The second half of 2025 involved significant legal and regulatory activity across fantasy sports, event contracts, sweepstakes casinos and sports betting.
The second half of 2025 involved significant legal and regulatory activity across fantasy sports, event contracts, sweepstakes casinos and sports betting. The period was marked by a steady stream of new rulings, enforcement actions and legislative initiatives that added further layers to an already unsettled landscape. As agencies and courts applied existing laws to complex, fast?evolving business models, operators and suppliers confronted a regulatory environment that remained fragmented and uncertain.
Below, we outline several of the most significant legal developments and enforcement trends that shaped the gaming industry between July 1 and December 31, 2025.
Fantasy Sports’ Newest Identity Crisis
Fantasy sports operate within a complex patchwork of state laws—some states have adopted clear regulatory frameworks and others permit the activity without specific rules, while a handful continue to prohibit fantasy sports altogether.
Traditional fantasy sports have long been a fixture in the gaming landscape, centered on season?long contests in which contestants build and manage teams over time. The emergence of daily fantasy sports (DFS) in the early 2000s brought shorter, faster?paced competitions, which have since evolved into “pick’em” or DFS 2.0 formats. In these newer versions, participants wager against the house by making over/under selections across multiple statistical categories, with payouts determined by multiplying the entry fee and increasing with each correct pick.
As these formats proliferate and state approaches continue to diverge, the legal status of fantasy sports—and especially pick’em contests—remains unsettled. This evolving landscape set the stage for significant developments in the second half of 2025. The principal development in the latter half of 2025 was California Attorney General Rob Bonta’s official legal opinion proclaiming that both daily fantasy sports and DFS 2.0 contests violate California law.
On July 3, 2025, California Attorney General Rob Bonta issued a formal opinion concluding that DFS—including both traditional draft-style and pick’em formats—violates California law. The opinion centers on Penal Code Section 337a(a)(6), which prohibits betting on the outcome of any contest of skill, speed or endurance. The Attorney General reasoned that both pick’em and draft-style DFS involve participants risking money on the performance of third-party athletes in real-world sporting events and thus fall within the statutory definition of illegal sports wagering—regardless of whether skill or chance predominates,1 saying, “We conclude that daily fantasy sports games constitute sports wagering and therefore violate section 337a.”
The opinion draws a sharp distinction between participating in a contest and wagering on the performance of others, emphasizing that both DFS formats amount to bets on sporting events, which are expressly prohibited. The Attorney General further found that these games closely resemble traditional sports betting, including proposition and parlay wagers, and rejected arguments that the predominance of skill should exempt DFS from the statute. Notably, the opinion clarifies that Section 337a applies even if skill is a significant factor, as the law prohibits betting on uncertain future events regardless of how outcomes are determined.
While the opinion stops short of addressing California’s lottery prohibition—citing the need for a fact-intensive analysis—it has already prompted follow-up litigation and heightened regulatory scrutiny. In June 2025, Underdog Fantasy—represented by WilmerHale—filed suit seeking to block Attorney General Bonta from issuing a formal opinion on the legality of daily fantasy sports, arguing that the Attorney General lacked statutory authority to opine on the issue at all. The challenge was filed before the opinion was released and framed the impending guidance itself as an unlawful act that would coercively reshape the market despite carrying no independent force of law. Although the court denied emergency relief and allowed the opinion to issue, the case underscored industry concerns that advisory opinions may function as de facto regulation in the absence of legislative action.
Event Contracts: Courts Continue to Grapple With Gaming and Event Contracts, and a New CFTC Chair Enters the Fray
Event?based contracts—financial instruments whose payouts turn on real?world outcomes—remain at the center of a rapidly evolving battle over where derivatives regulation ends and gaming law begins. Over the past year, platforms regulated by the Commodity Futures Trading Commission (CFTC or Commission) have expanded into sports?contingent markets, prompting renewed scrutiny from state regulators and setting off a new wave of federal preemption litigation. At the same time, major market participants—including platforms newly entering this space—are taking increasingly proactive steps to secure nationwide regulatory clarity.
State Enforcement and Injunction Battles
State gaming regulators continue to challenge sports?based event contracts, issuing cease?and?desist letters and asserting that these instruments constitute unlicensed sports wagering. Currently, federal courts remain divided.
District courts in Nevada and New Jersey granted temporary restraining orders against state regulators, determining that CFTC jurisdiction preempts state enforcement over event-based contracts on CFTC-regulated platforms.2 A district court in Maryland reached the opposite conclusion, ruling that the Commodity Exchange Act and the amendments to the law under the 2010 Dodd-Frank Act that enable the CFTC to prohibit event contracts “contrary to the public interest” do not preempt long-standing state gaming laws.3 Federal courts in Connecticut, New York and Ohio have yet to issue rulings on similar actions.4
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