A federal judge in San Francisco signaled Thursday that DraftKings may be running illegal gambling operations in California, setting the stage for a court battle that could shut down paid daily fantasy sports contests across the nation’s most populous state.
U.S. District Judge Charles Breyer told lawyers he’s inclined to let a class action lawsuit proceed against DraftKings, indicating the company’s contests likely violate California’s ban on commercial gambling. The judge said he may consider an injunction blocking the company’s operations in the state.
Users Claim They Were Misled About Legality
Two DraftKings customers filed the lawsuit in June, arguing the Boston-based company falsely represented its daily fantasy sports contests as legal under California law. The plaintiffs claim they wouldn’t have spent money on the contests if they’d known the games violated state gambling prohibitions.
Judge Breyer, a Clinton appointee, said the users appear to have standing to sue based on economic injury. “If in fact [plaintiff] can establish that he wouldn’t have parted with the money but for the misrepresentation, it then is material,” Breyer said during Thursday’s hearing on DraftKings’ motion to dismiss. “And if it’s material, misrepresentation in which he parted with money, he’s been injured.”
What Happens Next for California Players
The judge’s preliminary assessment suggests the plaintiffs have cleared the first major hurdle in their case. For the dismissal motion, Breyer said he would assume the challenged games are unlawful in California—a significant blow to DraftKings’ defense strategy.
California has long prohibited commercial gambling, though voters have repeatedly considered and rejected ballot measures to legalize sports betting. Daily fantasy sports operators like DraftKings and FanDuel have argued their contests involve skill rather than chance, placing them outside gambling restrictions.
If the case advances and the court ultimately sides with the plaintiffs, DraftKings could face an injunction barring paid contests in California, the company’s largest market. The ruling could also trigger similar legal challenges in other states where daily fantasy sports occupy a legal gray area.
DraftKings has not yet responded to requests for comment on the judge’s statements.
Key Points
- Judge Breyer indicated DraftKings users have standing to sue over economic losses from contests misrepresented as legal
- The court suggested California’s commercial gambling ban likely covers DraftKings’ daily fantasy sports contests
- An injunction blocking paid contests in California is now on the table, threatening operations in the company’s biggest state market
https://www.courthousenews.com/class-action-over-draftkings-legality-in-california-likely-to-advance/ – July 23, 2026
