FanDuel Texas: DFS Returns to The Lone Star State

FanDuel

FanDuel is open once again for fantasy sports fans in Texas. After leaving the state more than two years ago due to questionable legal footing, FanDuel quietly updated its list of restricted states and has once again begun allowing players located in Texas to sign up and play in real money contests online.

FanDuel has not made an official announcement, but we can see the website no longer lists Texas among its list of restricted states.

Forum user lpdev reported that FanDuel customer support chat said this when asked about the change:

“FanDuel has considered a variety of factors related to the operation of Daily Fantasy Sports in Texas, and we have re-entered the market while a legislative solution is being resolved by the state. All contests are now available to users located in the state of Texas.”

A Brief History of FanDuel DFS in Texas

Back during the daily fantasy sports craze a few years ago, major operators such as FanDuel DFS and DraftKings DFS operated on uncertain legal footing due to the industry being so new. Very few states had laws that even mentioned fantasy sports, and none had laws specifically mentioning daily fantasy sports.

This left daily fantasy sports sites with the unpleasant task of determining where to operate on a state-by-state basis according to state laws regarding gambling. In most cases, it came down to how state law defined the term “gambling.” If DFS fit the definition of gambling, it was prohibited. Otherwise, it was legal.

There were also a handful of states with gaming laws that were just a little too vague or difficult to fully evaluate in terms of daily fantasy sports. Remember, this was well before most states had gotten around to enacting new legislation to deal with the daily fantasy industry.

Texas was one of those states where it wasn’t as clear-cut. FanDuel and DraftKings both started out accepting customers from Texas through early 2016, but that changed in January of 2016 when Texas Attorney General Ken Paxton issued a nonbinding opinion stating the “odds are favorable that a court would conclude that participation in daily fantasy sports leagues is illegal gambling under [Texas law].”

As a nonbinding opinion, the Attorney General’s statement did not carry with it the force of law. However, it was clear that Texas daily fantasy sports sites operating in the state could potentially face an expensive, time-consuming lawsuit if it decided to stay and fight.

That was enough to convince FanDuel to exit Texas. DraftKings decided to shoulder the risk and continue accepting customers from Texas.

As other states enacted legislation to formally legalize and regulate fantasy sports, DraftKings continued to operate in the state while FanDuel remained on the sidelines. Over all this time, DraftKings operated without issue. Now, more than two years later, FanDuel has decided to jump back in.

Why is FanDuel Returning to Texas Now?

It’s hard telling without an official statement from FanDuel, but we can speculate on what may have inspired FanDuel to return to Texas.

One is the simple fact that Texas is a major market all on its own. Some of the decision-making was almost certainly related to Texas being the second-largest state by population with some 28 million residents. That is a big market to ignore for two years running while FanDuel’s biggest competitor has had free reign throughout Texas the entire time.

There’s also that report from the RotoGrinders forums in which a customer support person mentioned “a legislative solution [that] is being resolved by the state.” I reached out to FanDuel support as well and received the same response:

FanDuel support

There has been no news of Texas having active legislation to legalize fantasy sports, so this may just be a generic statement that really means FanDuel is coming back and hopes favorable legislation will be introduced at some point.

The decision could also be related to the legalization of sports betting. FanDuel and DraftKings have both entered the sports betting business since the Supreme Court struck down the federal sports betting prohibition.

FanDuel could be positioning itself for a place at the table should Texas eventually legalize sports betting.

Texas is not a traditionally pro-gambling state, but the pace at which legislation is being introduced in states across the country could have been enough to convince FanDuel that a chance at offering sports betting in what would be a major market is worth the minor legal risks associated with offering fantasy sports in the state in the meantime.

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