DraftKings dodges most class claims — except for likely death knell in California

A class of DraftKings users in California can't recover their gambling losses, but a federal judge kept alive a claim for injunctive relief that could block paid daily fantasy sports contests in the state.SAN FRANCISCO (CN) — A federal judge Wednesday dismissed several claims against DraftKings in a class action accusing the company of conducting illegal gambling in California, but left the door open for injunctive relief that could block the company from operating paid daily fantasy sports contests in the state.U.S. District Judge Charles Breyer tossed all claims brought by the plaintiffs to the extent they are trying to recover their gambling losses, ruling that state policy is commonly understood to prohibit the courts from enforcing gambling debts.“The public policy against gambling loss recovery bars plaintiffs’ claims to the extent they seek recovery of their losses in any form, whether it is damages or restitution,” the Bill Clinton appointee said.Breyer further dismissed plaintiffs’ claim of declaratory judgment, as well as all RICO claims against DraftKings subsidiary Crown Gaming and individually named DraftKings officers, writing that “amendment would be futile.”However, the ruling does not let DraftKings off the hook completely. Breyer said the same policies barring recovery of gambling losses in court do not extend to prohibit public injunctive relief for gambling based on deceptive advertising.He further ruled the plaintiffs had sufficiently claimed they suffered economic injury and have standing for injunctive relief under California’s Unfair Competition Law and Consumer Legal Remedies Act.“Plaintiffs argue there is a ‘significant’ risk of future injury because plaintiffs wish to gamble in California if it is legal and that is precisely what DraftKings continues to represent,” Breyer said. “The court agrees with plaintiffs.”The judge described the current status of gambling in California as “murky.” He acknowledged California Attorney General Rob Bonta’s 2025 nonbinding opinion concluding state law prohibits daily fantasy sports games with players who are physically located in California, while also recognizing no court has declared the games illegal, nor has the state taken any enforcement actions.“A person in plaintiffs’ position could reasonably continue to participate in purportedly illegal gambling if not for injunctive relief provided by this court, particularly if DraftKings offers similar illegal contests under different branding,” Breyer said, adding, “Indeed, plaintiffs allege that they may be tricked into engaging in future online gambling if DraftKings continues to represent that its games are legal.”Breyer additionally found the plaintiffs met the threshold to claim fraud by detailing how DraftKings represented its games as legal in California — despite online sports betting supposedly being illegal in the state — and how they relied on the representations before playing the games. Further, he said, plaintiffs explain that DraftKings’ campaign in support of a 2022 state ballot proposition to legalize online sports betting in California suggests “DraftKings was aware its games were not legal at the time.”During a hearing last week, the judge indicated an injunction blocking DraftKings in California is on the horizon if the plaintiffs prove they have standing, which they now have.“If there is standing, and the game falls within the statute, I don’t understand what the argument is about a general injunction that says you can’t do it here,” Breyer said last week.Representatives for the parties did not immediately respond to a request for comment.The lead plaintiffs, two DraftKings users, sued the daily fantasy sports website in June 2025, claiming the company misrepresents the lawfulness of its contests in California, a state that prohibits commercial gambling.In their complaint, lead plaintiffs Zhicheng Zhen and Jonathan Smith argue DraftKings violated the state’s Unfair Competition Law and Consumer Legal Remedy Act. In their amended complaint, they tacked on additional violations of state law, RICO claims and requested declaratory relief.In December 2025, Breyer dismissed the case with leave to amend because the plaintiffs were seeking equitable relief without demonstrating that monetary damages alone would be inadequate. The judge contrasted their request for equitable monetary relief with an injunction — a common form of equitable relief that does not involve money.“In a technical sense, this case is about a class of losers,” Breyer wrote to begin Wednesday’s order. “In a legal sense, this case is about games that were prohibited by the California Penal Code.”Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads