Daily Fantasy Sports In Texas
April 28, 2017 - Nicholle Burke
The way some people look at it, paid-entry daily fantasy sports are the closest thing to legal sports gambling that most residents throughout the US have available to them. Members can sign up for an account, and either pay per competition or put down a set amount of money at the beginning of the season and play throughout for a prize at the end.
Whether or not you view it as gambling, it is a highly contested activity, especially now as some states have started pushing for actual sports betting. Many believe that DFS doesn't constitute sports betting as we know it because there is skill involved in creating your fantasy team. Others purport that there is an element of chance involved because the success of your team relies on the performance of a player or players.
Some states believe daily fantasy sports should be banned, while others believe that it is just a fun pastime and not a form of gambling because it depends on the teams you build, rather than pure chance. It is this exact dilemma that has kept state legislators in Texas from being able to make up their minds about whether or not DFS should be legal in their state.
Where Does The Attorney General Stand?
With nothing on the books and no cases to base their decisions on, state legislators have been at a loss as to what to do about DFS. One representative, Myra Crownover, needed clarity. So, she sent a request to the State Attorney General asking whether or not sites like FanDuel and DraftKings fell under acts of gambling or not. It was because of this request that Texas AG Ken Paxton released a statement, stating that "Under section 47.02 of the Penal Code, a person commits an offense if he or she makes a bet on the partial or final result of a game...Accordingly, a court would likely determine that participation in daily fantasy sports leagues is illegal under Section 47.02."
This was not an official ruling and did not come with a directive from the AG asking fantasy sports sites to leave the state. But since then, the two main fantasy sites have taken two different paths on the issue. FanDuel has backed out of the state, only offering free competition for Texas residents rather than paid options. DraftKings, on the other hand, has decided to continue offering paid-entry services in the state, maintaining that they are not breaking the law.
What Is The State Legislature Doing About It?
In order to gain legal clarity on the matter, Representative Richard Raymond (D) has put forth a bill, HB 1457 A Bill to be Entitled An Act Relating To Fantasy Sports Contests. "If you don't think fantasy football is a game of skill, then you haven't played it," said the representative. "It is a game of skill, not a game of chance."
The issue is being heavily debated by Texas lawmakers. Unfortunately, the issue still seems to be at a standstill, as conservative legislators have reached a stalemate. Some believe that this is a matter of free market protection. These legislators take the stance that fantasy sports are games of skill and that they do not constitute gambling in the state, and have taken up for the bill. "There's no difference between that [paid-entry fantasy sports] and a fishing tournament or golfing tournament. It's me against everybody else," commented Rodney Anderson, (R)-Grand Prairie, who has since become a co-sponsor for HB 1457.
Others take the side of AG Paxton, believing that even the small bit of chance involved in these competitions falls under the purview of Texas State law, therefore making it an act of betting. One main issue lawmakers have with it is that these fantasy sites keep portions of what you pay, rather than holding it and divvying it up, pari-mutuel style. “The biggest part is when the house keeps a cut. How do you distinguish that from gambling?” said Matt Krause, the Republican rep. from Fort Worth. “As long as it [DFS] maintains the characterization in the attorney general’s opinion, I’m not in favor of it.”
So, Will Daily Fantasy Sports Be Legal In Texas Anytime Soon?
Texas' decision in the matter during this legislative session is crucial for FanDuel and DraftKings, as the legislative body only meets every two years. If the issue is not dealt with this session, it could mean another two years stuck in a very gray situation, meaning we might not have a decision on the issue until 2019. In the meantime, AG Paxton has issued his opinion and could take legal action to get DraftKings banned from the state if there is no legislation in place to allow it to stay.
The anti-gambling lobby in Texas is a large force and has taken up arms against this new bill, as well. Teamed together with the strong Christian presence in the state, the lobby could make trouble for Representative Raymond and his bill. They see this bill as an expansion of gambling and are ready to fight it all the way. For now, there are still many steps for this bill to take before it becomes a law, and it looks like it will be an uphill battle all the way.