Texas enacts new NIL law, giving state’s college programs a competitive edge

Texas Governor Greg Abbott has signed House Bill 126 into law, a sweeping measure that allows the state’s universities to directly compensate student-athletes for the use of their name, image and likeness (NIL), potentially giving Texas college sports programs a significant advantage over out-of-state rivals.

The bill, which received a two-thirds majority in both chambers of the Texas Legislature, took effect immediately upon Abbott’s signature.

Under the new law, universities may offer NIL contracts to student-athletes aged 17 and older once they have enrolled in college. This marks a major shift from previous Texas law, which permitted NIL deals only through third-party brands and boosters, not directly from schools.

“Gov. Abbott was proud to sign HB 126 into law to ensure that Texas athletes are able to be properly compensated for their efforts,” said Andrew Mahaleris, Abbott’s press secretary, in a statement to KBTX. “As we head into a new recruiting season and athletic year, Gov. Abbott looks forward to Texas teams showcasing their talent across the country.” 

The law enables Texas universities to allocate up to $20.5 million annually from their revenue for athlete compensation, with some of those funds eligible for use in recruiting, a practice previously prohibited. The move comes as a national settlement in the House v. NCAA case is expected to usher in a new era of revenue sharing across college athletics beginning July 1, 2025.

Supporters of the bill, including Rep. Carl Tepper, who authored the legislation, say the measure is crucial for keeping Texas competitive in college sports.

“We will be killing college football in Texas if we do not pass this bill,” Tepper said in April.

The law also aligns Texas with similar recent moves in states like Ohio and Arkansas, where lawmakers have passed or are considering bills to allow direct payments or new fundraising mechanisms for college athletes. Meanwhile, other states such as Alabama and Georgia are exploring legislation to further incentivize student-athletes, including tax exemptions.

While the new law is expected to strengthen Texas schools’ recruiting efforts, questions remain about how long this advantage will last as other states move to adopt similar policies.

“I would imagine that would be a significant disadvantage for our football programs if everyone else in the country can do revenue sharing and we couldn’t,” said Texas A&M head coach Mike Elko at the SEC’s spring meetings.

With the landscape of college athletics rapidly evolving, Texas’ swift action positions its universities at the forefront of the new NIL era, at least for now. As the national settlement nears finalization, athletic departments across the state are preparing for a future where direct compensation and revenue sharing become the new standard in college sports.