AUSTIN, Texas – Texas has reached a settlement with online daily fantasy sports site FanDuel, Texas Attorney General Ken Paxton announced Friday.
The settlement says FanDuel will stop accepting paid entries for cash prizes in the state on May 2.
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The agreement follows Paxton’s Jan. 19 opinion that paid online daily fantasy sports contests are illegal under current Texas law.
"I commend FanDuel for responsibly and proactively working with us to reach this settlement," Paxton said. "This will spare both the company and the taxpayers of Texas the expense of an extensive lawsuit that I believe would only affirm what my office has already determined."
Unlike some other states, Texas law requires only "partial chance" for something to be considered gambling. The law does not require that chance predominate.
Traditional fantasy sports leagues that are not operated by a third party for revenue are, as a general rule, legal under Texas law. In those leagues, participants generally split any pot among themselves, so there is no house that takes a cut.
FanDuel will continue to operate its free games in Texas, but will stop accepting paid contest entries on May 2. In return, the Office of the Attorney General agrees not to take any legal action against FanDuel in connection with the operation of its contests.