Daily Fantasy Sports Legality Heating Up In Texas

Texas lawmakers who are proponents of daily fantasy sports (DFS) are gearing up to try again for passage of a bill regulating the popular activity. Texas State Representative, Richard Peña Raymond (D- Laredo) introduced on Feb. 1, 2017 three separate bills that each would classify daily fantasy sports as legal and skill-based games. In true gambling fashion, three chances are better than one. Efforts to begin a legal effort last year for passage of a DFS bill were shot down when Ken Paxton, Texas State Attorney General, issued a legal opinion classing DFS as online gambling and therefore illegal in Texas. The Texas legislature was not in session throughout 2016, so 2017 marks the first time DFS legislation will be considered.

This go-around, the three house bills, HB 1418, HB 1422 and HB 1457, all address the reclassification, legalization and regulation of fantasy games. The three bills have overlapping agendas, the main difference being that separate co-authors have provided more detail for some of the provisions. The assumption being that if one bill passes, all three should pass, assuring that all legalities are addressed.

Besides classifying DFS as a non-gambling activity, terms of the bills also include the following:
– All DFS operators will pay a registration fee of $5000./
– There will be an annually recurring permit fee of $5000.
– Consumer protection policies, including prevention of insider trading information, must be in place.
– Civil penalties of $1000 per day for violations.
– All participants must be above the legal age of 18.
– DFS companies may not target advertising campaigns towards minors.
– All DFS employees and family members are banned from participating.
– All DFS employees are banned from sharing confidential information with third parties.
– All player funds must be kept separate from operational funds.
– DFS sites must offer tools for responsible gambling.
– All DFS companies must submit an annual financial audit to state authorities.
– The state attorney general will have the power to ban any DFS operator not following the laws.

In Texas, there is only pari-mutuel wagering on horse and dog races, one tribal casino and a lottery. It’s no wonder that more than four million players are known to regularly take part in fantasy sports each year, despite the opinion of Attorney General Paxon. In order to protect these consumers, regulation needs to be in place.

The Texas Fantasy Sports Alliance (TFSA) has commended the State Representatives responsible for the bills. TFSA is a coalition of sports fans, champions of free markets and limited government, consumer activists and Texas residents. Scott Dunaway, a spokesman for TFSA said, “TFSA applauds Rep. Raymond for proposing legislation that clarifies the right of Texans to play fantasy sports, while also providing consumer protections, and allowing this growing industry to prosper in Texas. We are confident the legislature will follow their lead by affirming the legality of this extremely popular leisure- time activity.”

Rep. Raymond said, “HB-1457 will clarify a confusing and ambiguous law and affirm that fantasy sports are legal in Texas. The government should not be limiting the freedom of Texans to participate in fantasy sports contests, which are clearly a game of skill, not chance.”

Representative Kuempel, co-author, said, “I am proud to support legislation that protects Texans’ right to participate in fantasy sports contests, while preventing unnecessary government involvement in Texans personal lives and pocketbooks.”

The founder of DraftAnalyzer.com, Ted Kasten, said, “Texas has been a major beneficiary of the fantasy sports industry. Over a dozen fantasy-sports related businesses are headquartered here in Texas. I look forward to supporting Reps. Raymond, Kuempel, Anderson, White, and Herrero as they work to protect an industry that is not only enjoyed by millions, but is also a growing source of jobs and revenue for our great state.”

It looks like Texas has a legitimate shot at legalizing daily fantasy sports.

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