FanDuel Class Action in California Withdrawn but May Resurface
Background of the FanDuel Legal Challenge in California
A lawsuit targeting FanDuel’s daily fantasy sports (DFS) contests in California has been temporarily withdrawn after the plaintiff decided to drop the case, but the dispute could be revived later. The legal action questioned whether FanDuel’s contests should be categorized as gambling, which is illegal online in California, rather than skill-based games.
Details of the Class Action Lawsuit
The lawsuit was initiated in July by Martin Beltran, a California resident. He argued that FanDuel’s daily fantasy sports offerings function like gambling, violating state laws that prohibit online betting on sports. Beltran alleged that FanDuel was unlawfully operating within California since the state does not currently permit online sports wagering.
FanDuel, owned by Flutter Entertainment, has operated DFS contests in California since 2015. The lawsuit cited violations of California’s Unfair Competition Law, the Consumer Legal Remedies Act, and the state’s criminal code banning bets on events with unpredictable outcomes. It also sought restitution for California users who funded their accounts on the platform.
On September 8, Beltran filed a Notice of Voluntary Dismissal in federal court, resulting in dismissal without prejudice. This means the lawsuit could be refiled later. Both parties agreed to a tolling agreement extending the timeline to bring the case back, which often indicates potential settlement discussions, although neither side confirmed negotiations.
Context: California’s Tough Stance on Sports Betting and DFS
This legal challenge comes amid California’s firm opposition to authorized sports betting. Voters rejected a 2022 referendum that would have legalized it, despite significant backing from FanDuel and other major companies. Furthermore, California regulators recently declared daily fantasy sports as a form of illegal betting, complicating matters for operators relying on these games.
Unlike other recent lawsuits against major sportsbooks focusing on gambling addiction or deceptive advertising, this case specifically questions the legality of DFS under California law. It raises broader concerns about whether companies like FanDuel can continue offering these services in the state.
The Influence of Tribal Gaming and Uncertain Future for FanDuel
Tribal gaming entities hold exclusive rights to operate casinos in California and wield significant influence with state lawmakers. Industry observers suggest that without tribal support, DFS and online sportsbooks face considerable challenges in growing in California.
While FanDuel has avoided prolonged litigation for the time being, legal uncertainty continues to cloud its DFS operations in California. If settlement talks falter, Beltran or other plaintiffs might revive their lawsuits, leaving FanDuel’s position and prospects in the state unsettled.
