Politics & Government

Daily fantasy sports in Texas: Don’t bet against it

Fantasy sports
Fantasy sports Star-Telegram

Don’t worry, daily fantasy sports fans.

Nothing is changing in Texas — for now, at least — as the peak of the NFL playoffs arrive with Sunday’s conference championships and the Super Bowl on Feb. 7.

Even though Texas Attorney General Ken Paxton recently weighed in on the online fantasy industry, saying he believes it’s operating illegally in Texas, fantasy sports companies say they’re not going anywhere.

“This involves games of skill and individuals acting as general manager of a team that is in competition with other teams,” said Randy Mastro, a New York-based attorney representing DraftKings on the issue in Texas. “It’s for predetermined prizes.

“For everything from beauty contests to bass fishing, you pay a fee, you compete and you win a prize,” he said. “Under Texas law, … it’s perfectly legal and always has been.”

Texas lawmakers who have fought expansion of gaming in Texas for decades may well have to wade in to this battle, just as they continue to combat efforts to allow historical racing devices similar to slot machines and moves to build Indian casinos in Texas.

“Texas legislators have generally thought that gambling was a sin, that it was a moral flaw and shortcoming and should be dissuaded if not prohibited,” said Cal Jillson, a political science professor at Southern Methodist University in Dallas.

“But as they are trying to protect the tender consciences of Texans from all that evil, you have Texans clawing their ways into casinos and gambling sites.”

As state officials focus on daily fantasy sports, other efforts to expand the gambling footprint in Texas continue.

A lawsuit addressing historical racing at horse tracks in Texas is proceeding, and plans move forward to create a couple of Indian casinos in Texas, at least one perhaps before summer.

Some of these issues may be settled in the courts — and some may still be up in the air when the Legislature goes back to work in 2017.

Some lawmakers including state Rep. Matt Krause say it’s time to stand firm about any gambling expansion in Texas.

“A study was done by a Baylor professor a couple of years ago that said for every dollar generated in gambling, we have to pay $3 in social services or some other fee,” said Krause, R-Fort Worth. “There are some undesirable things that come along with” gaming.

Fantasy sports

Last week, Paxton issued a nonbinding opinion predicting how a court would address daily fantasy sports in Texas.

“Odds are favorable that a court would conclude that participation in daily fantasy sports leagues is illegal gambling,” he wrote, adding that it’s illegal to bet on the “partial or final result of a game or contest or on the performance of a participant in a game or contest.”

Asked what the next step would be, Paxton’s office said his role was to give a “legal interpretation” of current laws on fantasy sports.

“We cannot speculate on potential legal actions,” said Katherine Wise, deputy press secretary for Paxton. “We will allow the opinion to speak for itself.”

Mastro said DraftKings disagrees with Paxton’s overall opinion.

DraftKings will continue to operate openly and transparently so millions of Texans who enjoy fantasy sports can continue to participate in the games they love.

Randy Mastro, a New York-based attorney representing

He said online fantasy sports are “definitely games of skill.”

“These are, therefore, games we strongly believe the Texas Legislature has authorized,” Mastro said. “Therefore, DraftKings will continue to operate openly and transparently so millions of Texans who enjoy fantasy sports can continue to participate in the games they love.”

If no lawsuits are filed against the continuation of daily fantasy sports, state lawmakers may take up the issue when they go back to work in 2017.

Last year, state Rep. Abel Herrero, D-Robstown, filed two bills targeting fantasy sports.

HB 4040 would have required “sports betting websites” be licensed and regulated in Texas. And HB 4019 would have made it a crime to use or run a sports betting website in Texas. Neither proposal ever made it to a committee hearing.

Krause, who plays online fantasy sports but never for money, said he wouldn’t be surprised if the Legislature ends up addressing the issue.

“I really never thought of it being an expansion of gambling. I thought it was free-market based,” he said. “I’m wrestling with it, … but if I had to vote on it in the House, I would vote ‘no’ because to vote for it would be supporting an expansion of gambling.

It’s such a debated and heated topic. Now, there’s so much ambiguity and the attorney general’s opinion doesn’t seem to have quelled it.

State Rep. Matt Krause, R-Fort Worth

“It’s such a debated and heated topic,” he said. “Now, there’s so much ambiguity and the attorney general’s opinion doesn’t seem to have quelled it.”

