Texas Joins States Criticizing Daily Fantasy Sports
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ARLINGTON (CBSDFW.COM/AP) - Texas is joining a growing list of states that are criticizing daily fantasy sports games. The state's attorney general on Tuesday said that websites like DraftKings and FanDuel are illegal, stopping short of telling the multibillion dollar industry to pack up and leave.
Ken Paxton explained that a Texas court would likely find these daily fantasy sports illegal, but the attorney general's opinions are nonbinding, leaving the games essentially free to continue operating across the state, for now. Regardless, the statement is yet another blow to the operators of these games.
"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 said. This does not apply to traditional fantasy sports leagues, which are typically private and only among friends using websites like Yahoo! or CBS Sports to track winnings.
Millions of Texans participate in daily fantasy sports. The top sites -- DraftKings and FanDuel -- took in a combined $3 billion last year. But they have gone to court in other states, including New York and Illinois, following similar words from other state leaders.
DraftKings and FanDuel have argued that their games are based on skill, not chance, and insisted that their operations are not illegal because they do not accept wagers, and because their success does not rely on any particular result. DraftKings issued a response to Paxton, calling his courtroom prediction wrong. The company plans to continue operations in Texas. According to Randy Mastro, a lawyer for DraftKings, "The Attorney General's prediction is predicated on a fundamental misunderstanding [of daily fantasy sports]."
Many professional sports teams have partnerships with these fantasy sports sites. The Dallas Cowboys even have a DraftKings Lounge at AT&T Stadium.
DraftKings and FanDuel have become ubiquitous during televised sporting events. But their aggressive advertising campaigns ahead of the 2015 NFL season caught the attention or regulators and lawmakers nationwide. Several states are now grappling with the legality and possible regulation of fantasy sports. Paxton stated that it would be up to the State Legislature -- "not this office or the courts" -- to alter the legal framework to make daily fantasy sports games permissible.
Paxton's office did not immediately say if the attorney general planned to crack down on the daily fantasy sports companies. A spokesman for Gov. Greg Abbott declined comment.
These new remarks come as the Fantasy Sports Trade Association holds its winter conference at the Omni Hotel in Dallas this week. The group's chairman stated that they will work to ensure that the 4 million people across Texas who play fantasy sports can continue to do so.
The conference brings together more than 300 fantasy sports companies to discuss the challenges facing their industry. Dallas Mavericks owner Mark Cuban was a keynote speaker at the conference on Wednesday morning. "What I've gotten pretty good at is detecting hypocrisy," he told a crowd during his motivational speech. "What I'm here to tell you is that, when things seem to be going against you, ganging up on you, that's typically when the best [stuff] is about to happen."
Cuban had already expressed his disappointment about Paxton's opinion on Twitter a day earlier.
Cuban said that Paxton did not represent the views of Texans, and added that his stance has nothing to do with his investment and ad revenue in daily fantasy sports, which he put at under $1 million. The NBA team owner also told the Dallas crowd that, he thinks, industry leaders will need to work with legislators nationwide to develop common sense regulations.
