Texas labels DraftKings, FanDuel Illegal Gambling

Another state has stepped up and declared DraftKings and FanDuel to be illegal gambling sites. Texas Attorney General Ken Paxton says he believes daily fantasy sports (DFS) are illegal because DraftKings and FanDuel are profiting off players’ bets.

“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,” writes Paxton.

New York is in the process of banning DraftKings and Fanduel, but Paxton says Texas won’t take things this far yet. However, as Wired reports, his opinion does give state courts the opportunity to ban DFS if they choose to.

If DraftKings and FanDuel – the DFS industry’s leading sites – were forced to leave Texas, it would definitely put a major dent in their business. After all, some 300,000 new accounts were from the Lone Star State last year, which is almost 10% of the entire industry.

Randy Mastro, a lawyer for DraftKings, obviously disagrees with the statement and believes that Paxton and his advisers don’t understand how daily fantasy sports work.

“[Paxton’s opinion is] predicated on a fundamental misunderstanding of daily fantasy sports,” says Mastro.

Paxton’s opinion comes at a time when DraftKings and FanDuel are facing multiple challenges across the United States. Illinois is another state that doesn’t believe DFS sites have the right to offer illegal gambling to their residents. But at this time, no major court ruling has been made on whether DFS is truly illegal.

New York courts are expected to decide whether DraftKings and FanDuel can stay in the Empire State very soon. Once this determination is made, it could set a precedent for how other states view DraftKings and FanDuel.

Both sites claim that they are legal because DFS is a skill-based game that allows any good player to win profits. However, there is definitely an element of chance to the equation, which is why some lawmakers believe it’s outright gambling.

The reason for all the sudden legal challenges right now could be that several states want to install their own regulated DFS industries. New York has been rumored to be thinking about DFS regulation while California has already seen such a bill pass their Governmental Organization Committee. With more and more states considering online gaming regulation, it’s possible that DraftKings and FanDuel will continue seeing their market decreased.