Add Texas to the growing list of states where the future of fantasy sports, particularly the billion-dollar industry surrounding daily leagues, has become an issue that will be decided on the political field of play.
State Rep. Richard Raymond, D-Laredo, will file a bill for the 2017 legislative session that will plainly state that fantasy sports are legal, skill-based games — not illegal gambling as Texas Attorney General Ken Paxton determined in a nonbinding opinion issued in January.
“Under existing law, it’s clear to me that it is legal, but I think Ken Paxton muddied up the waters so much that we have to straighten it out,” Raymond said.
Even as a casual player who participates in season-long fantasy leagues with no money at stake, Raymond said he believes success is based on research, knowledge and planning — making fantasy sports exempt under state law that allows for skill-based games.
“I would liken it to chess, as opposed to the roulette wheel,” he said.
Raymond said he didn’t consult with any purveyors of daily fantasy sports — a fast-growing industry in which participants pay an entry fee and create teams from a menu of professional or amateur athletes, then compile points based on statistical performance, such as yards gained and touchdowns scored in football. Money is awarded to the owners of the top teams in the online games, which typically last one day to one week.
DraftKings and FanDuel, the largest daily fantasy sports operators, were “pleasantly surprised” by Raymond’s bill, a spokesman said.
“However, we are not surprised that the millions of Texans that are passionate about fantasy sports have begun to contact their elected officials on this issue,” said Scott Dunaway, a Texas-based spokesman for the two companies. “We look forward to working with the Legislature in the coming year to protect fantasy sports in Texas.”
Daily fantasy sports is a relatively new industry, with operators and regulators forced to interpret each state’s gambling laws — most of which, like Texas, don’t specifically mention fantasy sports.
The stakes involved are high. DraftKings has said it expects to distribute more than $1 billion in winnings this year, and FanDuel said it has more than 6 million registered players and gets 15 million entries a week during the pro football season, its busiest time.
Paxton entered the fray with a January opinion that said daily fantasy contests appear to violate state gambling laws, which don’t allow betting on the performance of athletes. In addition, he said, daily fantasy sports offered games of chance in which success hinges on how well an athlete performs on game day.
FanDuel reached an agreement with Paxton’s office in March to stop taking entry fees from Texans. DraftKings, which has continued to operate in Texas, filed suit seeking a state court judgment on the legality of daily fantasy sports.
When 2016 began, residents in six states were blocked from playing daily fantasy sports for cash prizes — Arizona, Iowa, Louisiana, Montana, Nevada and Washington. Three states have since been added to the list when the attorneys general of Alabama, Delaware and Idaho concluded that the games violated state gambling laws.
Daily fantasy sports has had political success as well.
In August, New York Gov. Andrew Cuomo signed a law allowing licensed daily fantasy sports sites to operate in his state. The action followed similar laws creating licensing systems and other regulations in Colorado, Indiana, Mississippi, Missouri, Tennessee and Virginia.
In the 2015 legislative session, state Rep. Abel Herrero introduced a bill to require daily fantasy sports sites to acquire a state-issued license as a “sports betting website.” A second bill by Herrero, D-Robstown, would have made it a misdemeanor to place a bet on an unlicensed website.
Neither bill, however, was given a committee hearing — the first major step in the legislative process — and Herrero wasn’t available to discuss his plans for the upcoming session, his office said.
Raymond’s proposed bill would bar a fantasy sports operator’s employees or their relatives from competing for cash prizes and would prohibit employees from sharing betting information that could affect which athletes are chosen or other aspects of the contests. Operators also would have to verify that participants are at least 18 years old.
“If it gets to a vote, I feel very, very confident that it would pass,” Raymond said.
Legislators can begin prefiling bills for the 2017 session in mid-November.
How daily fantasy sports works
• Participants pay an entry fee and choose from a menu of athletes from professional or amateur sports, compiling points based on statistical performance, such as yards gained in football.
• Players join a league with a set number of other players, with predetermined prize amounts paid to the teams that compile the most points.
• Contests typically last one day to one week.