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AUSTIN (CBSDFW.COM) –  Texas has reached a settlement with online daily fantasy sports site FanDuel, under which the company will stop accepting paid entries for cash prizes in the state on May 2.

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This agreement follows Attorney General Paxton’s January 19 opinion stating that paid online daily fantasy sports contests, like those FanDuel operates, are illegal under current Texas law.

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

Unlike some other states, Texas law only requires “partial chance” for something to be gambling; it does not require that chance predominate.

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Traditional fantasy sports leagues that are not operated by a third party for revenue are, as a general rule, legal under Texas law, according to a news release from the Texas Attorney General’s Office.  In those leagues, participants generally split any pot amongst themselves, so there is no house that takes a cut.

FanDuel will continue to operate its free games in Texas, but will stop accepting paid contest entries on May 2.

In return, the Office of the Attorney General agrees not to take any legal action against FanDuel in connection with the operation of its contests.

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