Games company in ongoing US battle
FanDuel ‘laying off staff’ following latest setback on legitimacy
The layoffs, if confirmed, represent another setback in its battle for legitimacy after the Texas Attorney General said it violates state laws prohibiting online gambling.
Ken Paxton, responding to the Committee on Public Health of the Texas House of Representatives, said: “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.”
His opinion adds to similar verdicts by his counterparts in New York, Illinois, Massachusetts and Nevada.
FanDuel was co-founded in Edinburgh by entrepreneurs Nigel and Lesley Eccles (pictured), and now operates out of joint headquarters in the city and New York.
The company and its main rival DraftKings are still operating in New York and Illinois while they pursue a legal challenge to orders forcing them to cease operations.
Mr Paxton added: “It is beyond reasonable dispute that daily fantasy leagues involve an element of chance regarding how a selected player will perform on game day. The participant’s skill in selecting a particular player for his team has no impact on the performance of the player or the outcome of the game.
“Because the outcome of games in daily fantasy sports leagues depends partially on chance, an individual’s payment of afee to participate in such activities is a bet. Accordingly, a court would likely determine that participation in daily fantasy sports leagues is illegal gambling.”
FanDuel counsel John Kiernan said: “Today’s advisory opinion by the Attorney General of Texas is founded on a misinterpretation of the law and misunderstanding of the facts about fantasy sports.
“Fantasy sports has always been a legal contest of skill in Texas. The Texas legislature has expressly recognized 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.”
Peter Schoenke, the chairman of the Fantasy Sports Trade Association, was reported in the US as calling for greater dialogue between state authorities and the games companies.
“If Attorney General Paxton is truly concerned about the small businesses that operate in Texas and the millions of people in Texas who enjoy fantasy sports, he would stop grandstanding and start working with the FSTA and the Texas Legislature on common sense consumer protection issues like those being proposed in Massachusetts, Florida, Indiana, Illinois, California and other forward-looking states,” he told one US publication.