Texas Politics

Fight over online fantasy sports ramps up in Texas, lands before Legislature

Major League Baseball begins Sunday. In this photo, Texas Rangers third baseman Adrian Beltre (29) warmed up before a game in Peoria, AZ.
Major League Baseball begins Sunday. In this photo, Texas Rangers third baseman Adrian Beltre (29) warmed up before a game in Peoria, AZ. mfaulkner@star-telegram.com

Heads up, fantasy sports fans: Texas lawmakers are looking your way.

Between debates over everything from the state budget to sanctuary cities, state lawmakers soon will review a plan to once and for all make daily fantasy sports leagues legal in Texas.

As major league baseball opens Sunday — one of the biggest fantasy sports days of the year — two lawmakers want Texas to recognize that playing and profiting from fantasy sports is not the same as illegal gambling.

“There’s a lot of skill that goes into this,” said state Rep. Richard Raymond, a Laredo Democrat who authored House Bill 1457 to legalize fantasy sports in Texas and plays fantasy football himself. “I thought it was ridiculous for the government to try to take away your right to play fantasy sports.

“So far everyone I’ve talked to has agreed it is a game of skill,” he said. “That means it’s not expanding gambling.”

More than 55 million people across the county play fantasy sports. And it’s a big business, as each person spends an average of around $556 a year, according to the Fantasy Sports Trade Association.

It’s a hot topic in Texas, home to millions of sports fans and professional teams ranging from the Dallas Cowboys to the Texas Rangers.

Here, Republican lawmakers stand firm against an expansion of gambling. Texas Attorney General Ken Paxton even last year issued a non-binding ruling that online fantasy sports is exactly that — illegal betting.

But maybe the Texas Legislature will settle the issue this session.

Raymond and state Sen. Lois Kolkhorst, R-Brenham, maintain online fantasy sports is a skill-based contest where sports fans pay an entry fee, create teams in the sport of their choice and then gain points for their “team’s” performance, such as yards gained in football or runs scored in baseball. Those with the highest scores can receive money on a weekly basis.

On Monday, the House Licensing and Administrative Procedures Committee will consider Raymond’s proposal, as well as other issues ranging from letting certain lottery prize winners remain anonymous to allowing more professional teams to participate in 50-50 charitable raffles.

Two Fort Worth Republicans — state Reps. Charlie Geren and Craig Goldman — serve on the committee.

Earlier ruling

After being asked to weigh in on the issue, Paxton last year said that fantasy sports sites such as FanDuel and DraftKings, which allow betting with real money on fantasy teams, aren’t legally allowed in the state.

“Paid daily ‘fantasy sports’ operators claim they can legally operate as an unregulated house, but none of their arguments square with existing Texas law,” Paxton said at the time. “Simply put, it is prohibited gambling in Texas if you bet on the performance of a participant in a sporting event and the house takes a cut.”

That means free fantasy sports websites, including those manned by the NFL and ESPN, are not at issue here.

“The AG’s opinion doesn’t have any force or effect in law,” Raymond said. “It is simply an opinion.”

FanDuel and DraftKings still operate online fantasy sport sites in Texas.

FanDuel is only running free contests here. DraftKing, which filed a lawsuit against the state asking the courts to declare that fantasy sports websites are allowed in Texas, continues to allow paid contests, accepting entrance fees, and paying winners.

“Playing a fantasy sports game on either of these platforms is no different than a fishing tournament in our state,” said Scott Dunaway, a Texas-based spokesman for FanDuel and DraftKings and The Texas Fantasy Sports Alliance. “It is just a different type of competition.”

Dunaway said the proposals in the Texas Legislature right now would handily “accomplish what most Texans already believe: Fantasy sports are legal in Texas.”

“Fantasy sports contests are games of skill in which participants play for free, or pay an entrance fee to assemble a fictional team of players,” according to a recent opinion piece by John Colyandro, executive director of the Texas Conservative Coalition Research Institute. “Those players compete against the fictional teams assembled by competitors. Some games are season-long. Others are daily.

“Based on the performance of those players that day, week or season, the roster is awarded points. Earn more points than your opponent to win.”

Stop Daily Fantasy Gambling was recently formed to try to stop the spread of fantasy sports in Texas and across the country.

Members argue that there are winners and losers in contests for a variety of sports — football, baseball, basketball, soccer and hockey — and as winners collect prizes, losers forfeit their “fees” and websites running the sites take a “cut” of the money.

“Many states across this country are struggling to prevent exploitation of their citizens by online gambling that pretends to be treated like a sporting event or a game of skill,” said Michael Grimes, executive director of the group.

“In my home state of Texas, Attorney General Ken Paxton has clarified that daily fantasy sports gambling is illegal, yet websites like FanDuel and DraftKings want the Legislature to suspend reality to allow special treatment and circumvent the gambling laws of the state.

“Despite what proponents of daily fantasy gambling may suggest, the fact is, it is illegal gambling,”

Raymond disagrees.

He said fantasy sports is different from straight up games of chance.

“Fantasy football is not like the roulette wheel,” he said. “It’s like the game of chess.”

Mixed opinions

Raymond’s bill defines fantasy sports as a competition where someone pays a fee or not to create a “fictional team” made up of professional or amateur sports athletes to compete against other such teams.

His proposal notes that this is a “bona fide contest for the determination of the skill of the participant in assembling a fictional team of sports athletes.”

It also notes that participants must be at least 18. And if it becomes law, it would go into effect no later than Sept. 1.

“Fantasy (sports) is legal,” Raymond said. “That’s what we are doing with this bill, making it even more clear than it is already.”

For now, some local lawmakers have mixed opinions on the issue of fantasy sports.

State Rep. Matt Krause, R-Fort Worth, is a fan of fantasy sports and frequently plays online for free.

“It’s the only thing that makes a Cleveland Brown versus Cincinati Bengals game matter for a Dallas Cowboys fan,” he said. “Every game matters at that point. You’ve got your team, you’ve got your defense, a wide receiver here, a tight end there. I think it creates more excitement than just following your one team.”

But he said he has to abide by the current AG ruling that says it’s gambling.

“That’s the position of Texas at this point,” he said. I’ve always been against the expansion of gambling. To be consistent, at this point, the AG’s opinion is what it is and I’m not supporting” the fantasy sports bill.

State Rep. Nicole Collier, D-Fort Worth, said the AG’s opinion left fantasy sports companies in a bind. But she supports a law clarifying the situation.

“We have an obligation to clarify the rules for which daily fantasy sports companies can operate in Texas,” She said. “It is undeniable that daily fantasy sports have a positive economic impact in Texas. By forcing these games out of our state, we stand to lose money that could be going towards public school funding and our roads.”

Anna Tinsley: 817-390-7610, @annatinsley