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No gambling expansion this session

This should not come as a surprise to anyone.


It’s a sure bet that when Texas lawmakers convene every two years, legislation will be proposed to expand gaming in the state.

This year, there are nearly a dozen pieces of legislation covering casino games, slot machines and eight-liners. And just like each time before, the bills face long odds of passing.

Prospects are so dim that the Texas Gaming Association isn’t bothering to actively support a bill drafted on its behalf, as it has done in each of the approximately 10 previous legislative sessions, Chairman Jack Pratt said. The association represents casino-resorts operator Las Vegas Sands Corp.

“We have nothing going on because we know that there is no possibility of getting anything passed in the Legislature (the way) it’s structured there currently,” Pratt said. “We just didn’t want to waste our time nor our money.”

Pratt was referring to the makeup of the Texas Legislature. After last fall’s elections, Republicans continue to outnumber Democrats by about 2-1. But the majority is viewed as the most conservative in recent memory. Lt. Gov. Dan Patrick also has come out against expanded gaming.


The Texas Gaming Association has endorsed casinos at large destination-resort properties that would cost $2 billion to $3 billion each to construct, Pratt said. It does not favor adding slots as a way to rescue struggling racetracks, including Retama Park in Selma.

“There’s no reason for us to bail them out,” Pratt said. “They’ve just got a poor business plan. They ought to bury it and go on.”

Andrea Young, president of Sam Houston Race Park, disagreed. Texas racetracks have been competing on an “unlevel playing field” with Louisiana and Oklahoma racetracks that allocate gaming money to purses — the money awarded to the highest finishers. The purses at those tracks are higher than those in Texas, and thus can attract better horses. Sam Houston is partly owned by racetrack and gaming giant Penn National Gaming Inc.

While Young conceded there’s not much momentum for gaming legislation, she said that hasn’t stopped Sam Houston Race Park from backing legislation. “Doing nothing is not really an option for us,” she said.

You can see in the paragraphs above one reason why gambling expansion never came close to passing in previous sessions when the conditions might have been more favorable. This session, I heard basically nothing from the usual suspects of gambling expansion. Not surprising, given tax cut mania and the other priorities expressed by the new gang, but different. As Pratt says elsewhere in the piece, you can expect these guys to be back again some day. Their economic argument, whatever you think about it, remains the same in good times and in bad. Maybe in 2017, if oil and gas prices are still low, it will have some sway. Just not this time.

On game rooms and gambling

Looks like Fort Bend County wants to follow in the footsteps of Harris County when it comes to dealing with game rooms.

Last weekend, Fort Bend County sheriff’s deputies raided the H-90 Game Room on U.S. 90A east of Richmond, hauling away 97 slot machines, interviewing and releasing about 30 customers and charging one employee with a misdemeanor.

Unlike many places that get shut down, though, the business that opened in July had not been the subject of any police calls for service.

The raid has prompted a discussion about how much of a threat game rooms actually pose to community safety.

Some Fort Bend residents had been pressing authorities to crack down on game rooms that sprouted up in the wake of Harris County’s enforcement of new rules targeting the establishments, often the scenes of shootings and other criminal activity. They didn’t want a proliferation of game rooms bringing the same problems to Fort Bend.

Sheriff Troy Nehls acknowledged that residents’ concerns prompted his department’s recent action, which involved four divisions of his office.

“We’ve received calls from the community, so we did what we could to address the issue,” the sheriff said. “This one was right off Highway 90, so it was more visible. Thus, we had more people calling concerned about the operation.”

Nehls said he takes game rooms seriously, but he played down their impact so far. He noted that he has seen no evidence of an uptick in violence, nor had there been any calls for police service at either the H-90 Game Room or another gambling parlor, on FM 359. It was open just a few months before voluntarily closing under pressure from nearby homeowners.


Other residents say authorities are wasting time cracking down on an activity they think should be legalized, even if it is only to discourage the gang activity that was often attracted to the cash-based operations in Harris County.

Larry Karson, a criminology professor at the University of Houston, said it’s the responsibility of police leaders not only to crack down on illegal activity, but to educate communities about the actual level of crime, particularly when an issue becomes a public debate.

“One generally expects any law enforcement official to recognize the concerns of the community,” Karson said. “If, based on that officer’s experience, it’s not quite as dangerous as might be assumed, he obviously needs to communicate that.”

The Texas Constitution bans most forms of gambling, but the poker-based eight-liners common to game rooms are legal to own as long as the prizes do not exceed $5 per play. Police, prosecutors and other Houston-area officials argue that most game rooms do not operate within those narrow rules, awarding larger cash sums illegally and drawing other criminal activity. To thwart enforcement of the state’s ban, officials say, many game rooms require paid memberships designed to keep out undercover officers.

Karson differentiated between the risk of crime at game rooms and at casinos, both of which attract robberies because of their cash payouts.

“You run into that security nightmare that legitimate casinos deal with by coordinating with police,” Karson said. “Any business that’s illegal doesn’t have that option. That leads to a potentially nasty cycle.”

As we know, Harris County has tightened its enforcement on game rooms thanks to some legislative help, and after surviving a lawsuit, enforcement is on in full swing. It’s not a surprise that some of this activity might cross the border into Fort Bend, or that Fort Bend might be a bit proactive about trying to stop it. I figure Fort Bend will get the legislative help it now seeks in expanding its authority against game rooms, much as Harris did in 2013, and I won’t be surprised if other counties follow suit.

What did surprise me in that story was the almost casual mention of the “other residents” who think game rooms should be legalized. I’m not sure if there are actual people making that case, or if that’s just sort of a clumsy shorthand for support for expanded gambling in Texas, as there wasn’t any further exploration of it. I wouldn’t have given it much more thought had I not also received this email from Houston Controller candidate Carroll Robinson, which discusses the very subject of game rooms and legalized gambling:

The Houston Chronicle has recently reported that “local investigations have revealed how lucrative the illegal gaming trade can be, providing operators with as much as $20,000 per day. With such establishments spread across some 700 strip centers in the county, their total proceeds could be larger than the [$1.55 billion] budget for all Harris County government.…”

Not only are illegal gaming rooms generating hundreds of millions of dollars per year in untaxed revenue, they are also magnets for crime. Wouldn’t it be better to legalize slot machines (at existing legal horse and dog racing tracks) and Casinos in Houston and allow the city to regulate them and collect extra revenues to pay for city services?

Legalizing slot machines at existing race tracks and legalizing casinos would also help eliminate illegal gaming rooms and the crime associated with them.
Even Metro would receive revenue from the increased sales tax revenue generated from legalized gaming.

The City of Houston should investigate and evaluate all its options for legalizing and regulating slot machines and casino gaming under its Home Rule Authority.

I can’t say I’ve seen many city candidates take a position on expanded gambling in Texas, as that’s a matter for the Legislature and not likely to directly intersect with Houston. Sam Houston Race Park is outside city limits, and I can’t imagine a casino being built here. I’m sure there would be some effect on the city if one or both of these things were to be legalized, but I doubt it would be much. I don’t know how much effect it would have on the game rooms, but my guess is that we’d still have them regardless. You can like the idea of expanded gambling or not – as you know, I’m very ambivalent – I just don’t think it has much to do with the game room issue.

Just a reminder that “more gambling” does not necessarily mean “more revenue”

If Atlantic City can go bust…

The winning streak has run cold for Atlantic City, N.J.

Earlier this week, the upscale Revel Casino Hotel announced it will close, bringing the total number of casinos in the city expected to close by the end of the year to four. Thousands of workers are confronting unemployment.

The state has long guaranteed Atlantic City a monopoly on gambling within New Jersey’s borders, but gambling revenues there have been declining due to increased competition from new casinos in neighboring states and the lingering effects of the financial crisis. The monthly report from the state Division of Gaming Enforcement issued Wednesday shows that the trend is continuing, as July’s take declined 7.7 percent year over year.

