FanDuel will "cease taking paid entries for cash prizes" in Texas on May 2, under a "settlement with the state" announced by Attorney General Ken Paxton on Friday, according to Asher Price of the AUSTIN AMERICAN-STATESMAN. DraftKings within an hour of the announcement "sued Paxton in state district court in Dallas County, asking for a ruling on the legality of daily fantasy sports sites under Texas law." As part of the settlement with FanDuel, Paxton "agreed not to take any legal action against the company in connection with the operation of its contests." Paxton in January "issued a nonbinding opinion that paid online daily fantasy sports contests, like those FanDuel operates, are illegal." Unlike some other states, Texas law "only requires 'partial chance' for something to count as gambling; it does not require that chance predominate." Paxton in his opinion said that by paying entry fees, participants in the online contests are "placing improper bets on the performance of athletes." He added that DFS operators "also violate gambling laws by keeping a portion of the fees." FanDuel will "continue to operate its free games in Texas -- without cash prizes, and it pledged to try to bring back paid games by pressing lawmakers at the next legislative session" in '17. DraftKings has "taken a seemingly more aggressive position." DraftKings attorney Rob Walters said the company filed the lawsuit to "get clarity on the legal situation" (AUSTIN AMERICAN-STATESMAN, 3/5). DraftKings attorney Randy Mastro in a written statement "called the petition 'unavoidable' and maintained the company’s position that daily fantasy sports contests are games of skill that comply with state law" (DALLASNEWS.com, 3/4).
BACKING OUT: USA TODAY's Brent Schrotenboer noted Texas "becomes the ninth state in which FanDuel will not offer its paid contests because of state gambling laws, not including New York and Illinois, where it continues to operate while it fights for its survival in court" (USATODAY.com, 3/4). ESPN.com's David Purdum reported FanDuel "informed Texas users that it would suspend offering paid contests beginning May 1 and that users could withdraw funds at any time" (ESPN.com, 3/4).
