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Texas Teases

Will the Lone Star State join the gaming community?

Texas Teases

Texas Governor Greg Abbott did an about-face before the 2022 midterm elections by saying he would consider legalizing “a very professional entertainment option”

The rumors have been going around for quite some time—2023 could be the year that Texas passes casino gaming legislation. Full disclosure, I was born in Texas and lived my formative high school years in Southeast Texas, only a 30-minute drive from Louisiana’s Delta Downs racino and an hour from the casinos in Lake Charles. I want Texas to get this right. And with Texas’ status as a top state for business and quality of life, I have every belief that they will.

Texas is home to the fourth and fifth most populous metropolitan statistical areas (MSAs) in the country—Dallas-Fort Worth and Houston (7.7 million and 7.2 million people, respectively); San Antonio and Austin are both in the top 30 most populous MSAs. Each of these massive MSAs with their existing tourism infrastructure and their growing wealth should be able to support a first-class destination resort casino. In fact, of the top 30 MSAs in the U.S. that permit gaming, each hosts multiple casino gaming facilities within their markets.

However, even with the recent proliferation of skill-based gaming machines and social poker clubs in the state, casino gaming and sports betting are prohibited in the Texas Constitution. That constitution can only be amended through a two-thirds vote of the legislature, followed by voter approval. November 14 was the first day that legislators could file bills for the 88th Legislature, which convenes on January 10, 2023 and closes on May 29. In November Senator Carol Alvarado (D-Houston) introduced a bill that would legalize sports betting and casino gaming in Texas, but that bill has a long way to go.

So what will the final casino legislation look like? During the 2021 session, Rep. John Kuempel (R-Seguin) and Alvarado filed legislation to permit four destination resort casinos in the state’s four largest metro areas: Dallas-Fort Worth, Houston, San Antonio, and Austin. The bill sought to create a Texas Gaming Commission, would have imposed a 10 percent tax on table games and 25 percent on slots, permit the state’s federally recognized Native American tribes to offer full-scale casino gaming, permit horse and greyhound tracks to offer gaming, and would have also legalized sports betting.

In that same session, Rep. Joe Deshotel (D-Beaumont) filed a bill which provided for nine casino licenses to all be located within 200 miles of the Gulf of Mexico, including licenses for existing parimutuel licensees, all under the Texas Lottery. Levying an 18 percent tax rate on GGR, the funds were to provide funding for coastal protection and assistance for communities hit by catastrophic flooding. That bill received tacit backing of Speaker of the House Dade Phelan (R-Beaumont), whose district has been hard-hit by hurricanes in recent years. Both 2021 bills died, and everyone has since had the chance to regroup.

Governor Greg Abbott’s pre-election announcement that he would consider “a very professional entertainment option” signaled that the issue is on the table. Deshotel is retiring, to be replaced by his former chief of staff Christian “Manuel” Hayes. Will the newly elected Rep. Hayes carry on his former boss’ casino efforts and goal of helping disaster-ridden communities?

Speaker Phelan hasn’t made any public comments on the issue of late, but last December issued a statement saying, “These issues are best viewed through the prism of being long-term commitments rather than short-term revenue sources, and (he) believes they warrant a broader discussion on the economic impact that large entertainment investments can have on a community.”

Lieutenant Governor Dan Patrick has a track record of supporting job creation and economic development, and in February 2021 said in an interview on The Chad Hasty Show that “if you want to pitch your casinos or you pitch your sportsbooks, talk about jobs, talk about tourism.” Could we now see passage of casino bills which incorporate pieces of the previous ones? Or something different entirely?

However this turns out in 2023, I believe the legislature will continue to engage stakeholders and do its homework. I’ve spent the last nearly two decades working in the gaming industry and have seen both great successes and myriad mistakes made by well-meaning government entities. Success will be maximized by logical, forward-thinking vision that views resort casinos as major economic engines.

Small thinking and piecemeal legislation will result in undesirable projects with limited economic impacts. A thriving industry which creates good-paying jobs and spinoff benefits in the economy, contributes to communities, and helps the state and localities to meet funding goals is possible, and should be the only acceptable outcome. I am hopeful that this message is being heard in Austin, and that Texas can show the rest of the country how it’s done.

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