Pennsylvania, which only legalized casino gambling in the past decade, has replaced New Jersey as the state with the second-largest gambling industry. More casinos have been proposed in New York. Yet revenues have been disappointing across the region. In New Jersey, they have declined by around half from a high of $5.2 billion in 2006.

Most disappointing for investors has been the performance of the casinos’ new online gaming businesses. The prospect of online revenues has kept several casinos open despite declining income.

“A lot of these casinos have been unprofitable for quite some time,” said Alex Bumazhny, an analyst at Fitch Ratings.

Online gamblers haven’t anted up, though, and several casinos have folded. Bumazhny estimates that online gaming revenues for New Jersey businesses will total only around $125 million this year. Revel follows The Atlantic Club, which closed in January, and the Showboat and the Trump Plaza Hotel and Casino, also expected to close this year.

I like to note this sort of news item because as sure as the sun rises, at some point in the fall as the elections get settled and legislators start pre-filing bills, I’m going to get a press release from a pro-gambling expansion group touting the economic benefits of slot machines at horse racing tracks and/or casinos. Said press release and its accompanying economic study will point out the vast number of Texans that are currently gambling in Louisiana, New Mexico, Oklahoma, and other non-Texas states, and will lament the money that could have been spent and gambled right here. My point is that the casinos and riverboats and what have you in Louisiana and New Mexico and Oklahoma and wherever else won’t simply give up the business those traveling Texans bring them without a fight, and the competition they will bring to hold onto their existing customers as well as lure new ones may possibly have a downward effect on those numbers in those press releases and economic studies. This isn’t about whether one does support or should support expanded gambling in Texas – as you well know by now, I am deeply ambivalent about it. It’s just a reminder to keep a sense of perspective when the issue heats up as it always does every two years.

That’ll just about do it for gambling this session

Sen. Carona calls the chances “slim”, but it sounds like slim just left town to me.

[Sen. John] Carona, chairman of the Senate’s Business and Commerce Committee, said last week he expected to vote his sweeping gambling bill out of his committee Tuesday. But the morning committee hearing came and went, and Carona declined to bring the bill up for a vote.

Carona’s fellow senators told him they didn’t want to take a vote on the controversial topic if it doesn’t have much of a chance, especially in the Texas House, Carona said.

State Rep. John Kuempel, R-Seguin, agreed that there is not much of an appetite for gambling in the House this year.

“I don’t think it has a great chance over here,” said Kuempel, who supports expanded gambling to bring additional revenue to Texas. “It’s challenged in the 83rd legislative session in the Texas House.”


Even if his legislation fails this session, Carona said a lot has been accomplished in the past several weeks. Notably, two often clashing pro-gambling interests — those seeking slot machines at racetracks and those advocating casinos — have worked well together on a broad gambling bill.

“Time is always your enemy in a legislative session,” Carona said, adding that he is not ready to pronounce gambling dead just yet.

Sure sounds dead to me, but as always, you never know. There will almost certainly be a special session to deal with school finance next year, however, and barring anything unexpected from the Supreme Court the Lege will need to find more revenue for the schools, so expect the subject to be on the front burner. Having the cover of a court order sufficed to get the business margins tax created, and it could well do the same for some kind of gambling measure. If nothing else, we’re going to have to pay for Rick Perry’s irresponsible tax cuts somehow. So don’t bury expanded gambling too deeply just yet.

Senate to consider expanded gambling

I didn’t really take it seriously when I heard that Sen. John Carona had filed his own gambling expansion legislation, but it seems it’s got some traction.

Sen. John Carona

A proposal from Dallas Republican Sen. John Carona would establish a commission that licenses 21 casinos throughout the state, including three mega-resorts in Bexar, Dallas and Tarrant counties and two smaller locations at Retama Park in San Antonio and Sam Houston Race Park in Houston.

Carona, chairman of the Senate Business and Commerce committee, told reporters Monday the proposal would keep the estimated $3 billion Texans are spending at casinos in bordering states inside state coffers while creating more than 75,000 jobs. The committee, which will consider the measure Wednesday, is likely to pass the proposal on to the full Senate, he said.

“No one can really determine yet what chance of ultimate passage it has this session,” Carona said in an interview in his Capitol office, noting his vote tally indicates both chambers are a few votes shy of approval. “It is a difficult bill because of the presumed political consequences of it, but the polls show there is overwhelming public support.”

House Appropriations Committee Chairman Jim Pitts, R-Waxahachie, who has supported similar measures in the past, said the chances of gambling passing the Legislature this session are “slim-to-none.”

However, Pitts said the final decision on the state’s school finance trial could provide a boost for gambling in Texas. If the current ruling – that the state’s public education funding is inadequate and unconstitutional – stands, lawmakers will be searching for a new source of revenue that does not create a new tax, he said.


Under Carona’s proposal, three casinos would be licensed in coastal counties, 12 would be reserved for racetracks and three would be designated for federally recognized Native American tribes.

The majority of revenue generated – 85 percent – would be dedicated to the Property Tax Relief Fund, which supports local programs, such as public education and emergency services. Remaining revenue would belong to city and county governments and fund programs to counter gambling problems. The constitutional amendment must gain two-thirds support of the House and Senate before moving on to voters in a statewide referendum.

Sen. Carona’s measure is SJR 64. If you’ll pardon the expression, the smart money is on nothing happening, as has always been the case before. The Trib goes into some more detail.

[Carona has] been working on casino legislation for the last few sessions, but his plan this year is much more comprehensive. In the past, gaming bills have either had the support of casinos or race tracks. But not both.

That split support had doomed the efforts. This time, Carona said, both groups are on board.

“Let me make clear that this legislation has very broad support,” he said. “While not all stakeholder concerns are resolved in this bill, we have come a long way. And it is my hope that we’ll continue to work together to bring forward a bill that is best for Texas.”

The senator said his legislation is still fluid — many changes could be made. So for now, there’s no price tag on how much money casino gambling would generate. But billions are expected from the three giant destination resort casinos and 18 other facilities that would be authorized under his resolution.


But hey, if you want to pass something in the Legislature, you need to do one of two things: Show what problem the legislation would fix or, as casino supporters did this week, show an enemy that would be defeated by this bill. And according to casino supporters, we have met the enemy — and it is Oklahoma.

“In particular, we’re hemorrhaging money to Oklahoma,” said John Montford of Let Texans Decide. “Not only do they recruit our best high school football players. They also snooker us each day by building their gaming empire on the backs of Texans.”

Texas Association of Business President Bill Hammond was even less diplomatic when explaining what he sees as the benefits of casinos in Texas.

“Texans will no longer have to travel to third-world countries in order to game,” Hammond joked. “It’s unfair and unconscionable that we are making these people travel to these third-world counties that surround Texas.”

The state’s hatred of Oklahoma aside, there are still several roadblocks to casinos in Texas. Carona’s resolution needs a two-thirds vote in the House and Senate before it heads to the ballot as a constitutional amendment this November.

And on the Senate side, Jane Nelson, R-Flower Mound, has a history of threatening a filibuster over gaming legislation. As debates have neared in the past, she has even put tennis shoes on her desk on the Senate floor to let people know she’s ready to go if needed.

And, of course, if a resolution passes the House and Senate, then there’s the final statewide vote — a vote that will certainly include groups opposing casinos on moral grounds along with some backed by those neighboring states’ casinos that don’t want to lose business.

The 100-vote threshhold in the House is pretty daunting. Speaker Joe Straus will not be an ally, since he stays away from gambling bills to avoid talk about conflicts of interest, and there’s likely to be enough social conservative opposition to make it at best a close call. Still, even getting a bill out of committee in the Senate is farther than the gambling expansion forces have gone in the past. If Carona’s bill can actually make it to the floor in both chambers, who knows? Stranger things have happened.

