Texas Attorney General: Daily fantasy sports is 'illegal gambling'

In this Sept. 9, 2015, file photo, Len Don Diego, marketing manager for content at DraftKings, a daily fantasy sports company, works at his station at the company's offices in Boston. The daily fantasy sports industry is eyeing a breakout season as NFL games begin. And its two dominant companies, DraftKings and FanDuel, are touting lucrative opening week prizes to try to draw more customers as more competitors pop up. (AP Photo/Stephan Savoia, File) less In this Sept. 9, 2015, file photo, Len Don Diego, marketing manager for content at DraftKings, a daily fantasy sports company, works at his station at the company's offices in Boston. The daily fantasy sports ... more Photo: Stephan Savoia, STF / Associated Press Photo: Stephan Savoia, STF / Associated Press Image 1 of / 9 Caption Close Texas Attorney General: Daily fantasy sports is 'illegal gambling' 1 / 9 Back to Gallery

AUSTIN — Attorney General Ken Paxton said Tuesday in a nonbinding opinion that daily fantasy sports is "illegal gambling" in Texas.

"Simply put, it is prohibited gambling in Texas if you bet on the performance of a participant in a sporting event and the house takes a cut,” he said in a statement.

Daily fantasy sports site DraftKings said it intended to keep operating in Texas, disagreeing with Paxton's nonbinding interpretation of the law and his description of how the games work.

"We strongly disagree with the Attorney General's prediction about what the courts may or may not do if ever presented with the issue of whether daily fantasy sports are legal under Texas law. The Texas Legislature has expressly authorized games of skill, and daily fantasy sports are a game of skill. The Attorney General's prediction is predicated on a fundamental misunderstanding of DFS. We intend to continue to operate openly and transparently in Texas, so that the millions of Texans who are fantasy sports fans can continue to enjoy the contests they love," said a statement by Randy Mastro, counsel to DraftKings. He disputed the description of an entry fee as a cut.



Big sports names have a stake in fantasy sports, including Dallas Cowboys owner Jerry Jones, who has invested in DraftKings, and Dallas Mavericks owner Mark Cuban, who has invested in Fantasy Labs Inc, a platform of proprietary daily fantasy sports data, tools and analytics.

Cuban slammed Paxton's legal opinion on Twitter, saying, "what a disappointment re DFS."

"You certainly don't represent the views of Texans," tweeted Cuban, who is due to keynote the Fantasy Sports Trade Association's Winter Conference in Dallas on Wednesday.

Paxton said under the law, a person commits an offense by betting on the partial or final result of a game or contest. He said that a court thus would likely determine that taking part in daily fantasy sports is illegal.

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“Because the outcome of games in daily fantasy sports leagues depends partially on chance, an individual’s payment of a fee to participate in such activities is a bet,” Paxton wrote in the opinion.

He also wrote that participants would be able to use a defense to being prosecuted "when play is in a private place, no person receives any economic benefit other than personal winnings, and the risks of winning and losing are the same for all participants."

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In that way, Paxton's office said, the opinion makes it clear that traditional fantasy sports leagues generally are legal, since players typically split the pot without a house cut.

DraftKings said in its statement, "We strongly disagree with the Attorney General's prediction about what the courts may or may not do if ever presented with the issue of whether daily fantasy sports are legal under Texas law.:

Paxton’s office was flooded with thousands of emails supporting the games after he was asked by a state lawmaker to weigh in on whether the sports leagues are permissible under Texas law.

State Rep. Myra Crownover, R-Denton, in asking for the attorney general’s opinion in November had cited action in other states regarding the fantasy sports operations FanDuel and DraftKings. She pointed out that the Legislature generally has criminalized gambling.

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Attorney general opinions are nonbinding interpretations of the law. They generally are regarded by courts as persuasive and entitled to careful consideration, but courts have the authority to make binding determinations on the law.

Daily fantasy sports play is a multibillion-dollar national enterprise that’s under scrutiny in several states. Unlike traditional fantasy sports in which people pick their dream teams for a season, daily fantasy sports players can choose a new team each day or week using sports sites that advertise big payoffs.

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Critics see it as a gambling enterprise that should be regulated as such, but supporters of fantasy sports play say it involves skill and so is distinct from pure gambling.

After Crownover asked for Paxton’s opinion, a fantasy sports alliance had urged supporters to contact the attorney general and other officials.

The Fantasy Sports for All effort was supported by the Fantasy Sports Trade Association, which has 300 members including DraftKings and Fan Duel and has engaged lobbyists in Texas.

The association said there are more than 2 million fantasy sports players in Texas

Despite the deluge of emails, Paxton’s office had said his focus would be on the law.

pfikac@express-news.net

Twitter: @pfikac