Industry Updates

Attorney General Says DFS May Be Illegal in Texas

Image credit: David Herrera

Just hours ago, Texas Attorney General Ken Paxton issued a nonbinding opinion on the legality of daily fantasy sports according to Texas gaming laws. His opinion was published on the AG website, stating that even though fantasy sports contests may be based primarily on skill, Texas law only requires chance to be a partial element for an activity to be considered gambling.

One key paragraph from the letter reads as follows:

“It is beyond reasonable dispute that daily fantasy leagues involve an element of chance regarding how a selected player will perform on game day. The participant’s skill in selecting a particular player for his team has no impact on the performance of the player or the outcome of the game.”

The letter then goes on to provide examples of how luck can play a role. Several examples include the potential for injuries, poor performances based on weather and even one example that blatantly refers to a certain Miami Heat player suffering leg cramps after the air conditioning the building fails.

AG Ken Paxton later opines that season-long fantasy leagues such as those played among friends every year are usually exempt from gaming laws due to existing legislation that provides an exemption for games in which:

  • The actor engaged in gambling in a private place and
  • No person received economic benefit other than personal winnings and
  • Except for the advantage of skill or luck, the risks of losing and the chances of winning were the same for all participants

Thus, daily fantasy contests such as those offered by FanDuel and DraftKings fail to meet the exemption because the fantasy sites earn a commission taken from all entry fees. The letter then concludes that “a court would likely determine that participation in daily fantasy sports leagues is illegal gambling under section 47.02 of the Penal Code.”

The opinion has no immediate legal impact on DFS in Texas, but it does set the stage for a tough battle for fantasy providers in the Lone Star State. FanDuel and DraftKings have yet to respond to the news.

Dallas Resident Mark Cuban Weighs In

Dallas Mavericks owner Mark Cuban was quick to display his displeasure with the news. He took to Twitter on Tuesday to voice his disagreement.

https://twitter.com/mcuban/status/689535774761455616
https://twitter.com/mcuban/status/689540349786624000
https://twitter.com/mcuban/status/689541909023358977

We reported earlier this month that Cuban has recently invested in a daily fantasy stats startup called FantasyLabs. He certainly has skin in the game, but also made sure to point out that his opinion has nothing to do with his sub-million dollar investment in that company.

https://twitter.com/mcuban/status/689543305382596608

In any case, Mark Cuban is a strong ally on the side of fantasy sports fans. The celebrity billionaire is vocal, and people listen when he speaks. His 4.4 million followers sure got an earful today. We can only hope Cuban continues to be a staunch ally of the DFS industry and freedom-loving individuals everywhere.

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