Leading daily fantasy sports (DFS) site FanDuel recently announced that it has reached a settlement with the Texas Attorney General and has agreed to stop accepting paid entries for contests on its site from Texas residents in return for no civil or criminal legal proceedings against it. This makes Texas the ninth state in United States from which FanDuel has had to withdraw its paid services.
The settlement comes after Texas Attorney General Ken Paxton decided in January that it was illegal for DFS contests to be offered for cash prizes in the state of Texas as it amounted to gambling. According to the gambling law in Texas, a presence of partial chance is sufficient to declare an activity as gambling and put DFS operators in a tight spot.
wochit News: 20 Jan 2016
FanDuel expressed its disagreement with the decision but has elected to abide by it. The company has said that it will pursue legislation to legalize DFS in the state when the Texas legislature reassembles in 2017.
In a statement, FanDuel said,
We believe FanDuel has always been legal in Texas and strongly disagree with the recent advisory opinion of the Attorney General, but understand that the laws surrounding fantasy sports require clarity. As such, we have worked with the Texas Attorney General to map out our plan to wind down our operations in Texas, suspending paid contests on May 1st.
According to the terms of the settlement, FanDuel will stop accepting payments from Texas residents for paid contests on its site from May but will continue with its free contests. On its part, the office of the Attorney General has agreed to not initiate any legal action against FanDuel with regards to its prior operations.
Attorney General Paxton applauded the company for acting responsibly in agreeing to settle rather than entering into a lawsuit. FanDuel’s primary competitor, DraftKings on the other hand has opted for the legal route. It has filed a lawsuit in Texas asking the court to provide clarity on the legal position of fantasy sports. The company has stated that it will be presenting evidence to the court to prove that daily fantasy sports is a game of skill and not chance, making it legal under the current Texan law.
Interestingly, FanDuel’s agreement states that in case DraftKings reaches an agreement with the state to offer paid contests, it can also do the same. The legality of paid contests on DFS sites is under debate across states in United States(U.S.) as authorities try to assess whether the contests and games offered by DFS providers amount to gambling or not.