This issue is crystal clear for some fans, though, including billionaire Mark Cuban, who spoke to the Fantasy Sports Trade Association in Dallas last week.

“What a disappointment re DFS,” Cuban tweeted after Paxton released the opinion. “You certainly don’t represent the views of Texans.”

Cuban, owner of the Dallas Mavericks, invested recently in a daily fantasy sports company, Fantasy Labs Inc.

“As a point of reference, my investment & ad rev in DFS is under 1mm dollars,” he tweeted. “I can walk way from it. It has nothing to do w my position.

“Let’s be clear. More skill is required for DFS than picking stocks,” he said. “Luck is required to win at picking stocks. It’s not required 4 DFS.”

In other states including New York and Illinois, attorneys general have also issued opinions stating that daily online fantasy sports are illegal. The question appears headed to a New York court in May.

But the issue is needs to be addressed nationwide once and for all, Paul Charchian, president of the Fantasy Sports Trade Association, said during its winter conference.

It could take two to three years, but “we need to formally legalize fantasy play in 50 states,” Charchian said. “It’s a big job.”

Historical racing

As daily fantasy sports move to the front burner, still simmering is a nearly two-year fight between conservative state lawmakers and the Texas Racing Commission over historical, or instant, racing — a way to gamble at horse tracks by replaying already-run races on slot-machinelike devices.

Horsemen and the commission have said it can help save their slumping industry; Republican lawmakers say it’s an expansion of gambling.

The issue is now headed to court.

This month, the Texas Horsemen’s Partnership sued state Comptroller Glen Hegar over a measure requiring the Legislative Budget Board to sign off on administrative costs, such as salaries, for the Racing Commission.

The commission could run out of funding by the end of February, forcing it to close forcing tracks — including Lone Star Park in Grand Prairie — to shut down for the second time in a year since there would be no state officials to oversee the horsing industry.

Horsemen say they have tried unsuccessfully to meet with Lt. Gov. Dan Patrick to talk about the future of the horse industry in Texas.

“The thousands of people who make their living in the horse racing and breeding industry are worried about their livelihoods and whether they will be forced to relocate to another state,” said Mary Ruyle, executive director of the Texas Thoroughbred Association. “They also feel frustrated and betrayed that despite the lieutenant governor’s public statements, there is an apparent lack of desire on his part to sit down to discuss the issues facing the industry and find possible solutions.”

Patrick’s office did not respond to a request for a comment on the issue.

Racing commissioners are scheduled to meet Feb. 9 to decide for the fourth time whether to repeal historical racing so lawmakers will continue funding or move toward closing the agency if the next wave of funding isn’t granted.

Indian casinos

Also on the back burner is a potential fight over Indian casinos in Texas.

As soon as mid- to late-April, a casino could open in East Texas on the Alabama-Coushatta Tribe’s 10,000-plus-acre Indian reservation south of Livingston.

“We are still in the developmental stages,” tribe spokesman Carlos Bullock said. “But we are moving forward.”

The casino, about 240 miles southeast of Fort Worth, closed in 2002 after the tribe lost legal fights with Texas officials, who said state law trumped national Indian law and casino gambling wasn’t allowed in Texas.

But the tribe now believes it has new authority — a ruling by the federal Interior Department and the National Indian Gaming Commission that the tribe can operate games on its reservation, just as the Tigua Indians can on the Ysleta del Sur Pueblo reservation near El Paso.

Plans call for bringing in about 300 machines and hiring about 150 employees.

These machines, like others on Indian reservations, resemble traditional slot machines found in Las Vegas. They have the same bells, whistles and designs. But the machines in some form show or run bingo patterns with every spin.

Tribal officials say they’ve met with staffers from Paxton’s office to discuss the issue.

Bullock said the tribe was asked to hold off on opening the “entertainment center” until litigation over the Tigua’s casino is resolved. But he said they are moving forward.

The AG’s office also wanted to discuss times of play and prize payouts. “We are governed by a federal agency,” Bullock said. “The way you run things [in Texas] doesn’t necessarily reflect on the way we will run things.”

Anna M. Tinsley: 817-390-7610, @annatinsley

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