Texas took a stand against the daily fantasy sports industry on Tuesday when the attorney general said the state’s courts would likely rule sites such as DraftKings and FanDuel illegal.
DraftKings said it would continue operating in Texas, as attorney general decisions are non-binding.
But just as the Fantasy Sports Trade Association convention was set to begin, the position is another strike against DFS operations.
“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,” Texas attorney general Ken Paxton said Tuesday.
DraftKings and FanDuel have been at the forefront of DFS sites and games, and reported a combined $3 billion spent on their multi-sport games in 2015.
DraftKings attorney Randy Mastro said in a statement that the attorney general was operating on a misunderstanding of the business model.
Paxton said the Texas legislature would have to decide the next step.
New York, Illinois and California already have pending court schedules to determine the legality of DFS. The attorney general in New York said Jan. 2 that it wanted FanDuel and DraftKings to pay restitution in cases where consumers lost money, plus a fine that could hit $5,000 per case.
More than 600,000 customers and $200 million in entry fees came from New York, according to the attorney general’s office.