For daily fantasy sports sites, legal limbo in Texas set to continue

A year and a half after Texas Attorney General Ken Paxton issued an opinion equating some fantasy sports sites to illegal gambling, the legal landscape for fantasy sports fans in the state remains murky and is likely to stay that way.

Lawmakers ended their legislative session on Monday without passing measures aimed at making clear that those paid sites are legal in the state.

“I literally in my whole time have never seen something have so much support across the board from the most conservative to the most liberal, to the tallest and the shortest,” state Rep. Richard Peña Raymond, D-Laredo, said Wednesday after leading the charge on the issue in the Texas House.

In a nonbinding opinion in January 2016, Paxton equated paid fantasy sports sites to online gambling, which is illegal, arguing that they involve “partial chance.” The opinion didn't target free fantasy sports sites — like those hosted by Yahoo, ESPN and the NFL — and focuses instead on paid sites such as DraftKings and FanDuel, which allow Texans to win money based off their virtual teams.

Following the opinion, FanDuel stopped offering paid contests in Texas. DraftKings filed a lawsuit against Paxton, asking a court to issue a declaratory judgment that fantasy sports websites are permissible under Texas law. 

Raymond's bill, House Bill 1457, would have classified fantasy sports as games of skill, not chance.

“When you read the law, it’s clear that it’s legal already. What I was trying to do with my legislation was make it crystal clear,” Raymond said Wednesday.

At an April hearing on Raymond's bill before the House Licensing and Administration Committee, gambling opponents took issue with the notion that sites like DraftKings and FanDuel are games of skill.

“We believe that this legislation will enable predatory gambling in our state, targeting a whole new generation of young people into gambling and getting them hooked and spending great amounts of their dollars, at damage not just to themselves but to others dear to them,” Benjamin Wright, a pastor with the Southern Baptist of Texas Convention, told the committee.

Although his bill never made it onto the House floor, Raymond passed a motion in the House in May in support of adding similar language onto a Senate bill that was in the middle of negotiations between the two chambers. The motion passed with a 119-25 vote, signaling that a majority of the House agreed with Raymond on the issue,  but no language related to fantasy sports made it into the final version of the bill.

Yet Raymond is still optimistic — even though the session is over. The only way lawmakers could take up the issue before the next regular session in 2019 is if Gov. Greg Abbott added it to the agenda of a special session.

“I was disappointed the Senate did not agree but speaking of sports, as Yogi Berra said — ‘It ain’t over till it’s over’ — and it ain’t over yet, I think. We’ll see what the governor says,” Raymond said.

The Texas Fantasy Sports Alliance, a group backed by FanDuel and DraftKings, plans to continue to press lawmakers on the issue.

“Four million Texans play fantasy sports each year in Texas, and they are all disappointed that the Texas Legislature could not pass sensible fantasy sports legislation introduced in the Texas House and Senate this session," said Scott Dunaway, a spokesman for the alliance. "Fantasy sports is not illegal in our state. Fantasy players want that cemented in legislation."

Despite the unsettled legal situation around fantasy sports in Texas, the National Fantasy Football Convention is still planning to host its first national conference in Dallas next month. 

Andy Alberth, CEO for the National Fantasy Football Convention, said at least 30 former and current Dallas Cowboys players are expected to attend, including former Cowboys quarterback Tony Romo, who is an investor in the company.

This is the organization's third attempt to host the convention. It was first slated to take place in Las Vegas in 2015 and then in Pasadena, California, the following year, but both were shut down amid pushback by the NFL.

Last month, the Legislature honored Romo. His visit to Austin led some to believe he was going to lobby for Raymond's bill, but a planned news conference was canceled, according to The Dallas Morning News.

Alberth noted the convention is not promoting daily paid fantasy football, which Paxton put under scrutiny.

“It’s more about becoming a better season-long fantasy player, and those are the leagues you play with your friends that you grew up with or at the office,” Alberth said.

Yet regarding questions of legality, Alberth stressed that it “is a game of skill, as people put a lot of time into becoming good fantasy players. It’s not something you can do and just get lucky.”

Read related coverage:

• Now that it's over, here's our list of the winners and losers of the 85th session of the Texas Legislature.
• Check out what happened to this session's most high-profile bills.