FanDuel to cease real-money fantasy in Texas, DraftKings remains defiant

texas-fanduel-daily-fantasy-sportsDaily fantasy sports operator FanDuel says it will stop accepting real-money players from Texas while rival DraftKings intends to defy the state attorney general’s opinion that DFS is illegal under state law.

In a statement released Friday, Texas attorney general Ken Paxton said his office had worked out a deal under which FanDuel would block Texas players from entering real-money contests as of May 2. In exchange, Patton’s office has agreed “not to take any legal action” against FanDuel for its past activities.

In January, Paxton’s office announced it had determined that DFS was “prohibited gambling” in Texas due to that state’s prohibition of betting on events determined either “solely or partially by chance.” Paxton is among a growing number of state AGs who have arrived at similar conclusions, but only New York has so far pursued criminal proceedings against DFS operators.

Paxton may yet pursue charges against DraftKings, which announced on Friday that it had filed a petition for declaratory judgment in a Dallas County court “to bring clarity to its legal situation.” DraftKings attorney Randy Mastro claimed DFS was “perfectly legal under Texas law” and said the company was looking forward to presenting evidence supporting its case in court.

The loss of Texas will be a blow to FanDuel’s earnings, as the state was believed to account for as much as 8% of the total DFS player base in the US. However, FanDuel’s willingness to take its lumps now and hope for positive legislative activity going forward may serve it better in the long run than the almost comically antagonistic stance DraftKings has adopted in Texas and other states in which DFS’ legality has been questioned.

The Texas news played spoiler to Indiana becoming only the second US state legislature to send a pro-DFS regulatory bill to a governor’s desk since the industry blew up last October. Virginia sent its own bill to Gov. Terry McAuliffe last week.

Indiana’s legislation sailed through both Republican-controlled state chambers with relative ease and with veto-proof majorities, and since Gov. Mike Pence is also a Republican, his John Hancock appears to be a foregone conclusion.

Things weren’t so peachy in Florida, where a last ditch attempt to get a DFS bill approved before legislators conclude their current session went down to defeat on Friday.

Earlier this week, legislators opted not to vote on the state’s proposed gaming compact with the Seminole Tribe, and DFS had been part of that legislative package. On Friday, state Rep. Matt Gaetz attempted to attach the DFS language to a different bill, but withdrew his measure after receiving pushback from other legislators.

Gov. Rick Scott was responsible for bundling the DFS language into the Seminole compact based on his fear that the tribe could use a standalone DFS bill as evidence that the state had violated the terms of the compact, possibly leading to the tribe deciding to launch its own real-money online gambling sites. On Friday, other lawmakers cited similar claims for rejecting Gaetz’s efforts to duct-tape DFS to an unrelated measure.