Back in 2019, a Texas bill effectively opened the door to legalize Daily Fantasy Sports betting throughout the state. In the end, it wound up working—unofficially, but still it still worked. Texas hasn't officially legalized Daily Fantasy Sports, but the companies who run them accept players from the state.
And yet, years later, straight-up online sports betting in Texas continues to be illegal. Not only that but bills to approve it have been rejected or tabled on multiple occasions since, including at the most recent legislative sessions to close out 2021.
This naturally leaves many wondering: What gives? How can you allow Texans to bet on fantasy sports but not bet on live sports? Especially now, when sports betting in the USA is officially the majority standard, with 30 states plus Washington, D.C. on board and many others seemingly on the way?
These are questions experts and sports betting enthusiasts across the United States have been asking for years. And even after all that time, there isn't a clear answer.
This isn't to say Texas lawmakers haven't offered one. It's to say the justification behind the absence of legal sports betting no longer makes sense, assuming it ever even did.
Why Texas Allows Daily Fantasy Sports
It should be noted, again, that Texas is essentially a reluctant participant in Daily Fantasy Sports. They have not legalized it in an official matter; they just haven't prevented sites like DraftKings and FanDuel from accepting players from the state.
This is still bizarre, because Texas doesn't permit sportsbooks outside the state to take bets from Texans on live sports. Sure, there are a handful of sites appearing in our reviews of the top online sportsbooks that will allow Texas residents to set up accounts and place wagers, but they are offshore operations neither the state nor federal government has any authority over. Geotracking data, on the other hand, prevents people in Texas from signing up at domestic online operators like Caesars, BetMGM, WynnBet, etc.
Daily Fantasy Sports has historically slipped through the cracks or been accepted by Texas and other states because they are considered a game of skill rather than chance. To be sure, the justification behind why Daily Fantasy Sports qualifies as a game of skill and betting on live sports does not remain insufficient. There really haven't been many useful differentiations between the two provided.
In our estimation, Daily Fantasy Sports gets a pass largely because it is excluded from constitutional laws. Places like Texas and other states have language in their constitutions that explicitly prohibit gambling and live-action betting. They do not, however, address the idea of Daily Fantasy Sports—mostly because DFS has only been around for a couple of decades and only a few years in its current form.
Go ahead and call this a loophole because that's what it is—a workaround. But it has provided a basis for Daily Fantasy Sports companies to set up shop across the United States in places that aren't prepared to write exceptions into their constitutional laws.
Texas Worried Legal Sports Betting Will Have Adverse Ramifications
In more recent years, legal sports betting in Texas has gained momentum. Polls have been conducted to show that residents are generally in favor of it, and there have been more political figures, like Beto O'Rourke, who have come out in support of passing it.
Even so, the latest Texas legislative sessions came and went without green-lighting the initiative that was on the table. And because Texas legislative sessions are held only in odd-numbered years, it's widely believed the state won't approve sports betting before 2023, if at all.
As people continue to wonder why Texas has taken this stance, particularly with Daily Fantasy Sports already in play, lawmakers have generally voiced concern for the potential societal impact legal sports betting might have. Yes, as the second most populated state in the U.S., Texas stands to make plenty of money each year off taxing sportsbooks. But by legalizing sports betting, opponents of the move argue it will open the door for more casino companies to try building more properties throughout the state, which is something Texas has mostly fought against.
Supporters of sports betting argue that the state wouldn't have to allow such commercial builds. At the same time, there will be a precedent. If sports betting is legalized, why wouldn't the state let casino companies set up more resorts throughout the region?
Daily Fantasy Sports May Hint at Future of Betting in Texas
Though Texas may not want to legalize sports betting at the risk of becoming a tourist destination for gamblers, it still doesn't feel like they'll hold off the arrival of it for that much longer. So much support is now in its corner that most think the 2022 elections could wind up favoring lawmakers advocating to push through sports betting initiatives by the end of 2023.
Aside from that, more attention is being paid to the fact that Daily Fantasy Sports continue to operate throughout the state. So unless Texas puts a stop to that—something they have also thus far been unwilling to do—the precedent for legal sports betting has, in a way, already been set.
Put another way: Thanks in part to Daily Fantasy Sports, legal sports betting in Texas may be a matter of when rather than an issue of if.
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