The FanDuel Inc. app and DraftKings Inc. website are arranged for a photograph in Washington, D.C., U.S., on Monday, Oct. 5, 2015. Fantasy sports companies DraftKings Inc. and FanDuel Inc. raised a total of $575 million in July from investors including KKR & Co., 21st Century Fox Inc. and Major League Baseball to attract players to games that pay out millions of dollars in cash prizes in daily contests. Photographer: Andrew Harrer/Bloomberg via Getty ImagesPhotograph by Andrew Harrer — Bloomberg via Getty Images
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Daily fantasy sports games that charge players to compete cannot operate legally in Texas, the state’s attorney general said in a statement on Tuesday, making Texas the latest U.S. state to challenge the legality of such online contests.
Online operators’ legal claims that they can “operate as an unregulated house” do not “square with existing Texas law,” said Texas Attorney General Ken Paxton in a statement posted on his office’s website.
“A court would likely determine that participation in daily fantasy sports leagues is illegal gambling under section 47.02 of the Penal Code,” he said in a letter to a lawmaker who questioned the legality of the sites.
The fast-growing, multibillion-dollar fantasy sports industry dominated by DraftKings and FanDuel has drawn increased attention from state regulators over the past year, with the attorneys general of New York, Illinois and Nevada challenging their legality.
Last week, a top law enforcement official in Vermont said fantasy sports games are illegal in that state as lawmakers there took up discussion of a bill that would exempt the popular games from the state’s anti-gambling laws.
The games are currently illegal in Arizona, Iowa, Louisiana, Montana and Washington. The attorneys general of New York and Illinois have also declared the games illegal, but those rulings are being challenged in state courts.
Nevada has said fantasy sports companies cannot operate in the state unless they receive gaming licenses.