney general there and the gaming commission came to the conclusion that DFS is gambling.)
At least two laws could possibly be applied to DFS in the state:
Section 19801 (d) of the Business & Professions Code
This is the law that Levine cites in his letter:
(d) Unregulated gambling enterprises are inimical to the public health, safety, welfare, and good order. Accordingly, 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 and by the ordinances of local governmental bodies.
Penal code §337a
At least one lawyer who consults with clients on gaming issues in California and Nevada — Vincent Oliver — believes this law could be applied to DFS operators. He’s written a briefing on the legality of DFS in California.
A letter sent to Assemblymember Adam Gray from the group Stand Up For California regarding a potential regulatory code mirrors the thinking that DFS sites could run afoul of this code.
If this law is considered, the “game of skill” argument may not apply.
Here is the full text of the code:
337a. (a) Except as provided in Section 336.9, every person who engages in one of the following offenses, shall be punished for a first offense by imprisonment in a county jail for a period of not more than one year or in the state prison, or by a fine not to exceed five thousand dollars ($5,000), or by both imprisonment and fine:
(1) Pool selling or bookmaking, with or without writing, at any time or place.
(2) Whether for gain, hire, reward, or gratuitously, or otherwise, keeps or occupies, for any period of time whatsoever, any room, shed, tenement, tent, booth, building, float, vessel, place, stand or enclosure, of any kind, or any part thereof, with a book or books, paper or papers, apparatus, device or paraphernalia, for the purpose of recording or registering any bet or bets, any purported bet or bets, wager or wagers, any purported wager or wagers, selling pools, or purported pools, upon the result, or purported result, of any trial, purported trial, contest, or purported contest, of skill, speed or power of endurance of person or animal, or between persons, animals, or mechanical apparatus, or upon the result, or purported result, of any lot, chance, casualty, unknown or contingent event whatsoever.
(3) Whether for gain, hire, reward, or gratuitously, or otherwise, receives, holds, or forwards, or purports or pretends to receive, hold, or forward, in any manner whatsoever, any money, thing or consideration of value, or the equivalent or memorandum thereof, staked, pledged, bet or wagered, or to be staked, pledged, bet or wagered, or offered for the purpose of being staked, pledged, bet or wagered, upon the result, or purported result, 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, or upon the result, or purported result, of any lot, chance, casualty, unknown or contingent event whatsoever.
(4) Whether for gain, hire, reward, or gratuitously, or otherwise, at any time or place, records, or registers any bet or bets, wager or wagers, upon the result, or purported result, 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, or upon the result, or purported result, of any lot, chance, casualty, unknown or contingent event whatsoever.
(5) Being the owner, lessee or occupant of any room, shed, tenement, tent, booth, building, float, vessel, place, stand, enclosure or grounds, or any part thereof, whether for gain, hire, reward, or gratuitously, or otherwise, permits that space to be used or occupied for any purpose, or in any manner prohibited by paragraph (1), (2), (3), or (4).
(6) Lays, makes, offers or accepts any bet or bets, or wager or wagers, upon the result, or purported result, 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.
Of note: Nevada’s AG classified DFS as “pool betting” in a legal analysis of DFS.
The climate for DFS in California
Before word that the state AG might get involved, there had been relatively little chatter — at least publicly or in the media — about daily fantasy sports.
Assemblymember Adam Gray, who introduced a bill to regulate the DFS industry in September, indicated he was in no rush to pass legislation and wanted to take a “thoughtful approach.” There has not been a loud outcry from public officials in the state, otherwise, to act immediately on the subject of DFS.
The bottom line for the DFS industry is that it can ill afford to lose the player base in California — the country’s most populous state — especially with the possibility that sites might have to stop accepting customers in New York.
Image Helga Esteb / Shutterstock.com
