Paxton: Sports Gambling Websites Require Law Change

It is well known that Texans and sports are a perfect fit, especially when it comes to football. So it's not surprising that fantasy sports leagues have grown as a fun way for Texans to live vicariously through the competition of actual game participants on the playing field.

Numerous companies have built innovative business models that expand friendly leagues into a more complex environment involving hundreds of millions of dollars. In normal circumstances, such entrepreneurship is welcome in this business-friendly state. However, many Texans harbor a deep cultural skepticism toward gambling and its impact on communities.

Ken Paxton: Daily fantasy is illegal gambling

In Texas, the law is clear: gambling laws are triggered by any element of chance. This is based on the statutory text and reinforced by opinions from Paxton's predecessors.

Some business practices of certain companies cross the line between fantasy sports and illegal gambling. Traditional fantasy leagues—where participants don't wager money or split the entire pot—are generally legal. Problems arise when third parties take a cut of the pot.

In defense, fantasy sports companies claim their leagues are skill-based, not chance-based. However, injuries or bad referee calls are unpredictable, introducing chance that can determine wins or losses for teams or fantasy lineups.

DFS companies insist it's a contest of skill, highlighting a punter's ability to pick players and teams using detailed analysis. They compare it to poker, where skill matters but chance in the cards remains.

DFS operators also claim their contests measure predictive skill, akin to golf tournaments measuring golfing ability or fishing tournaments measuring catching prowess.

Mr. Paxton argues that, regardless of skill involved, betting on the bona fide contest—the actual players on the field in the real sport—is where true skill lies.

He issued the opinion to alert businesses to these real concerns.

As Paxton prepared his opinion, a well-funded campaign conflated everyday friendly fantasy leagues with big online companies profiting millions from ordinary Texans' losses. Notably, a New York Attorney General injunction revealed that nearly 90% of DraftKings players lost money in 2013 and 2014. These companies hired expensive lobbyists and lawyers for ad campaigns, social media blitzes, and recent op-eds attacking Paxton's office.

Paxton emphasized that no amount of lobbying or marketing can change the law without the Legislature. Friendly leagues aren't the issue and face no shutdown risk. The concern is companies acting as the "house," making millions off Texans' weekly losses. He and his office won't cower to op-eds or social media attacks funded by deep-pocketed businesses.