Daily fantasy sports games are illegal, so we need better laws

When Willy Wonka announced that five golden tickets to “the big prize” would be hidden in Wonka bars, the world erupted as people went out to buy Wonka bars in the vain hope of winning.

The Jan. 13 Powerball drawing for a record $1.5+ billion — the largest lottery jackpot in world history — generated $266.7 million in Texas sales. That’s a lot of money gambled on a state-run game in which the odds of winning the jackpot are 1 in almost 300,000,000.

As The Economist pointed out, “Buyers are around four times more likely to be killed by an asteroid impact this year. Lotteries are designed to be a bad deal …”

Juxtaposed against the Powerball fervor was Attorney General Ken Paxton’s Jan. 19 legal opinion on daily fantasy sports.

While there are a variety of iterations in daily fantasy, games typically involve selecting a roster of players subject to a salary cap and pitting that roster against others who do the same.

Based on the performance of those players that day, the roster is awarded points. Earn more points than your opponent to win the money.

Paxton concluded that daily fantasy sports amount to illegal gambling in Texas because winning them involves “an element of chance.”

Paxton’s opinion is correct on the straightforward question of whether or not daily fantasy sports amount to gambling as defined by state law, but using “an element of chance” as the standard ignores the fact that winning daily fantasy sports requires knowledge of the rules, players and numerous additional considerations.

Where the lottery — a game of blind luck — is state-sanctioned, state law prohibits games — daily fantasy — in which your chances of winning can be increased based on your knowledge, research and strategy.

The Texas Constitution’s prohibition on gambling mandates that the Legislature “pass laws prohibiting lotteries and gift enterprises,” but then provides several exemptions including bingo games, raffles and the state lottery.

All these exemptions are games of pure luck.

There is no principled line drawn between permissible gambling and impermissible gambling either in the Texas Constitution or in statute. Even prohibited gambling has so many exemptions that they swallow the rule.

The definition of bet, for example, exempts “an offer of a prize, award, or compensation to the actual contestants in a bona fide contest for the determination of skill, speed, strength, or endurance.”

Another defense to prosecution for gambling exists when “except for the advantage of skill or luck, the risks of losing and the chances of winning were the same for all participants.”

Daily fantasy sports amount to illegal gambling as it is defined under current statute, but so does the lottery.

The only reason that the lottery is not prohibited is because the voters approved it in a constitutional amendment.

This reveals a glaring inconsistency in Texas’s treatment of gambling.

It makes more sense to draw a clear line between gambling that involves mostly chance (the lottery) versus gambling that involves mostly knowledge or skill (daily fantasy), or to prohibit gambling altogether.

This story was originally published February 16, 2016 at 5:52 PM with the headline "Daily fantasy sports games are illegal, so we need better laws."