his agreement follows Texas Attorney General Ken Paxton’s Jan. 19 opinion stating that paid online 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 General Ken Paxton said in a statement. “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 requires only “partial chance” for an activity to be considered gambling, according to Paxton’s non-binding opinion. State law does not require that chance predominate.
Traditional fantasy sports leagues that are not operated by a third party for revenue are, generally, legal under Texas law. In those leagues, participants typically split any pot among themselves, so there is no “house” that takes a cut.
FanDuel and fantasy sports industry leaders have argued that because their games involve skill, they are not gambling.
New York-based 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 agreed not to take any legal action against FanDuel in connection with the operation of its contests.
Daily fantasy sports websites have growing from 32 million players in 2010 to more than 56 million in 2015, according to the Fantasy Sports Trade Association. But elected officials in several states, including New York, Arizona and Louisiana as well as Texas, have moved to block third-party fantasy sports gaming.