Texas joins other states, says daily fantasy illegal

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Texas Attorney General Ken Paxton declared daily fantasy sports illegal in his state Tuesday, putting more pressure on the embattled industry and leading sites DraftKings and FanDuel.

“It’s my duty as Attorney General to look to the law, as passed by the people’s representatives, to answer the questions put to this office,” Paxton said in a statement. “Paid daily ‘fantasy sports’ operators claim they can legally operate as an unregulated house, but none of their arguments square with existing Texas law. 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.

“These sites are also wrong in claiming an actual-contestant exception, which applies only to contestants in an actual skill or sporting event,” Paxton added. “And unlike some other states, Texas law only requires ‘partial chance’ for something to be gambling; it does not require that chance predominate.”

Paxton’s opinion also makes a distinction between daily fantasy and traditional season-long fantasy games, saying, as a general rule, that season-long fantasy is legal.

Attorneys general in three of the five most populated states — Texas, New York and Illinois — have issued recent opinions that daily fantasy is illegal. Paxton joins attorney generals in New York, Illinois and Vermont to rule that daily fantasy sports violate state gambling laws. Nevada is requiring a gambling license to operate daily fantasy sports, and several other states are taking a look at the industry.

Earlier this month, an appellate panel granted a stay to DraftKings and FanDuel in New York that would allow them to take business from residents in the state. The New York case brought by Attorney General Eric Schneiderman not only seeks to make daily fantasy illegal in the state, but also seeks to return money to players within the state who lost money on the sites. In May, DraftKings and FanDuel will have a chance to appeal the original interpretation that went against them in the New York Supreme Court.

Several states, including New York, have introduced legislation to regulate daily fantasy sports.

The Fantasy Sports Trade Association is holding its winter meeting this week in Dallas. Mark Cuban, owner of the Dallas Mavericks, is the keynote speaker.

The Texas ruling also comes after a Dallas Morning News report last week that said records show that for months, Texas Lottery Commission executive director Gary Grief pursued a deal with DraftKings so that the commission could offer fantasy sports games.

The newspaper based its report on more than 400 emails, including communications with fantasy sports lobbyists, that it reviewed.

Commission chairman Winston Krause said Grief explored the matter at the urging of a lawmaker, whose identity Krause said he couldn’t remember.

Grief said in a written statement that he would say only that the commission had stopped its efforts. He declined requests by the Morning News for an interview and didn’t respond to an email from The Associated Press late Friday.

Information from The Associated Press was used in this report.

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