Texas Attorney General Ken Paxton has announced that Texas has reached a settlement with online daily fantasy sports site FanDuel, under which the company will stop accepting paid entries for cash prizes in the state on May 2. This agreement follows Attorney General Paxton’s January 19 opinion stating that paid online daily fantasy sports contests, like those FanDuel operates, are illegal under current Texas law.
“I commend FanDuel for responsibly and pro-actively working with us to reach this settlement,” Attorney DSC03525-BGeneral Ken Paxton said. “This will spare both the company and the taxpayers of Texas the expense of an extensive lawsuit that I believe would only affirm what my office has already determined.”
Unlike some other states, Texas law only requires “partial chance” for something to be gambling; it does not require that chance predominate. Traditional fantasy sports leagues that are not operated by a third party for revenue are, as a general rule, legal under Texas law. In those leagues, participants generally split any pot amongst themselves, so there is no house that takes a cut.
FanDuel will continue to operate its free games in Texas, but will stop accepting paid contest entries on May 2. In return, the Office of the Attorney General agrees not to take any legal action against FanDuel in connection with the operation of its contests. FanDuel’s email to users
FanDuel reportedly sent the following email to its Texas customers:
“Dear Texas Fans:
“We have some important news to share regarding our contests for users in Texas. As you may know, fantasy sports was founded in Texas more than four decades ago. In 2009, FanDuel was formed at Austin’s SXSW Interactive Festival, paving the way for millions of sports fans to play fantasy in a whole new way. We are proud of the business we’ve built, our ability to innovate fantasy sports and create a new product that fans love.
“We believe FanDuel has always been legal in Texas and strongly disagree with the recent advisory opinion of the Attorney General, but understand that the laws surrounding fantasy sports require clarity. As such, we have worked with the Texas Attorney General to map out our plan to wind down our operations in Texas, suspending paid contests on May 1st. The Texas legislature will be in session in 2017 and we will work to pass legislation that protects fantasy sports and consumers so that we can bring our paid contests back to Texans as soon as possible.”
