California Still Battling Illegal Online Sports Gambling Issues

There's an adage: "Sports bettors are going to do what sports bettors do, and nothing will ever change that." That means that sports bettors will bet on sports whether through legal means or by stepping outside the law. In California, illegal online sports betting has been a thing for 25+ years, even with legal sports betting available in nearby Nevada.

The core of the illegal sports betting issue is California's legislative bodies can't get anything passed in terms of legalizing either retail or mobile sports betting. Some insiders would say they aren't even trying. They seem to lack the proper motivation to get something done in deference to the state's powerful Indian Tribes that to date have said no to every attempt. Their interest in sports betting is confined to having complete control of said activities much like they have over retail casino gambling.

Meanwhile, illegal online gambling problems persist. Here's a look at a recent case that has stirred calls for legalization again.

Fliff Lawsuit Takes Centerstage

In June 2023, a sports bettor named Bishoy Nessim filed a lawsuit in California against social sportsbook Fliff. He is seeking financial relief in the amount of $7 million. The lawsuit alleges that the company is using unfair practices to grab money from registered players. The law that Nessim cited in his lawsuit was California’s Unfair Competition Law. He alleges that Fliff is running an illegal online sports betting operation.

In all fairness, the Fliff sports betting platform looks very similar to a standard online bookmaking site like DraftKings or Caesars Sportsbook. At issue is the fact players don't technically wager with real cash. They are required to make cash deposits and purchase Fliff cash/coins, which can then be used to bet on sports events.

Once Fliff cash/coins are purchased, they cannot be converted back into real cash. If a sports bettor wins money, they can use their Fliff cash to purchase gift cards or participate in other social gaming opportunities. There's the rub. The fact Fliff claims to be operating as a social gaming site, they are not required to secure sports betting licenses. Currently, Fliff has customers in every state except for Hawaii, Idaho, Nevada, Tennessee, and Washington.

After the lawsuit was filed, Fliff's lawyers responded in August 2023 by asking a California federal court judge to dismiss the lawsuit and have it remanded over for arbitration. A hearing to discuss arbitration was held in September, which subsequently led to a judge to indeed send the matter to third-party arbitration. The decision on the case will now be made by a neutral arbitrator.

The Sports Betting Question

These filings are becoming commonplace in California. Issues continue to arise because Californians want to bet on sports from the comfort of home. If they can't do so legally, they will seek alternatives. It's these kinds of issues that are shining a light on what is perceived to be the real issue. California isn't moving forward with the rest of the country in terms of legalizing some form of sports betting.