Texas: Where The Stakes Are Highest For Daily Fantasy Sports Legalization

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Texas fantasy sports

The efforts to legalize daily fantasy sports are continuing to gain traction around the US. There are bills involving paid-entry fantasy sports in more than two-fifths of the states.

But the stakes are highest in one state in particular: Texas. And the outcome of legislation there is not at all certain, after a recent report from the Dallas Morning News.

The backstory in Texas for DFS

Texas is the biggest gray area that exists for fantasy sports, currently. A legislative effort appeared in Texas earlier this year.

Why is that? While attorneys general have weighed in on the legality in states around the country, the reaction of the industry — and of DraftKings and FanDuel — has generally been in lockstep. Sites have stayed in Illinois and left the likes of Alabama, Idaho and Hawaii.

The reaction to Texas Attorney General Ken Paxton opining that DFS is gambling under state law was not uniform. DraftKings fought the opinion and still serves Texas. FanDuel, meanwhile, reached a settlement with Paxton and pulled out of the state.

The latest in Texas for DFS

The Dallas Morning News broke down the micro-political climate in Texas for daily fantasy sports legislature. Each state has its own issues — and some times interested opposition — when it comes to paid-entry fantasy sports.

While some states had a relatively easy time passing legislation in 2016, that was not the case everywhere. Texas appears to fall into the latter category. More from the DMN report:

But the issue has split conservative lawmakers. Some view it as a matter of protecting the free market and don’t see fantasy sports as gaming. Others see the games as an expansion of gambling and fear racetracks and American Indian casinos could one day include machines to play fantasy sports.

The story goes on to note that anti-gambling lobbies are at play here. The success of such efforts at pushing back against DFS legislation is not entirely known in other states.

Complications for FanDuel and DraftKings

The current push for legality in Texas has two important factors in play. First, the Texas legislature only meets every two years. That means if the state doesn’t pass a bill this year, the wait for legal clarity would have to wait until at least 2019.

Making things even more complicated is the fact that DraftKings and FanDuel are working toward a merger. If Texas doesn’t legalize DFS, how would the new merged company deal with the state? Does FanDuel toss its settlement out the window if and when the companies join forces? Or does the new company take the DraftKings tack of fighting against Paxton’s opinion?

Regardless, the stakes in Texas are just about as high as they were in New York in 2016. The outcome of the legislative effort in 2017 will have a major impact on the DFS industry moving forward.