Daily fantasy sports contests illegal in Texas
Texas Attorney General Ken Paxton has decided something very big: Daily fantasy sports leagues, at least those offered by online giants like DraftKings and FanDuel, constitute illegal gambling in Texas.
The Fantasy Sports Trade Association says 56.8 million people in the U.S. and Canada played fantasy sports in 2015. And for them, it’s a highly emotional thing.
Paxton’s opinion is non-binding as a matter of law, but it lays out the state’s official position. It tracks some recent opinions by officials in other states.
It’s similar to an attorney general’s opinion in New York last November that has brought intense legal opposition from DraftKings and FanDuel. New York Attorney General Eric Schneiderman sought to halt the sale of daily fantasy sports participation to New York residents.
Paxton hasn’t yet taken that step, but it’s only logical to think that he should.
In response to a November request for clarification from state Rep. Myra Crownover, R-Denton, Paxton wrote Tuesday that “a court would likely determine that participation in daily fantasy sports is illegal gambling” under Texas law.
DraftKings and FanDuel argue that they offer a game of skill in which participants assemble a “team” of real sports players, pay an entry fee and win or lose a share of the total fees based on the performance of those players.
No, says Paxton, they’re placing bets on a game of chance. Their “team” performance is influenced by many factors beyond their control, including injuries, weather, equipment, facilities and the calls of refereeing officials.
It makes no difference that there is some skill in picking players, the attorney general wrote. Texas law says if there is chance involved, anything of value placed on the line constitutes a gambling bet.
It’s also important that DraftKings and FanDuel keep a share of the entry fees ranging from 6 percent to 14 percent, Paxton wrote. In gambling terms, the money that DraftKings and FanDuel keep is referred to as a “rake.”
That’s important for typical fantasy sports office pools. They’re not breaking the law if “play is in a private place, no person receives any economic benefit other than personal winnings, and the risks of winning or losing are the same for all participants,” Paxton wrote.
Open gambling in Texas is meant to be under strict state control, and the Legislature decides what those controls should be.
Paxton says big-time daily fantasy sports is illegal. He should take steps to make sure it doesn’t happen.
This story was originally published January 19, 2016 at 5:37 PM with the headline "Daily fantasy sports contests illegal in Texas."