Gambling interests narrow their focus

This is usually how it goes.

Let Texans Decide, a pro-gambling organization that is fronted by former state Sen. John Montford, was aligned at the beginning of the 2013 legislative session with big casino interests in a call for full-scale casino gambling in Texas, whether at horse and dog tracks or at yet-to-be-built destination resort casinos.

But as the session progressed, the chances of passing a measure for casino gambling appeared to grow slimmer. And now, Montford’s group, which advocated legislation in 2011 to permit slot machines at tracks, has returned to its old way of thinking.

“This was the position we originally took,” Montford said. “I do believe that this is a reasonable approach.”

The goal has always been the same: to get a gambling-related bill through the Legislature and have the matter put in front of the voters of Texas, the former senator said.


While it is always difficult to gain approval for gambling legislation from the Texas Legislature, some factors at play now could help, Montford said.

For one, there is growing support among Republicans in the House for slot machines at racetracks, he said. Recently, John Kuempel of Seguin and Rep. Ralph Sheffield of Temple signed on to a slot bill by Rep. Richard Raymond, D-Laredo. Montford said he was encouraged that more members are willing to allow constituents to vote on a gambling initiative.

Montford is also happy that a slots-at-tracks measure by Sen. Juan “Chuy” Hinojosa, D-McAllen, has been assigned to the Senate Finance Committee, where more senators could hear the testimony.

See here and here to compare what’s being said now to what was said before. I have my doubts that this was a consensus decision, since the casino interests and the horse racing interests have generally not been on the same page in the past, but whatever. I’ll believe there’s movement when something gets passed out of committee. As it happens, while there are three pieces of legislation relating to expanded gambling – the latest, SJR64 by Sen. John Carona, was filed this week – none have yet been scheduled for committee hearings.

The other players in the game, notably the big Las Vegas casino companies, might be quiet now, but that doesn’t mean they have lost hope in the long run.

Some gambling proponents could see an opportunity if there is a special legislative session, as expected, focusing on financing public schools.

If lawmakers are scrambling in a special session for new money to comply with an expected court order to put more money into education, then casinos are “more optimistic for serious consideration,” said John Pitts, a lobbyist for several large casino interests.

Maybe. A scenario where more revenue is required and there’s no two ways around it is probably a prerequisite for any expansion of gambling to happen. I still think it’s highly unlikely, but I suppose anything is possible. I wouldn’t bet on it, though. The equally pessimistic Burka has more.

It may not matter where the casinos are

I don’t know if the gambling industry will finally gain traction in their effort to legally expand operations in Texas, but I do wonder if they’re fighting the last war and missing out on what’s happening now elsewhere in the country.

Silicon Valley is betting that online gambling is its next billion-dollar business, with developers across the industry turning casual games into occasions for adults to wager.

At the moment these games are aimed overseas, where attitudes toward gambling are more relaxed and online betting is generally legal, and extremely lucrative. But game companies, from small teams to Facebook and Zynga, have their eye on the ultimate prize: the rich American market, where most types of real-money online wagers have been cleared by the Justice Department.

Two states, Nevada and Delaware, are already laying the groundwork for virtual gambling. Within months they will most likely be joined by New Jersey.

Bills have also been introduced in Mississippi, Iowa, California and other states, driven by the realization that online gambling could bring in streams of tax revenue. In Iowa alone, online gambling proponents estimated that 150,000 residents were playing poker illegally.

Since that story was published, the states of Nevada and New Jersey have passed their laws to allow online gambling. I’m sure others will follow. Now, online gambling will never truly replace casinos. No matter how good the online experience may become, it won’t include low-cost buffets, cocktail waitresses, or Wayne Newton. Some things you still have to do in person to get the full effect. But online gambling is sure to cut into the profit margins of casinos, and perhaps reduce the overall market for them. If so, that weakens the case for expanded gambling here, at least as far as the current proposals for casinos and slot machines at racetracks go. Of course, the current proposals can be amended to allow a vote on online gambling. I don’t know if the spirit of cooperation that exists now can handle that, but who knows. In any event, this is something to keep an eye on.

Gambling has always polled well

In addition to their self-reported efforts to work together, the pro-gambling expansion forces have released a poll showing public sentiment on their side.

A poll paid for by Let Texans Decide, a pro-gambling group made up of interests that wanted slot machines at racetracks last session, asked 1,001 registered voters in Texas: “Regardless of your views on gambling, would you support or oppose allowing Texas voters to decide on a constitutional amendment to allow the expansion of gaming in Texas?”

The answer was a loud “yes.”

Of all respondents, 82 percent said they’d support being able to vote on a constitutional amendment to allow gambling, and 78 percent of Republican primary voters — the folks that, let’s face it, decide our statewide elections — also supported the idea of putting gambling to a public vote, according to poll results.


The poll was conducted by Wilson Perkins Allen Opinion Research, the same firm that did the surveys for U.S. Sen. Ted Cruz during his run for the Senate last year.

Respondents were contacted by phone between Jan. 27 and Jan. 30. The margin of error is ±3.1 percent, with an oversample sufficient to achieve 511 Republican primary voters with a margin of error +4.4 percent.

You can see the poll memo here, and crosstabs can be found here. There are two points to note. One is that asking people whether they favor voting on something is not the same as asking them if they favor the thing they’d be voting on. I suspect most propositions would get a favorable response to the question “should the people be allowed to vote on this”. Two, previous polls on the subject have generally shown a positive response from Texans towards expanded gambling. This 2009 Baselice poll found that 63% of respondents favored allowing slot machines at horse and dog racetracks, with 82% being in favor of being allowed to vote on the question. This 2010 Texans for Economic Development poll found that people preferred slot machines at racetracks as a way to raise revenue by a 57-22 margin over increasing taxes. None of that has made any difference in the Legislature in the past, and the safe bet is that this poll won’t make any difference, either. But there you have it anyway. Hair Balls has more.

One big happy pro-gambling expansion family

If the pro-gambling forces in the state all join hands and agree to work together, will this finally be the year that gambling expansion gets a vote? Maybe.

John Montford, chairman of Let Texans Decide, a coalition of gaming companies, track operators, trade groups and others who want Texas to legalize casinos, has met with groups representing casino and slot machine interests and is optimistic that they could agree on potential legislation that would bring a constitutional amendment on gambling before Texas voters.

“We’re working hard to build coalitions in favor of a referendum,” said Montford, a former state senator from Lubbock and the author of the legislation that created the Texas Lottery. “The members of the Legislature don’t have to be pro- or anti-gaming to support a referendum. We want people to have a fair say so.”

Efforts at such collaboration are not new in the industry, though they haven’t proved successful in bringing a proposed amendment to voters on creating casinos, allowing slot machines or other such gambling measures.

But those interests haven’t always been on the same page. Some previous efforts have come undone when race track and casino proponents battled to get a competitive advantage built into proposals pending in the Legislature.

In recent sessions, conflict between bills that would have allowed slot machines at horse racing tracks and those that would allow resort casinos have been part of the reason no such legislation made progress. Competing lobbyists and dollars sent mixed messages to legislators who may not have been keen to promote gambling in the first place out of fear of alienating anti-gaming voters.

See here for the story so far. Hard to know what to make of this, since Montford appears to be the sole person speaking on behalf of Let Texans Decide. The story notes that Sen. Rodney Ellis’ SJR6, which would allow a vote on various forms of gambling, is what’s being talked about now. It also notes that the horse racing interests are pursuing their own bill, though they may be willing to support SJR6. So yeah, not clear whether this session represents a change of tactics or just more of the same and hoping for a different outcome.

Time once again to talk about expanded gambling

There’s a legislative session coming up, right? That can only mean one thing: A new effort to expand gambling in Texas.

