Underdog, PrizePicks, and Other California Fantasy Sites Switch to Peer-to-Peer Contests as Crackdown Looms

Several California-facing daily fantasy sports (DFS) operators have switched their products to allow peer-to-peer contests only in the wake of Attorney General Rob Bonta’s legal opinion, which declared DFS illegal. Sites making the change include Underdog, PrizePicks, Sleeper, and ParlayPlay.

Bonta released his opinion on July 3, stating that all DFS contests constitute illegal wagering under California’s Penal Code section 337a.
Although his opinion does not change the state’s laws, it signals potential enforcement risks and scrutiny against DFS operators.

Several Operators Transition to Peer-to-Peer

Some of the operators took that step even before Bonta formally issued his opinion. PrizePicks switched to its “Arena” format in California at the end of June. Similarly, Sleeper updated its terms and conditions to reflect the switch to peer-to-peer contests on July 1.

ParlayPlay also made the transition in advance. Its latest terms, updated on June 4, specify that California residents can participate in its “Rumble” peer-to-peer contests.

Underdog Fantasy took a different approach. It initially attempted to stop the release of the opinion by filing a lawsuit against Bonta.

Underdog claimed DFS is a skill game and that Bonta lacks the legal authority to issue an opinion on it. However, the Sacramento County Superior Court denied Underdog’s motion for a temporary restraining order, allowing the release of the opinion.

Roughly two weeks later, Underdog also transitioned to offer only its “Champions” peer-to-peer format in the state.

Player-versus-house “pick ’em” fantasy is a recent and legally controversial innovation. Longer-standing operators, like DraftKings and FanDuel, have been more conservative in following the trend and didn’t have to make a change. DraftKings’ Pick6 contests don’t involve the house as a participant, while FanDuel’s Picks was never available in California.

Peer-to-Peer Contests as a Strategy to Navigate Regulation

Daily fantasy sports emerged from a carveout for fantasy contests in the federal prohibition against sports betting that existed until 2018. Compared to old-school season-long fantasy contests, the “daily” version offers an experience that feels a bit more like sports betting. Even now, DFS is legal in more places than sports betting.

Pick ’em contests took that to the next level by pitting the user against the house, where traditional and daily fantasy sports are peer-to-peer.

Player-vs.-house pick ’em contests feature fixed odds and payouts, which make them even more like sports betting. Peer-to-peer fantasy products base their payouts on the size of the player pool and each player’s performance compared to others.

The transition seen in California is nothing new. DFS operators have used this move as a strategic workaround in several states where pick ’em contests have raised questions among gambling regulators and lawmakers.

The change allows operators to argue that peer-to-peer fantasy is a private contest of skill, not governed by gambling laws.

Additionally, peer-to-peer contests remove the house as a participant, providing operators with a stronger legal defense in states like California, where playing against the house is classified as illegal gambling.

Still, it’s important to note that Bonta’s legal opinion states that even peer-to-peer DFS is illegal. His opinion is based on the fact that players risk money on the outcomes of third-party sports performances, over which they have no control.

Some DFS Operators Still Offer Pick ’em Contests in California

While many DFS platforms have transitioned to peer-to-peer, others continue to offer the controversial pick ’em contests. They include:

• Betr Fantasy
• Boom Fantasy
• Chalkboard Fantasy
• Dabble
• Owners Box
• StatHero

The situation is still developing, however. Although these operators have not made proactive changes to their products, they may still do so if faced with pressure from state regulators or enforcement actions resulting from Bonta’s opinion.