How Will California's DFS and Sweeps Crackdown Affect Sports Betting

The daily fantasy sports industry suffered a massive blow in California yesterday.

Attorney General Rob Bonta released a much-anticipated opinion on the legality of DFS, finding that the industry was violating state gambling laws. This even includes the classic draft-style games, which began appearing years before sports betting became legal.

The stunning opinion comes as lawmakers debate a ban on sweepstakes platforms. This includes free-to-play casino games and sportsbooks that utilize a dual-currency model, which is the standard approach among most operators. New York and New Jersey recently passed bans of their own, making California a critical market for the industry.

While neither industry has been officially banned, the above efforts will soon lead to a change in that.

Good News for Sports Bettors?

While many lawmakers oppose these two industries based on fears over problem gambling, that isn’t the sole reason for the recent action. 

The state has been attempting to legalize sports betting for years, but a strained relationship with tribal leaders has led to its failure. The tribes operate the most profitable casino market in the US, generating even more revenue than Las Vegas. 

The source of tension between the two sides is the issue of allowing commercial operators to acquire sports betting licenses. This would reduce revenue for the Tribes, which would also result in fewer visitors to their casinos. Leaders accused several of those operators of using deception when negotiating, leading to the state taking over.

The imminent bans are a step in the right direction for sports betting negotiations. The tribes requested that the state crack down on both industries eight months ago, which should help to rebuild some of the trust lost during previous talks. 

Even if these changes don’t lead to progress in legalizing the industry, it will likely put even more pressure on lawmakers to do so. Some residents will undoubtedly be angry and demand answers from local politicians, but others may be tempted to find illegal operators to bet on sports. The state has worked hard to eliminate those, but some of the less-reputable offshore operators continue to find ways to reach bettors. 

While legal battles over both bans are likely, they seem to be a good sign for the state’s chances of legalizing sports betting.