AUSTIN, Texas (Legal Newsline) — Texas Attorney General Ken Paxton has announced a settlement with FanDuel, an online daily fantasy sports site, that will force the company to stop accepting paid entries for cash prizes in the state in May.

The agreement comes after Paxton released an opinion that paid online daily fantasy sports contests are illegal under Texas law.

“I commend FanDuel for responsibly and pro-actively working with us to reach this settlement,” Paxton said. “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.”

Traditional fantasy sports leagues not run by a third party are generally deemed legal under Texas law, because the pot is split among the people involved. There is no house that takes a cut. Daily fantasy sports sites like FanDuel, however, take cuts to turn a profit as a business.

FanDuel will continue to manage free games in Texas but will no longer accept paid contest entries. In return, Paxton’s office agreed not to take legal action.

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