DraftKings Files Lawsuit in Texas over Legality of Daily Fantasy Sports

Adam Wells@adamwells1985Featured ColumnistMarch 5, 2016

An electronic advertisement for DraftKings hangs on the side of Madison Square Garden, Wednesday, Jan. 6, 2016 in New York. Officials say a court could rule by mid-January in the legal spat between fantasy sports sites FanDuel and DraftKings over a state order to shut down their operations in New York. The companies have asked an appeals court to continue a temporary hold on Attorney General Eric Schneiderman's shutdown order. The companies argue their games are based on skill, not chance, and players pay entry fees in order to manage rosters like a general manager. But Schneiderman has countered that the games are highly dependent on factors out of their control, such as injuries or even the weather, and are thus ultimately based on chance. (AP Photo/Mark Lennihan)
Mark Lennihan/Associated Press

As the debate rages on about whether daily fantasy sites are gambling, DraftKings has taken a proactive approach by filing a lawsuit in Texas on Friday.

Per ESPN Chalk's David Payne Purdum, DraftKings is asking the Texas state court to "decide legality of daily fantasy sports." This comes on the same day Brian M. Rosenthal of the Houston Chronicle reported that FanDuel agreed to stop operating in Texas starting May 2.

Rosenthal provided a statement from Texas Attorney General Ken Paxton: "I commend FanDuel for responsibly and proactively working with us to reach this settlement. 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."

DraftKings and FanDuel have been fighting various legal battles in different states pertaining to whether they are gambling sites.

New York Attorney General Eric Schneiderman filed an amended lawsuit against DraftKings and FanDuel in January, asking the companies to return all the money they made in the state to the people who lost money and pay a fine of up to $5,000 in each case, per ESPN.com's Darren Rovell

In December, Illinois Attorney General Lisa Madigan said daily fantasy sports betting is illegal under state law. "All games of chance or skill, when played for money, are illegal gambling," she said, per ESPN.com

A Kentucky man filed a class-action lawsuit against DraftKings and FanDuel in October, claiming both companies failed to disclose that their employees have access to "insider data" that could help them win money at the expense of customers, per Brent Schrotenboer of USA Today.

DraftKings has maintained that it is not a gambling site, which the new lawsuit in Texas seeks to reaffirm as the company looks to continue its operations in the state.