Texas attorney general Ken Paxton gave his legal opinion on fantasy sports sites including DraftKings and FanDuel and ruled the multibillion-dollar industry illegal.
According to CNBC, Boston-based DraftKings reported $80,000 in lobbying spending for the fourth quarter according to a congressional disclosure released Wednesday. Meanwhile New York-based competitor FanDuel, posted $20,000 in lobbying expenses, unchanged from the previous quarter.
Reportedly, in this largely unregulated business, players pay fees to enter contests where they can choose real athletes and win money based on their performance. While daily fantasy industries are yet to be scrutinized on a federal level, states have come to notice the seemingly gambling-like sites.
Attorneys general in New York and Illinois have already ruled daily fantasy sports as illegal under their state laws, prompting FanDuel and DraftKings to go through litigation in both states. It looks like Texas is following the states deeming fantasy sports unlawful.
Paxton stated that while picking a good fantasy team may require an element of skill, which way the game breaks involves a lot of luck.
"If an element of chance is involved in a particular game, it is embraced within the definition of 'bet,'" he said as cited by Tech Crunch.
He then referenced a previous decision where a Texas court ruled poker as gambling and is therefore illegal.
"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," Paxton remarked.
On their defense, DraftKings and FanDuel have argued that fantasy sports is a game of skill and insist that their operations are legal because they technically don't accept wagers and because their success doesn't rely on any particular result. Also, each of the spokesperson of the companies has guaranteed that they are working with lawmakers to ensure the legality of their business.
FanDuel's lawyer remarked that Paxton's legal review is simply founded on his misinterpretation to facts of fantasy sports.
For the meantime, Paxton emphasized that his legal opinions on daily fantasy sports are non-binding. So up until the legislature meets again and has the chance to discuss this industry, players of fantasy sports are free to continue their game.
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