FanDuel insists fantasy sports do not break Texas law

Fantasy sports operator FanDuel has hit back at a claim its service could be in breach of the law in Texas.

FanDuel co-founder and chief executive Nigel Eccles

The Edinburgh-founded firm, one of Scotland’s most lauded start-ups, said the opinion put forward by Texas attorney general Ken Paxton represented a “misunderstanding” of the facts.

In a statement published on his website, Paxton said: “It’s my duty as attorney general to look to the law, as passed by the people’s representatives, to answer the questions put to this office.

“Paid daily ‘fantasy sports’ operators claim they can legally operate as an unregulated house, but none of their arguments square with existing Texas law. Simply put, it is prohibited gambling in Texas if you bet on the performance of a participant in a sporting event and the house takes a cut.”

The move is seen as a fresh blow for FanDuel, led by co-founder and chief executive Nigel Eccles. The firm was recently told to stop accepting bets in the state of New York after investigators concluded that its daily competitions amount to gambling, rather than a game of skill. FanDuel’s biggest rival in the US, DraftKings, was also ordered to “cease and desist”.

FanDuel counsel John Kiernan, a partner at law firm Debevoise & Plimpton, said Paxton’s opinion “is founded on a misinterpretation of the law and misunderstanding of the facts about fantasy sports”.

He added: “Fantasy sports has always been a legal contest of skill in Texas. The Texas legislature has expressly recognised that payment of an entry fee to compete for prizes in a contest of skill is not illegal gambling. Texans have long enjoyed participating legally in a wide variety of contests on that basis.

“The attorney general’s advisory prediction that a Texas court might think fantasy sports fall outside that protection because fantasy sports contestants are not actually participating in the sports events disregards that the selection of a fantasy roster to compete against other contestants’ selections is a separate valid contest of skill all its own.”