Texas’s Attorney General, Ken Paxton, issued an opinion today that says that daily fantasy sports (DFS) is illegal under Texas law. The crux of Mr. Paxton’s argument is,
Under section 47.02 of the Penal Code, a person commits an offense if he or she makes a bet on the partial or final result of a game or contest or on the performance of a participant in a game or contest. Because the outcome of games in daily fantasy sports leagues depends partially on chance, an individual’s payment of a fee to participate in such activities is a bet. Accordingly, a court would likely determine that participation in daily fantasy sports leagues is illegal gambling ‘under section 47.02 of the Penal Code.
Texas is one of several states where any element of chance is enough to make something gambling.
The reactions were predictable. DraftKings and FanDuel stated that Mr. Paxton got the law wrong. “The Attorney General’s prediction is predicated on a fundamental misunderstanding of DFS. We intend to continue to operate openly and transparently in Texas, so that the millions of Texans who are fantasy sports fans can continue to enjoy the contests they love.” FanDuel’s response was similar.
Unfortunately, I suspect that Attorney General Paxton got this right. Raffi Melkonian, an appellate lawyer in Houston who specializes in Fifth Circuit and Texas appellate practice, stated (via Twitter):
This is ridiculous, as @WALLACHLEGAL and others have pointed out. It's a very easy interp. of Texas law. https://t.co/kMcP860u0K
— Raffi Melkonian (@RMFifthCircuit) January 19, 2016
I trust his legal view far more than what has been stated by DraftKings and FanDuel.
Of course, none of this should have been a surprise to anyone. As I said almost two years ago,
Unfortunately, many states look at just an element of chance to determine if something is gambling. And there’s no doubt that daily fantasy sports have such an element.
Another state where DFS is of dubious legality is Florida. An Assistant Attorney General in Vermont, John Treadwell, stated that “Daily fantasy sports violate Vermont’s gambling laws.” Adding in Illinois and New York and the picture of DFS in the US is mostly cloudy with a chance of rain.
Tags: daily.fantasy.sports