Underdog Fantasy Shifts to Peer-to-Peer Format in California Following AG Opinion on DFS

As the legal status of daily fantasy sports (DFS) in California remains uncertain, Underdog Fantasy has quietly altered its offerings in the state, replacing its Pick ‘Em contests with a peer-to-peer “Champions” format.

The change follows a July legal opinion issued by California Attorney General (AG) Rob Bonta, which deemed DFS illegal in the state. Although the opinion does not change the law, it signals increased scrutiny and potential enforcement risks for DFS operators.

The switch by Underdog is not surprising. Rival PrizePicks made a similar transition in anticipation of Bonta’s decision. The two companies, along with other DFS operators, have made changes to the formats in various states under regulatory scrutiny regarding player-vs-house DFS.

How’s “Champions” Different Than Pick ‘Em?

The most significant difference between the two formats is the user’s opponent.

In Pick ‘Em, players compete against the house by predicting over/under outcomes on individual player stats. For example, whether Patrick Mahomes will throw over or under 300 yards.

The house determines Pick ‘Em contest odds. Winnings are based on fixed multipliers, which depend on the number of correct picks. For example, two correct picks award a 3x multiplier, while eight correct picks result in the player winning 120 times their stake.

There are also additional options, such as Flex picks (which offer lower payouts but allow for missing a pick) and “Rivals,” where users select which of two athletes will outperform the other.

In contrast, in the “Champions” format, users compete against each other in a pool. The entire funding comes from entry fees. Participants create a roster of 2-8 athletes and predict whether each athlete will perform higher or lower than a benchmark statistic.

Correct stat predictions earn Champions Points, and the entry with the most points wins. The amount each participant wins depends on their performance compared to their peers.

As the Champions format removes the house as a participant, it could offer a stronger legal defense in states like California, where playing against the house is classified as illegal gambling.

It’s the same legal rationale behind the cardrooms in the state employing third-party dealers, known as Third-Party Proposition Player Services, something Bonta wants to change.

DFS’ Uncertain Status in California

The Attorney General’s opinion does not change the law in California. It serves as an advisory interpretation of the law, intended to guide lawmakers and enforcement agencies.

For DFS to be classified as illegal, lawmakers must pass a new law or the courts must intervene. Still, some observers note that California courts traditionally side with the Attorney General’s legal opinions.

Until a regulatory or legislative change occurs, DFS platforms will likely continue operating in California.

Bonta is not the first AG to grapple with the legality of DFS. In 2016, attorneys general in Hawaii, Alabama, and Texas declared DFS illegal under their respective state laws. However, the response varied.

Hawaii has remained off-limits for anything gambling-related, including daily fantasy. In Alabama, PrizePicks continues to offer Pick ‘Em, while Underdog has switched to the Champions format. Meanwhile, multiple platforms, including Underdog and PrizePicks, offer Pick ‘Em in Texas.

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