Track and gaming interests say voters should be allowed to decide whether to give Texas a shot at the benefits of $2.5 billion they say is wagered in surrounding states annually by Texans.

“They are taking our money to fund their programs, and I think they frankly have just been smarter than we have. My hat’s off to ’em,” said John Montford, a former state Senate Finance Committee chairman. He carried the legislation that established Texas’ lottery and now is involved in the casino battle.

Critics doubt the figures and call expanded gaming a losing proposition for Texas, saying gaming would take money from the pockets of people who can ill afford it.

Montford has been hired by the partnership of Penn National Gaming and Sam Houston Race Park to push the gambling expansion under the name of Let Texans Decide.

Among supporters listed on the group’s website are Valley Race Park, the Texas Association of Business, the Greater San Antonio Chamber of Commerce, Greater Houston Women’s chamber, Houston Hispanic chamber and Houston Northwest.

Remember the name Let Texans Decide, whose Facebook page is here. Whatever arguments or talking points you hear for expanding gambling in Texas will have come from them.

The Legislature has repeatedly turned down the chance to amend the state constitution to expand gambling, which would require a two-thirds vote of lawmakers before going on a state ballot.

The battle doesn’t look to be any easier this time.

State lawmakers who faced a huge revenue shortfall in their last regular session in 2011 now are seeing a recovering economy, and the House and Senate are no less conservative. Several incoming senators are viewed as further right than their predecessors.

“Before this session, there was probably a shot at passing something like that through the Senate. I think with the new members that we have in the Senate, it’s probably less likely than it was before. And I think it is very unlikely that either one of those proposals would get through the House,” said Senate Finance Committee Chairman Tommy Williams, R-The Woodlands, when asked about slots at tracks or casinos. Williams said he has never voted to expand gaming in Texas, adding that revenue figures presented in years past by supporters of the idea appeared unrealistic.

“I don’t have a big, huge moral objection to it, but I’m not sure it’s for the benefit of the state,” Williams said.

Dale Craymer, president of the business-based Texas Taxpayers and Research Association, said, “One of the considerations for casino gambling is the fact that it raises revenue, and that’s a big issue during a session when they are looking for revenue. This is not going to be a session where they are looking for revenue.”

Yes, God forbid we should seek out any new revenue sources any time outside of a severe crisis, not that we do then either. I’m not saying that more gambling is the way we should go to raise more revenue for the state, I’m just saying we’re a million miles from being at a point where we can say that we don’t need any more revenue sources. Between water, transportation, Medicaid, mental health services, education, and a whole host of other needs, there are plenty of issues in need of more funding.

Texans for Public Justice, which tracks money in politics, found that gambling interests donated $1.6 million to Texas political action committees and candidates going into the 2010 elections.

TPJ, in a check of reports available for this year, found top gambling PACs from 2010 donated more than $904,000 this cycle. The total included only reports covering up until eight days before the election, so the total is sure to be higher.

According to Let Texans Decide, the Chickasaws and Choctaws, which have Oklahoma casino operations, have given Texas candidates five times as much as they gave Oklahoma candidates since 2008 — more than $807,000 in Texas compared to nearly $152,000 in Oklahoma. The Chickasaws also have invested in a Grand Prairie track.

There may not be money for the things Texans need, but there’s always money for the campaigns. As always, keep an eye on that as the debate progresses. There’s a scandal lurking out there somewhere.

More on the economic effect of casinos

I’m just noting this for the record, since I am sure that gambling expansion will come up again in The Lege this spring.

Melissa Kearney, an economist at the University of Maryland, released a literature review in 2005 summarizing work on gambling done to date. A study by Maryland’s William Evans and Julie Topoleski that focused on Indian casinos found that they created a significant number of jobs. The ratio of jobs available to adults increased, on average, by 5 percent. This in turn lead to a 2 percent decline in mortality, as residents’ economic conditions improved.

But the casinos also lead to a plethora of social ills, including increased substance abuse, mental illness and suicide, violent crime, auto theft and larceny, and bankruptcy. The latter three all increased by 10 percent in communities that allowed gambling.

Other work backs up the crime finding. The University of Georgia’s Earl Grinols, Baylor’s David Mustard, and the University of Illinois’ Cynthia Dilley found that 8 percent of crime in counties with casinos was attributable to their presence, a crime increase that cost residents, on average, $65 a year.

And the bankruptcy finding has been replicated as well. The St. Louis Fed’s Thomas Garrett and Mark Nichols found that Mississippi riverboat gambling increases bankruptcies not just in Mississippi, but in counties outside the state where many residents gamble in Mississippi. The effect was largest in neighboring states, with the Mississippi casinos responsible with a 0.24 percentage point increase in bankruptcy filings. Interestingly, other casinos — such as Las Vegas, Atlantic City, and so forth — didn’t have statistically significant effects on other areas’ bankruptcy rates.

Unsurprisingly, legalized gambling also exacerbates problems with gambling addictions. The National Gambling Impact Study Commission found that having a casino within 50 miles doubles one’s likelihood to become a problem gambler. That suggests that the new DC-adjacent Maryland casino could create major addiction problems here in the District.

The evidence on casino gambling’s distributional impact is much weaker than that concerning state lotteries, but there is extensive evidence that the latter amounts to a regressive tax, given that lottery ticket purchasers are disproportionately poor. But some evidence — admittedly from industry groups — suggests that casino-goers are richer than the average American, so the story could be quite different than with lotteries.

But as with the liquor industry, much if not most of the gambling industry’s revenue come from addicts. Grinols estimates that 52 percent of revenue at the typical casino comes from problem gamblers, while an Ontario study put the figure at 35 percent and a Louisiana one at 42 percent. So even if gambling takes more money from the middle-class than the poor, it largely takes that money from middle-class people who aren’t exactly rationally willing to spend it.

Casinos aren’t even a particularly good source of tax revenue. Kearney notes that a number of studies have found that Indian casinos cannibalize business at nearby restaurants and bars, and in so doing actually reduce state tax revenue.

Some of these studies are several years old, so it is certainly possible that things have changed. I’m sure the casinos and racetracks will have their own data to add to the debate as well. Given that there’s already a lot of casino-like gambling going on in Texas, it may be that we’re already suffering most of the ill effects we’d see with casinos without getting any of the benefits. Like I said, I’m just noting this for future reference when the subject comes up again.

Casinos expanding nationally

I have no idea what the political or budgetary climate will be like for the gambling industry here in Texas when the Lege next convenes in 2013, but they have been gaining a lot of ground elsewhere in the country.

You got to know when to hold em...

States have embraced casinos, after years of trepidation about their societal costs, for two simple reasons: a promise of a rich new revenue source, plus the possibility of stimulating tourism.

“They are faced with tough decisions. They are in recession … And we pay taxes far over and above normal taxes,” said Frank Fahrenkopf, president of the American Gaming Association.

Last week alone, Genting’s new gambling parlor at Aqueduct, now limited to 4,500 video slot machines and another 500 electronic table games, made nearly $13 million — putting the “racino” on pace to make $676 million per year, with 44 percent of that take going to a state education fund.

And that total is nothing compared to the $1.4 to $2 billion per year Genting predicts it would bring in at the huge complex it is planning in Miami.

Some experts, however, have questioned whether revenue bonanzas that large are realistic, and say states should be cautious about giving up too much to lure these projects. Competition for a limited pool of gambling and tourism dollars is already fierce, and recent years haven’t been kind to casinos.

Nevada’s larger casinos lost $4 billion in 2011, according to a report released this month by the state’s Gaming Control Board, as the state continued to feel the effects of the global economic slump.

