Paid fantasy sports sites violate Texas law, attorney general says

Paid daily fantasy sports sites run contrary to Texas law, Attorney General Ken Paxton said.

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AUSTIN—Paid daily fantasy sports sites run contrary to Texas law, Attorney General Ken Paxton said.

In a Jan. 19 opinion, Paxton ruled the paid sites like DraftKings and FanDuel—in contrast to traditional sports fantasy leagues—violate Texas gambling prohibitions.

Daily fantasy sports sites allow players to buy into a game in which they create a fantasy team using real professional athletes. The athletes’ statistics in various categories are tracked, and fantasy league players win or lose money based on how their teams perform—with the sponsoring site taking a percentage.

‘It is prohibited gambling’

“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. “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.”

Paxton also took issue with the site operators’ argument that the criminal code exempts contestants in a sporting event whose “skill, speed, strength or endurance” determine the outcome. That applies only to “actual contestants”—not participants who select members of their fantasy teams based on those criteria, he noted.

Paxton also dismissed the argument that paid daily fantasy sports sites should be legal because skill in selection of team members—not pure chance—determines winners.

“Unlike some other states, Texas law only requires ‘partial chance’ for something to be gambling; it does not require that chance predominate,” a statement from Paxton’s office said.

‘100 percent correct’

Anti-gambling advocates applauded the attorney general’s opinion.

“The facts support no other conclusion than the decision reached by the Texas attorney general. Daily fantasy sports constitutes illegal gambling,” said Rodger Weems, chairman of Stop Predatory Gambling-Texas.

The decision is in line with similar rulings in New York and Nevada, he added.

Rob Kohler, consultant with Texas Baptists’ Christian Life Commission, praised the attorney general’s opinion as “100 percent correct,” saying the operators of the paid daily fantasy sports sites were trying to circumvent the legislative process.

“They tried to do it backwards, getting into the state first and then asking permission,” he said. “It shouldn’t work, and it didn’t.”

Texas Lottery Commission

Paxton issued his opinion four days after the Dallas Morning News reported Texas Lottery Commission Executive Director Gary Grief worked for months aggressively seeking a contract with DraftKings.

Through Texas public records laws, the newspaper obtained more than 400 pages of emails that contradicted the agency’s claim it only was considering scratch-off and lottery drawings—not expanding to include daily fantasy sports.

“I hope the actions of the Lottery Commission don’t go without review by their bosses,” Kohler commented.

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