Key Moments:
- The plaintiff voluntarily withdrew the class action suit against FanDuel in California. However, it may be refiled in the future.
- A tolling agreement now allows the class to revive the lawsuit. As a result, they can proceed even after the statute of limitations.
- California recently classified daily fantasy sports as illegal wagering. Consequently, DFS providers face tougher restrictions under state law.
Plaintiff Steps Back from Lawsuit Against FanDuel
Plaintiff Martin Beltran voluntarily retracted his class action complaint against FanDuel in the US District Court for the Northern District of California. Beltran submitted the lawsuit in July. He accused FanDuel of running daily fantasy sports contests as betting activities. He argued these contests violated California law against sports wagering.
Beltran sought restitution for himself and other Californians who, he argued, lost money ‘unlawfully taken from them.’ The legal challenge alleged FanDuel’s acceptance of customer funds for events with unpredictable outcomes contravened California’s penal code.
Allegations Against FanDuel
The legal filing argued that FanDuel breached California Penal Code Section 337a. It claimed the company acted like a bookmaker, sold pools, and recorded wagers on uncertain events, including fantasy sports. The case also cited California’s unfair competition law and Consumer Legal Remedies Act, seeking a declaratory judgment against the company, a unit of Flutter Entertainment (NYSE: FLUT), which has offered daily fantasy sports in California since 2015.
A July filing stated: ‘A company violates California Penal Code Section 337a when it sells pools, operates as a bookmaker, or records wagers on contests or uncertain events, including fantasy sports.’
Voluntary Dismissal Leaves Door Open for Future Litigation
On September 8, the court received a formal Notice of Voluntary Dismissal confirming the withdrawal. The court dismissed the suit without prejudice, which means Beltran can refile it later. In addition, a tolling agreement has been reached, allowing the class to reinstate the case even if the statute of limitations lapses.
Legal analysts often view tolling agreements with voluntary dismissals as signs of possible settlement talks. However, neither side has confirmed such discussions.
Changing Landscape for DFS in California
Unlike other legal actions, the Beltran suit did not focus on FanDuel’s treatment of vulnerable players, centering instead on the claim that daily fantasy sports violate California statutes since sports betting was firmly rejected by voters in 2022.
“In fact, as the California legislature re-affirmed in 2008, ‘no person in this state has a right to operate a gambling enterprise except as may be expressly permitted by the laws of this state,” said the Beltran suit, citing the state’s business and professional code.
Of note, this complaint was submitted in the same month that California formally banned daily fantasy sports, treating them as illegal wagering activities. The new prohibition could particularly challenge smaller companies dependent on DFS revenue, as California represents a major segment of the industry’s earnings.
Tribal Operators Influence State’s Gaming Direction
California’s powerful tribal casino operators hold exclusive rights to gaming expansion within the state, granting them substantial leverage over any proposed changes. Their influence and political engagement make it difficult for non-tribal entities, including DFS providers, to secure permissive legal conditions for ongoing operations in California.
| Event | Date | Details |
|---|---|---|
| Class Action Filed | July | Martin Beltran files lawsuit against FanDuel |
| Suit Withdrawn | September 8 | Beltran voluntarily dismisses the complaint |
| Tolling Agreement | Unspecified | Agreement allows lawsuit to be refiled after statute of limitations |
- Author
Daniel Williams