As gambling options have increased in the East, revenue has slid substantially at the pair of Indian tribe-owned casinos in Connecticut and declined by a dramatic 30 percent in Atlantic City, which has lost customers in droves to the new casinos in nearby Philadelphia, according to David Schwartz, director of the Center for Gaming Research at the University of Nevada Las Vegas.

Other than that one mention of Nevada, the story is entirely East Coast-focused, so I can’t say what kind of action there may be in these parts. No question, Texas is a big prize, and I’m sure there will be yet another large push for casinos, slot machines at racetracks, or both. There’s also been a push for online gambling of late, which may add a new wrinkle to the usual legislative battle. As always, worth keeping an eye on.

States looking at online gambling

Until the economy returns to the point where states aren’t completely strapped for revenue, I expect them to look at all possible sources of new money.

It’s an idea gaining currency around the country: virtual gambling as part of the antidote to local budget woes. The District of Columbia is the first to legalize it, while Iowa is studying it, and bills are pending in places like California and Massachusetts.

But the states may run into trouble with the Justice Department, which has been cracking down on all forms of Internet gambling. And their efforts have given rise to critics who say legalized online gambling will promote addictive wagering and lead to personal debt troubles.

The states say they will put safeguards in place to deal with the potential social ills. And they say they need the money from online play, which will supplement the taxes they already receive from gambling at horse tracks, poker houses and brick-and-mortar casinos.

“States had looked at this haphazardly and not very energetically until the Great Recession hit, but now they’re desperate for money,” said I. Nelson Rose, a professor at Whittier Law School, where he specializes in gambling issues.

When it comes to taxing gambling, he said, “the thing they have left is the Internet.”

I don’t really expect this to come up in the Texas Lege in 2013, because casino and horse racing interests have too much at stake to let it happen. While I am not an advocate of expanded gambling myself, if it ever does happen in Texas I would prefer it to be in the form of real casinos and/or slot machines at racetracks, on the grounds that they would provide more jobs than online gambling. Having said that, once this is up and running somewhere, it’s not really clear to me how you could prevent someone in Texas, or anywhere else, from playing.

There are other ways that a state could leverage the Internet to feed its own gambling habit:

Some states, including New York and North Dakota, already sell lottery subscriptions online. Since 2005, New York has offered a subscription service that allows people in the state to enter a string of Lotto or Mega Millions drawings. The state says 100,000 people subscribe.

New York is exploring whether to allow people to draw from an escrow account when they decide to buy into a single drawing — say, when the jackpot reaches alluring levels.

Again, I can’t recall hearing of anything like this in Texas. Unlike the virtual casinos, I could imagine something like this being implemented by the Texas Lottery Commission, without direct input from the Lege. I wonder if they haven’t thought of it, or if they think it’s illegal for them to try it. Anyone know anything about that?

The racetracks have given up on gambling for this session

Here’s a clear answer for those of you who may have been holding out some hope for an expansion of gambling.

Retama Park officials have all but lost hope that lawmakers will act before the end of the regular legislative session to let voters decide whether to legalize slot machines at state racetracks.

While a gambling bill could be taken up in a special session this summer, any delays only would prolong the agony for money-losing Retama and other racetracks.

The tracks depicted this legislative session as do-or-die time for saving Texas’ racing industry, while pitching video-lottery terminals as one answer to the state’s fiscal problems.

“The real question to me is how long would the industry be able to survive without getting legislation?” Retama Park CEO Bryan Brown said. “I don’t think the industry will go away tomorrow or next week or next year or two years from now. But little by little, it (will).”


A spokesman for Sen. Juan Hinjosa, D-McAllen, who co-authored a resolution to expand gaming at 13 racetracks, confirmed that proposals are “effectively dead.”

A Senate resolution never got out of committee. A house resolution made it out of committee, but no further action has occurred.

The proposals could never muster much support despite polls that showed a majority of voters favored expanded gaming.

So much for that special committee. Modulo any conspiracy theories, we’re done here. As I’ve said before, if the racetracks really couldn’t survive without slot machines, then I don’t think they were truly viable for the long term anyway. Frankly, I expect to see them again in 2013 saying more or less the same things they’re saying now.

Some gambling advances in the House

It’s probably too little too late, but you never know.

A Texas House committee surprised the casino lobby Friday night when it voted out legislation that would allow video lottery terminals — slot machines — at state racetracks and Indian reservations. The casinos were left behind.

Casino interests wanted any legislation approved by the House Licensing and Administrative Procedures Committee to also allow destination casinos in major cities and on the state’s barrier islands.

Rep. Mike “Tuffy” Hamilton, R-Mauriceville, said he still doesn’t have the 100 votes required in the House to advance the constitutional amendment his committee approved.


The bill approved by the committee includes a constitutional amendment and the legislation putting it into effect if it passes. Those bills, by Rep. Beverly Woolley, R-Houston, would allow VLTs at dog and horse tracks and on reservations and would raise $548.2 million for the next budget.

The legislation in question is HJR111 and HB2111. I still don’t see any evidence that the Senate is willing or able to pass similar legislation, and without assurance of at least a vote in the Senate it’s not clear that enough House members will commit to voting for it. So as always, I don’t really expect anything to happen. Click over to the link to see statements from the casinos (short version: boo!) and the racetracks (short version: yay!) about this development.

House says it may be close to approving expanded gambling

This would be as far as they’ve gotten in recent sessions.

Rep. Mike “Tuffy” Hamilton, R-Mauriceville, who chairs the Licensing and Administrative Procedures committee, said he is close to having enough votes to pass his ever-morphing gambling bill.

As Hamilton seeks to gather a comfortable number of “aye” votes, he and his committee members have been working to change the bill to make it more palatable for on-the-fence lawmakers who might oppose slot machines at race tracks and full-scale casinos at various places across Texas.

“I think that we have a really good chance right now,” Hamilton said. “We’re really close in the numbers.”

One way to gain support in this revenue-hungry Legislature is to promise to feed the state coffers.

Hamilton said he expects the bill to add about $3 billion of general revenue in the 2012-2013 biennium. The bulk of the money would come from $2.4 billion in licensing fees from groups seeking to slots at race tracks and would-be casino operators.

Hard to know what that means. I guess we’ll find out when and if it gets voted out of committee. Of course, Sen. Robert Duncan says there’s no support for gambling in his committee, so this may all be academic. My expectation is the same as before, that ultimately no action is taken.

Gambling interests tout job creation benefits

From the inbox:


Confirms Texans Continue To Spend Billions Gaming in Neighboring States

AUSTIN, Texas – Win For Texas released a new report today outlining the specific regions and sectors of the 77,500 new, permanent jobs that will be created when slots are allowed at Texas horse and greyhound tracks and recognized Indian reservations. TXP, a Texas economic policy consulting group, prepared the study.

The study also details the $2.7 billion dollars Texans spend on gaming in a seven state region every year. TXP estimates that $2.2 billion of this “leakage” could be kept here simply by allowing slot machines at existing racetracks and Indian reservations.

“TXP estimates that approximately $2.4 billion in gaming revenue (and $3.8 billion total) would appear in-state by the end of 2013,” said TXP President, Jon Hockenyos. “This in turn would create $8.5 billion in total economic activity, $2.6 billion in earnings, and about 77,500 permanent jobs.”

The new report breaks down the specific economic and job creation into five regions: Austin Area, DFW, Houston and the Rest of Texas.

“The economic benefits of implementing slots are well-distributed across the state, as Dallas-Fort Worth and Houston each stand to gain close to 20,000 permanent jobs, Austin and San Antonio will realize approximately 10,000, and the balance is distributed across the rest of Texas,” said Hockenyos.

The legislation that would bring this proposal to Texas voters to decide is HJR 111/ SJR 33. The enabling legislation that details the implementation and oversight are HB 2111/ SB 1118.

