Daily fantasy sports sits in a legal gray zone in California as of 2026. The state attorney general issued a formal opinion in July 2025 concluding that paid DFS contests, including both draft-style and pick’em formats, violate California’s sports wagering statute.1Office of the Attorney General. California Attorney General Opinion No. 23-1001 That opinion is not a law and did not shut anything down. Major platforms like DraftKings are still operating in the state, Governor Gavin Newsom publicly disagreed with the opinion, and class-action lawsuits against the biggest operators are working through the courts.2NEXT.io. California Governor Opposes AG’s Critical Fantasy Sports Opinion You can still log in and play. Whether you should is a different question.
What the Attorney General’s Opinion Actually Did
Attorney General Rob Bonta released Opinion No. 23-1001 on July 3, 2025, responding to a request from state lawmakers. It answers one question: does California law prohibit DFS contests played by people physically located in the state, even when the operators and their servers are elsewhere? The AG’s answer is yes, for both the classic salary-cap draft format and the newer pick’em format where you predict whether an athlete will go over or under a stat line.1Office of the Attorney General. California Attorney General Opinion No. 23-1001
An attorney general opinion is not legislation. It does not change the penal code or create new crimes. What it provides is the state’s official legal interpretation, and that interpretation carries weight: local prosecutors can rely on it when deciding whether to file charges, and courts may find it persuasive when reading the same statutes. It also arms private plaintiffs. Within days of the opinion, class-action lawsuits were filed against FanDuel, DraftKings, PrizePicks, and Underdog Fantasy on behalf of California residents who paid entry fees while in the state, seeking full refunds and injunctions against further operation.
The Statute Behind the Opinion
The AG’s position rests on Penal Code Section 337a, part of California law since 1909. The statute makes it a crime to place, accept, or facilitate a bet on the outcome of any contest involving skill, speed, or physical endurance. It also covers bookmaking, pool selling, and maintaining any space or equipment for recording such wagers.3California Legislative Information. California Code PEN 337a – Gaming
The DFS industry’s main defense everywhere else is that fantasy sports is a game of skill. That argument runs into a wall under Section 337a, because the statute does not ask whether skill or chance predominates. It prohibits betting on contests of skill by name. A bet on a horse race, a boxing match, or a football game is illegal under this statute no matter how much research the bettor brings. The AG’s opinion notes that DFS operators “have not cited a single authority construing section 337a(a)(6) to require that chance predominates” and warns that reading a skill exemption into the statute could inadvertently legalize ordinary sports betting too.1Office of the Attorney General. California Attorney General Opinion No. 23-1001
Federal law complicates the picture without resolving it. The Unlawful Internet Gambling Enforcement Act of 2006 carves out qualifying fantasy sports contests from its prohibitions.4Office of the Law Revision Counsel. 31 U.S. Code 5362 – Definitions But the UIGEA does not legalize fantasy sports. It only says the federal government will not use that particular law against them. State gambling statutes still apply independently, and California’s law predates the federal carveout by nearly a century.
Can Players Themselves Be Prosecuted?
Section 337a’s language covers both sides of a wager: the person who places a bet and the person who accepts it. In theory, a California player could be charged. In practice, no individual DFS player in the state has been publicly prosecuted under this statute. The AG’s opinion is clearly aimed at commercial operators collecting millions in entry fees, and the lawsuits that followed target companies, not customers.
Your more realistic exposure is financial and practical. If a court agrees with the AG and orders operators to shut down California accounts, you could lose access to funds held on the platform or face delays getting them out. The class actions are seeking refunds for players, so if they succeed you may eventually recover entry fees paid during this period, but that process would take years.
Why Platforms Are Still Running
The AG’s opinion did not trigger a shutdown. DraftKings issued a public statement calling the opinion “non-binding” and asserting that peer-to-peer fantasy sports contests “are legal in California,” noting the company has offered them “without challenge or issue for over 13 years.” Underdog Fantasy and other major operators took similar positions and kept their California contests open.
Governor Newsom’s office publicly broke with the attorney general. A spokesperson said the governor “does not agree with the outcome” and would welcome “a constructive path forward in collaboration with all stakeholders.”2NEXT.io. California Governor Opposes AG’s Critical Fantasy Sports Opinion A coalition of seven organizations, including the Social and Promotional Games Association and the ACLU, has formed to push back against any legislative ban, arguing for regulation instead of prohibition. Estimates suggest DFS platforms account for roughly 15 percent of all gaming revenue in the state.
So the standoff looks like this: the AG says the activity is illegal, the governor says the AG is wrong, no court has ruled either way, and the companies have decided the business is worth the legal risk. That calculation is theirs. Yours is different.
What About Season-Long Leagues With Friends?
If you play in a traditional season-long fantasy league with coworkers or friends, the AG’s opinion did not analyze that format. It focused on commercial draft-style and pick’em contests. The reasoning in the opinion is broad enough to reach a private league where participants pay an entry fee and the winner takes a cash prize, because Section 337a on its face prohibits betting on athletic contests.3California Legislative Information. California Code PEN 337a – Gaming The practical difference is enforcement. No prosecutor has ever gone after an office fantasy football league, and nothing about the current fight suggests that is changing.
You Still Owe Tax on Winnings
The legal fight over whether DFS can be offered in California does not change your tax obligations. The IRS treats DFS winnings as taxable income regardless of how a state classifies the activity. Net winnings get reported as other income on Schedule 1 of Form 1040, even if the platform never sends you a form.
DFS operators are required to send a Form 1099-MISC to you and the IRS when your net profit reaches $600 or more in a calendar year. Starting in 2026, the minimum reporting threshold for certain gambling-related payments on Form W-2G rises to $2,000, with annual inflation adjustments after that.5Internal Revenue Service. Instructions for Forms W-2G and 5754 (01/2026) You can deduct entry fees and losses, but only if you itemize on Schedule A, and only up to the amount of your winnings for the year. You need records of both wins and losses to claim the deduction.6Internal Revenue Service. Topic No. 419, Gambling Income and Losses A log of every contest entry plus platform transaction records is the simplest protection.
Where This Is Headed
Three things could resolve the uncertainty, and none of them have happened yet. A California court could rule on the AG’s interpretation, most likely through the class-action lawsuits against the four major operators. The legislature could pass a bill either authorizing and regulating DFS or explicitly banning it; past efforts, including Assembly Bill 1437 in 2016, failed in committee.7California Legislative Information. California Assembly Bill 1437 – Gambling: Internet Fantasy Sports Game Protection Act Or a future attorney general could withdraw or revise the opinion.
Until one of those happens, DFS platforms will likely keep operating in California and the state’s top law enforcement officer will keep saying they shouldn’t. You can play. The main risks you carry are losing access to funds if a court sides with the AG and a shutdown follows, and the small but non-zero possibility that enforcement eventually reaches individual players. The much larger risk sits with the companies, which is why they are the ones being sued.