Lawsuit Alleges DraftKings Daily Fantasy Games Constitute Illegal Sports Gambling in California

Despite sports betting being illegal in the state, California residents spend more than $200 million on such sites per year, DraftKings lawsuit claims.

A new class action lawsuit has been filed against DraftKings in California, claiming that the popular online sports betting site is operating illegal gambling enterprises in the state, through its “Daily Fantasy Sports” contests, which it allegedly uses to lie to residents about the games’ legality.

The complaint (PDF) was brought by Brandon Moore, ZhiCheng Zhen and Jonathan Smith in the U.S. District Court for the Northern District of California on June 1, seeking class action status to pursue damages on behalf of individuals similarly situated throughout the state.

DraftKings is only permitted to operate in states that have legalized online sports betting, but this has not stopped the site from rapidly growing to become the dominant player in the U.S. market. The platform, known for its aggressive promotional strategies, has drawn millions of users since federal restrictions on sports gambling were lifted in 2018.

While this lawsuit has been filed alleging that the company is illegally operating in California, it comes amid a growing number of gambling addiction lawsuits now being pursued by users in states where it is allowed to operate, alleging that DraftKings and similar sites target vulnerable users and exploit individuals showing clear signs of compulsive behavior.

California has a ban on sports betting, but the lawsuit claims that DraftKings is illegally circumventing that ban through its Daily Fantasy Sports and Pick6 games. Running any such games is considered a misdemeanor under state law, plaintiffs claim.

State lawmakers shot down an attempt to legalize sports betting in 2022, including a proposition lobbied for by sports betting sites like DraftKings. However, the lawsuit notes that DraftKings has continued to push daily sports fantasy betting to consumers in the state, which plaintiffs say flies in the face of the established state law.

Despite the ban, the California Business Bureau estimates that state residents spent about $200 million on Daily Fantasy Sports contests every year.

According to the lawsuit, unlike normal fantasy sports betting in an office pool or something similar, DraftKings operates and documents the contests, pools the money, holds participants’ bets and wagers, and decides who gets what portions of the rewards. In addition, DraftKings takes a portion of each wager, despite not directly participating in the game.

“Put simply, the outcomes of the Daily Fantasy Sports contests are contingent and unknown at the time the bets and wagers are collected, recorded (i.e., booked), and pooled by DraftKings,” the lawsuit states. “And as a result, DraftKings’ Daily Fantasy Sports violate California Penal Code Sections 319, 320, 321, 330, 330a, 337a, and 337j.”

In addition, the lawsuit claims DraftKings wrongfully misleads California consumers by claiming the games are legal under California law.

Plaintiffs present claims that DraftKings violated California’s Unfair Competition Law and California’s Consumer Legal Remedies Act.

DraftKings Gambling Lawsuits

Most DraftKings gambling lawsuits filed outside of this class action largely center on allegations that the company intentionally fosters sports betting addiction in consumers, using aggressive marketing tactics such as misleading “risk free” promotions and app features specifically designed to encourage high-frequency betting.

In states where online gambling is legal, plaintiffs argue that companies like DraftKings have prioritized profits over consumer protection, using real-time data to identify and retain users that have shown signs of compulsive behavior. Rather than offering support or safeguards, these platforms allegedly target inexperienced users with personalized promotions, loyalty perks and psychological triggers that normalize betting while masking its financial consequences.

Amid the growing evidence linking sports betting platforms to rising rates of addiction and financial harm, lawyers are now reviewing sports betting addiction lawsuits for individuals between the ages of 18 and 25, who developed gambling addictions and lost $10,000 or more after using sports betting apps like DraftKings, FanDuel, BetMGM and Caesars. 

These claims focus on college age users who were encouraged to place high-frequency bets, even after showing signs of addiction. Some continued to receive personalized incentives and marketing offers after requesting account closures or appearing on self-exclusion lists, raising serious concerns about how platforms exploit vulnerable behavior.

If you or someone you love suffered financial harm from compulsive gambling on these apps, a lawsuit may help recover losses and hold companies accountable for their addictive design and predatory targeting practices.