The study was commissioned by Win For Texas and is attached in its entirety. For more information about this proposal or Win For Texas, please visit

Please see the report for your region’s specific benefits. The TXP report is attached and may also be downloaded here:

I will simply note that TXP issued a similar report in 2009, which I blogged about here. I’ll leave it to you do compare the two and see what differences there are. Hey, we’ll need something for all those soon to be unemployed people to do.

As for the ubiquitous question of gambling’s prospects in the Lege, it doesn’t look any clearer now than it did before the session. The good news for gambling interests is that a consensus bill may emerge from the House.

A Texas House committee will listen to several gambling proposals at a hearing today , and in the coming days, the chairman of the committee will take all the proposals and roll them into one measure.

The forthcoming piece of all-encompassing legislation by Rep. Mike “Tuffy” Hamilton, R-Mauriceville, could lead to seven new Las Vegas-style casinos, slot machines at 13 horse and dog tracks across the state, slots at a few Indian reservations and slots at bingo halls across Texas, he said.

“Something for everybody,” Hamilton said. “We’ll put them all together.”

But there are competing gambling interests in Texas, and getting them to work with one another could prove difficult; casino proponents and the group wanting slots at tracks have not been able to work together this session or in sessions past.

There are also pro-gambling groups representing bingo halls and Indian reservations.

Hamilton, though, said he can get them all together.

Asked how he’d reach a consensus among the competing groups, Hamilton said, “Because I’m the chairman, and there will be just one bill passed out of committee.”

Whether that’s a bill that makes the casino interests, the racetrack interests, and the Indian tribes happy or one that makes some or all of them feel disgruntled remains to be seen. It’s also not clear that this consensus bill, or any other gambling bill, will get a hearing in the Senate.

While a new statewide poll shows that 86 percent of Texans believe the public should vote on whether to legalize casinos, an influential state Senate chairman with jurisdiction over gambling said Monday he has no intention of advancing the necessary legislation.

“There is no support in my committee,” said state Sen. Robert Duncan, R-Lubbock. “I just don’t think there are the votes in the Senate. I don’t see any chance of passage.”

Duncan’s opposition signals almost insurmountable odds for the expansion of gambling in Texas, despite the industry’s hopes that lawmakers would look favorably upon casinos this year as a solution to the state’s fiscal crisis.

So far, Lt. Gov. David Dewhurst has referred all gambling resolutions and bills filed in the Texas Senate to the State Affairs Committee, which Duncan chairs.

His spokesman, Mike Walz, said Dewhurst also likely would refer all “stand-alone” gambling bills passed by the House to Duncan’s committee. He noted that the issue could be attached to other significant legislation that traditionally is heard by other committees.

So the door isn’t completely closed, but it’s far from wide open. I thought gambling’s odds may have improved somewhat after the terribly austere Pitts and Ogden budgets first surfaced, but this doesn’t lend support to that thesis.

As for the poll mentioned in the story, there’s no details or references to the poll data, and I’m not interested in seeking them out. We’ve seen plenty of polling data that suggests Texans support the idea, so this is no revelation. I still think the fundamental issue is a lack of legislators that support it. If Hamilton’s “consensus” bill never makes it to the House floor, that will tell you all you need to know. The Trib, Texas Politics, and Postcards have more.

Legislation to allow slot machines filed

Fresh from the inbox:


AUSTIN, Texas — Texas State Senator Juan “Chuy” Hinojosa (D-McAllen) and Texas State Representative Beverly Woolley (R-Houston) filed legislation today to allow Texas voters to decide whether to allow slot machines at existing horse and greyhound tracks along with federally recognized Indian reservations.

Both Legislators filed Joint Resolutions (HJR 111, SJR 33) that would trigger statewide constitutional amendment elections as well as the corresponding enabling legislation (HB 2111, SB 1118) detailing the proposal.

“For years Texas has missed out on billions of dollars in gaming and entertainment revenues while neighboring states pocket the winnings,” said Senator Hinojosa. “This proposal is the first major revenue generating proposal of this session – it will help keep the money we lose to other states in Texas, and put new revenues on the table without increasing taxes.”

Economic studies indicate that the legislation as proposed would bring in about $1 billion a year in tax revenue and create more than 77,000 Texas jobs across a wide variety of sectors. Currently, Texas loses revenue to Louisiana, Oklahoma and New Mexico at a rate of $2.5 billion a year.

“The people of Texas should have the opportunity to decide whether or not to add slot machines to Texas’ racetracks and federally recognized Indian reservations,” said Representative Woolley. “This legislation gives Texans a voice to decide our economic future.”

In a recent poll conducted by Baselice and Associates, Inc., 82 percent of Texas voters favored the right to vote on adding slot machines to racetracks and federally recognized Indian reservations. Sixty four percent favored the specific proposal. Support was evenly spread across all partisan and demographic subgroups.

For more information, please visit

Here’s HJR 111, SJR 33, HB 2111, and SB 1118. You can read more about that Baselice poll here; a similar poll from 2009 found a nearly identical result. Finally, here’s a DMN story about the newly-filed bills.

You know what my opinion is of how likely any such measure makes it out of the Lege, so I’ll spare you another accounting of it. I will say this, though. Lately, we’ve started to see Republican legislators not only embrace the idea of using at least some of the Rainy Day Fund to ease the budget cuts a bit, we’ve also seen one Republican make the case for some form of tax increases, too. Sen. Deuell is still out on a pretty lonely limb right now, but the mere fact that he’s there is remarkable. I certainly wasn’t expecting it. As such, I must consider the possibility that I’m overestimating Republican resistance to gambling legislation. I still want to see some news story showing new House members being on board with this, or former opponents of gambling stating their willingness to vote for a particular measure this time around before I really change my mind. But for the first time, I’m beginning to think that it’s within the realm of the possible that something might pass. Postcards has more.

UPDATE: And now there’s a casino bill, too.

Rep. José Menéndez, D-San Antonio, filed a casino gambling bill in the Texas House. He filed it hours after Rep. Beverly Woolley, R-Houston, filed another bill that would allow slot machines at racetracks.

Companion bills were also filed in the Senate. Sens. Juan “Chuy” Hinojosa, D-McAllen, and Jeff Wentworth, R-San Antonio, filed the slots bill. And casino proponents said Sen. Rodney Ellis, D-Houston, filed a casino bill.

House Joint Resolution 112, which is supported by the Texas Gaming Association, would call for an election on a constitutional amendment that would allow the creation of a five-person Texas Gaming Commission. A fiscal note has not been published.

Once created, the Texas Gaming Commission would issue up to eight licenses to operate slot machines at racetracks.

It also would issue up to six licenses for casino gaming in different urban areas in Texas.

Additionally, the bill also would allow the commission up to two licenses for casino gaming on islands in the Gulf of Mexico.

The commission would also allow an Indian tribe to operate slot machines or have casino gambling.

Here’s HJR 112, and here’s a statement from Sen. Ellis about his bill, SJR 34.

The gambling industry keeps trying

I’m not sure how successful an approach this will be, but I guess it’s better than nothing.

Expanding gaming requires a vote of two-thirds of the legislature, with voters getting the final say. A new poll done for the Chronicle and the state’s other major newspapers found 60 percent favored an expansion of gaming.

Expanding gaming may be a last-ditch attempt at saving racing. Without slots, Texas track operators say, they won’t have the additional revenue to increase purses and attract quality horses .

“You will likely see the fall of several players,” predicted Andrea Young, president and chief operating officer of Sam Houston Race Park . She wouldn’t say whether Sam Houston would be one of them.

Bryan Brown, chief executive of Retama Park in Selma, had an even more fatalistic view if lawmakers can’t be persuaded.

“Our industry, over a period of years, will just disappear,” Brown said. Retama hasn’t turned a profit since opening in 1995.

