Texas AG Ken Paxton Said DFS Was Illegal Gambling Last Year
Legal Sports Report

Messing With Daily Fantasy Sports In Texas: New Regulatory Bill Drops In Legislature

Texas daily fantasy sports bill introduced

Editor’s note: This story now accounts for the fact that three different bills have been introduced, instead of just one.

One of the biggest battleground states for the daily fantasy sports industry is looking at regulatory bills.

Texas and a DFS bill at a glance

Lawmakers in Texas are starting an effort to explicitly legalize and regulate paid-entry fantasy sports with a series of bills:

That such an effort was forthcoming was not a secret, as the author — Rep. Richard Peña Raymond (D-Laredo) — indicated last year that he would introduce legislation.

“HB-1457 will clarify a confusing and ambiguous law and affirm that fantasy sports are legal in Texas,” said Raymond, according to a group called the Texas Fantasy Sports Alliance.  “The government should not be limiting the freedom of Texans to participate in fantasy sports contests, which are clearly a game of skill, not chance.”

Other sponsors include:

  • Rep. John Kuempel (R-Seguin)
  • Rep. Rodney Anderson (R-Grand Prairie)
  • Rep. James White (R-Hillister)
  • Rep. Abel Herrero (D-Robstown)

“I am proud to support legislation that protects Texans’ right to participate in fantasy sports contests, while preventing unnecessary government involvement in Texans personal lives and pocketbooks,” Kuempel told the TFSA.

Texas’ legislature was not in session throughout 2016, so this is the first time the statehouse has had the opportunity to tackle DFS since states became interested in the issue late in 2015.

Texas is important for DFS

The stakes are higher in Texas than they are in many other states.

About a year ago, Texas Attorney General Ken Paxton declared that DFS constituted illegal gambling under state law. That led to FanDuel leaving the state as part of a settlement with the AG. DraftKings, meanwhile, has a case against Paxton regarding his opinion while it continues to operate in the state.

Texas is just the latest of a variety of states looking at DFS legislation early this year. Eight states legalized DFS in 2016.

Texas does not have much in the way of gaming now, with one tribal casino, a lottery and pari-mutuel wagering on horse and dog races.

Inside the Texas bills

The legislation is in the mold of many bills that have been floated or passed around the country. The different bills have some common elements but also diverge on several matters. Some key points:

  • Defines fantasy sports contests as a game of skill, apart from gambling. (H 1457)
  • Institutes consumer protections, such as a ban on employee play and preventing minors under the age of 18 from competing. (H 1457)
  • Gives ability to take legal action against operators to the AG’s office. (H 1457)
  • Gives oversight of the industry and power to promulgate regulations to the Secretary of State. (H 1418, 1422)
  • Sites must register with the state for an annual fee of $5,000. (H 1418, 1422)

Two of the bills (1418, 1422) provide for segregation of player funds from operational funds. Just this week, a DFS operator filed for bankruptcy while owing players more than a million dollars.

Dustin Gouker
- Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer -- including stops at The Washington Post and the D.C. Examiner.