I blogged about the poll in question the other day. I have to say, this is not an approach I’d take if I were the horse racing industry. There were plenty of Republicans who were perfectly content to let the US auto manufacturers die back during the early days of the economic crisis. If this is the pitch, I have no trouble imagining it being recast as a “bailout” in the 2012 primaries. Stick with your projections of economic benefit for the state and hope for the best, I say. The gloomier the budget picture and the harder it gets to make cuts, the better it’ll sound to them.

To be fair, the racetracks did also talk up the economic benefits they say allowing them to have slot machines would bring:

Under the racing industry’s proposed legislation, the state would get 30 percent of the slots revenue. The tracks would keep 58 percent, and the remaining 12 percent would be earmarked for purses and other items for the horse and greyhounds industries, Hooper said.

If slots pass, Sam Houston’s Young said it will spend $350 million for new facilities, gaming terminals and other amenities. Retama expects to spend $200 million.

Young pointed to Parx Casino in Philadelphia as a venue she’d like to emulate, raving about how well it has integrated slots (and table games) with horse racing.

“It feels like you’re walking into a Vegas-style casino,” she said, referring to the layout and finishes.

I still don’t think much of their odds of success, but this is as sensible an approach as you could expect.

I nearly did a spit take when I read this:

The Texas Gaming Association, which represents casino operators, is proposing four to eight casinos. Three would be in the largest counties – Harris, Bexar and Dallas – and at least one other would be in a coastal town, said spokesman Scott Dunaway.

Whoa! I’ve been following this issue for awhile now, and this is the first time I can recall seeing any specific location mentioned for a casino, especially Harris County. In the past, the talk has always been that there would be local elections to determine whether or not a given city would allow a casino to be built there. (Go take a listen to my interview with Joe Jaworski, now Galveston’s Mayor, in which we discussed this issue, for an example.) I was sufficiently surprised by this that I contacted Harris County Judge Ed Emmett, to see what his position was. Judge Emmett told me that it was the first he had heard of it as well. As such, I don’t know if this is something new, something that’s always been there but is just now coming out, or if the story got it wrong.

Whatever the case, the casino interests say they will be releasing their financial projections next week. I can hardly wait to see it, and I’ll be sure to write about it when I do.

Expanded gambling: Still doomed

The Dallas Morning News does a little checking, and the math isn’t good for gambling fans.

The Dallas Morning News, canvassing all lawmakers, found that expanded gambling lacks the votes, mostly because of objections to social ills and new tax revenue being too far off to help now.

The results may indicate that the Legislature, already facing a host of confrontational issues when it convenes Jan. 11 for the 140-day session, could give short shrift to a gambling debate.


Sen. John Carona, R-Dallas, who heads a key economic committee, said he has turned down a request to carry a casino bill.

“It is highly unlikely that any version [to expand gambling] will be found acceptable by the required number of members in either chamber,” Carona said recently.


In the House, 115 of the 150 members responded to the gambling question, with 54 saying they would not support its expansion in any form. Only 27 said they favored doing so, and 26 said they were undecided. The rest who were reached declined to comment.

Because of the two-thirds mandate for constitutional amendments, 51 “no” votes would kill the proposal in the House.

In the Senate, 24 of the 31 members responded, with 11 saying they would oppose expanding gambling and six saying they would favor it. The others said they were undecided or declined to comment. Eleven “no” votes would kill the proposal in the Senate.

Asked about the various plans, some of the lawmakers who were counted as favoring gambling said they might be open to allowing slots at existing racetracks under limited circumstances, but would oppose casinos.

I know I’ve beaten this horse many times, but it bears repeating. Gambling expansion is a tough sell, which is why it hasn’t happened after all this time. It’s certainly possible, as suggested by gambling lobbyists and State Sen. Jeff Wentworth elsewhere in the story, that some legislators who are currently opposed to expanded gambling might reconsider once they see what a cut-only budget approach begins to look like. This assumes that they will recoil from such a realization, and I at least am not prepared to make that assumption. I say it’s doomed, and I don’t see any reason to change that assessment.

Gambling proponents still optimistic for some reason

The conventional wisdom, to which I subscribe, says that the results on this election are bad news for proponents of expanded gambling. One reason for this is that the Republican wave means more socially conservative members. Gambling proponents are doing their best to put a smiley face on their prospects in the new Lege in spite of this.

Jack Pratt, chairman of the Texas Gaming Association and a proponent of casinos, said he is not discouraged by the recent election results.

“I have witnessed the debate over expanded gaming firsthand in at least 16 states and followed it closely in several others. It’s just a fact that many Republican legislators around the country voted for these measures and were an essential part of the majority in those state legislatures that passed expanded gaming legislation,” Pratt said. “A proposal to allow a limited number of destination resort casinos in Texas makes sense on the merits and is very compelling at a time when Texas needs jobs and new sources of nontax revenue.”

Chris Shields, who also works with the Texas Gaming Association, said an overwhelming number of Texas voters support expanded gambling measures and even more support putting the issue to the voters, based on a poll commissioned by the association. And the newly elected candidates know that, he said.

“We think the new members have a very strong connection to the voters right now,” Shields said.

Mike Lavigne, spokesman for Win for Texas, which is supported by track owners and the horse industry, said his group believes an expanded gambling bill can pass in the upcoming session, which will begin in January.

Most of the Legislature’s new blood ran on platforms of no new taxes and less government, Lavigne said. They ran on fiscally conservative values, not on socially conservative ones. To prove his point, he produced a short stack of direct mail pieces from Republican challengers that include tea party-approved tax messages and not a word about abortion or other favorite topics of the socially conservative.

And because increased gambling raises money without raising taxes, these soon-to-be-sworn-in candidates could get behind a gambling measure, Lavigne said.

Sure, if you believe that any of them want to find new revenue sources, which is at best an open question. But there’s a fundamental issue here that the gambling proponents don’t address.

Jason Isaac, the Republican who defeated Rep. Patrick Rose, D-San Marcos, represents hope for gambling proponents.

Isaac said he hasn’t decided how he’d vote on a gambling bill. He’d have to see it first. But he said he is not necessarily opposed to the idea of expanded gambling.

“My concentration is going to be on fiscal matters,” Isaac said, adding that his initial reaction is to be more open to slots at racetracks where gambling already exists rather than casinos.

Isaac said one of his concerns is that gambling could lead to bigger government — something that he and many other newly elected people staunchly oppose.

The position of Paul Workman, another newly elected Central Texas Republican, proves that gambling proponents will have to work for every vote. He said he’ll oppose a gambling measure.

Workman, who defeated Rep. Valinda Bolton, D-Austin , said he enjoys trips to Las Vegas and does not see gambling as evil. But he thinks expanded gambling of any kind in Texas would be a mistake. He might not be opposed to gambling on moral grounds, but he objects to the crime and other social costs associated with it.

“I think it brings more trouble than it solves,” he said. “I think it would add an undue burden to cities and counties.”

What goes unmentioned here is that Rose and Bolton were both gambling supporters. To be more precise, they were recipients of financial support from the gambling industry. In their place is one guy who might support a gambling resolution, and one guy who won’t. That means that they need at least one of the other new members to be a proponent and to have replaced someone who wasn’t just to break even from 2009, when they didn’t have enough votes to pass anything. What are the odds of that?

Further, I’m sure that if you looked at more of the individual cases, you’d see more of the same. Here in Harris County, for example, Rep. Ellen Cohen was a gambling supporter – in her interview with me, she stated unequivocally that she would vote for a resolution to allow expanded gambling. There’s nothing on Sarah Davis’ wafer-thin issues page that mentions gambling, but an anti-Cohen site attacked her for having “voted for legalizing gambling on Indian reservations”. In other words, at best the pro-gambling forces have broken even, and at worst they’re down another vote. I doubt it will be different in the other races the Democrats lost. And there’s still the passing of Rep. Ed Kuempel, too.

The bottom line, then, is that a number of legislators who were known to be supportive of a gambling resolution will not be there next year. In their place are a bunch of people who are almost certainly less supportive as a group than their predecessors. If there’s an example of an anti-gambling person being replaced by a gambling supporter, I’m not aware of it. The craps table offers much better odds than this.

Retama Park

Here’s another story about another horse racing track – Retama Park, which is northeast of San Antonio in Selma – hoping to hit the jackpot (as it were) with slot machines. The bit that interests me is this:

If slots pass, [Retama CEO Byron] Brown envisions a massive transformation at Retama with an investment of more than $200 million in new facilities, gaming terminals and other amenities.

Still, that isn’t likely to happen until late 2012 at the earliest if slots are approved. Approval requires a vote of two-thirds of the Legislature, with voters getting the final say.

It’s not clear what would happen to Retama if slots don’t pass. Gary Baber, board chairman of track owner Retama Development Corp., a municipal subdivision of Selma, fears it could become home to a flea market or motor racetrack.

Built in the early 1990s for a reported $80 million, Retama Park had trouble right out of the starting gate. It missed financial projections its first year and landed in bankruptcy a year later in 1996.

Joe Straus Jr., who is the father of Joe Straus, the speaker of the Texas House, is part of the group that got Retama built. Straus blamed the arrival of the state lottery, the rise of Internet gaming and the spread of eight-liner slotlike machines for hampering the track.

While Retama Development emerged from bankruptcy, it didn’t shed its financial problems. Since its reorganization, it has ended every year in the red. In each of the past 13 years, auditors have cited Retama Development’s recurring losses and growing liabilities for raising “substantial doubt about Retama’s ability to continue as a going concern.”

“It’s kind of a minor miracle, in my opinion, that we have kept (Retama) alive as long as we have,” Baber said.

I had thought that maybe the racetracks might have a bit of an edge in the forthcoming gambling expansion fight on the grounds that they could install slot machines and start generating revenue for the state a lot faster than casinos, which would have to be built from scratch. But if Retama is typical, then that isn’t necessarily the case. Point being, and I want to commend Sen. Rodney Ellis for being clear about this when I interviewed him, whatever the potential long-term revenue from expanded gambling may be, there will be almost no effect on the next budget.

I got a good chuckle out of Straus’ daddy’s excuses for Retama’s lack of profitability. I mean, the Lottery was created in 1991, five years before Retama was built. I suppose it could have had an effect on their bottom line, but it’s not as if they never saw it coming. Really, they should have seen the threat from online gambling back in 1996, too, but that’s a more understandable oversight. I have to ask, though – if online gambling is keeping people away from the tracks now, how much would the addition of slot machines really change that?

Retama is an example of an industry, once touted as a financial savior for Texas, now in deep distress. Yet here it is, touting the addition of slot machines to their businesses as an savior for Texas, and by the way for themselves. You do have to admire the tenacity, I’ll say that much.

The state of horse racing in Texas

It’s not very bright right now.

The Texas Racing Commission faced a packed house Friday in the enclosed confines of the Founder’s Room at Sam Houston Rack Park. They heard a tale of woe from an industry in rapid decline, a decline precipitated by a close escape of Texas dollars flowing across the Sabine and Red rivers to horse tracks with a racino attached.

You can imagine what they believe the solution to their woes is. Look, I’m not a horse racing enthusiast. The one only time in my life I’ve been to a racetrack was 1988 at Bandera Downs, which was back before you could place a bet on a race. But I sure do remember being told that allowing bets on races would be a financial windfall for the state. It’s primarily because of that that I remain skeptical about the claims now being made by “racino” proponents; that is, proponents of allowing video lottery terminals – slot machines – at racetracks. I do believe that will draw more people to the tracks, but I don’t see how it’s going to make more people interested in horse racing, and because of that I have doubts about its long-term viability. If the races themselves aren’t drawing people in, what’s to keep them from getting drawn away by some other shiny new object later? Anyway, this is an interesting story about something I generally pay little attention to, so check it out. Thanks to Hair Balls for the link.

Gambling industry support

The DMN has an interesting story about gambling industry players making large campaign finance contributions, but there’s some context missing.

A review by The Dallas Morning News of contributions since last July shows horse track interests have poured more than $4.2 million into campaigns and special committees.

That would average about $23,000 per lawmaker in the House and Senate, with the traditional surge of donations closer to the November election yet to come.

The News identified 33 horse track investors and those who have applied to become owners as substantial givers. They cover the political spectrum and are pushing other agendas before the Legislature in addition to gambling.

Included in this amount is Steve Mostyn and the $1.4 million it says he’s contributed so far. I’m wondering what the DMN’s parameters for this search was, since I know Mostyn contributed to a number of Harris County judicial candidates in the primary. Mostyn says in the article that his primary concern is getting Democrats elected, and I take him at his word on that, but even if you don’t a lot of his money is not going to legislative campaigns, or is going to general interest PACs. I ran a TEC query on Mostyn’s name, with a range of July 1, 2009 to June 30, 2010. Initially, I found $1.47 million in contributions. Taking out money he gave to the Coalition of Harris County Democratic Elected Officials and judicial candidates such as Amy Clark Meachum leaves $1.2 million. He’s also given significant amounts to Texans for Insurance Reform ($170K), the HDCC ($100K), and the Texas Forward Committee ($30K), all of which will be supporting candidates who may or may not ultimately vote for a gambling bill. There’s the Back to Basics PAC, to which he’s given over $300K. A few thousand more has gone to Bill White, and to people who are on their way out of the Lege, such as Norma Chavez and Eliot Shapleigh. If I add up his total contributions to current legislators and legislative candidates, it comes out to just short of $400K. That’s a lot of money, to be sure, but a whole lot less than $1.4 million. As such, that $4.2 million figure cited above is overstated by at least a million dollars, and maybe quite a bit more.

Duane Galligher, spokesman for the Texas Gaming Association, said that group is pushing for legislation that would allow destination resort casinos in Texas, not just slots at existing tracks. It also supports gambling rights for the state’s three recognized American Indian tribes.


Despite financial hardships for tracks and the lagging economy, early donations show horse track owners have upped the ante compared with the entire 2004 election cycle.

A study by Texans for Public Justices, a nonprofit campaign watchdog, showed track owners gave $3.6 million in 2004 elections, compared with this year’s $4.2 million.

Galligher’s group has a political committee, but so far has raised little money and made only a handful of contributions.

But two years ago, the Texas Gaming Association made large contributions closer to the general election.

“By and large, I’m not at liberty to state what our plans are, but we do intend to participate in the political process,” he said.

I presume the $3.6 million for 2004 represented the entire cycle, and not just the period ending June 30. Even if you don’t discount that $4.2 million as I just did, the final total would need to be considerably higher than $3.6 million – I’m thinking at least $6 million – just to keep up with the inflation rate for legislative campaigns. So again, while we are talking about a lot of money, it’s not as much as it first appears. Having said that, adding in whatever the Texas Gaming Association does could easily change that.

Another question to ask is are these interests giving to their usual supporters, or are they reaching out to those that have voted against them in the past? In addition, how much are they giving to candidates who are running against known gambling opponents, and how much are they giving to candidates who are seeking to fill open seats? I mean, if all they’re doing is writing bigger checks to the people who are already on their side of this issue, how much does that really matter?

Will the racetracks and the casinos work together?

At the very end of this Trib story about more legislative hearings on gambling expansion comes this tidbit:

The Win for Texas group — which includes current racetrack owners who’d like to add slot machines and other games to their facilities — is touting that updated study on the “Economic and Tax Revenue Impact of Slot Machines at Racetracks in Texas.” The Texas Gaming Association — those are the folks who want to legalize and build resort casinos around the state — will update their economic studies and polling closer to the legislative session, according to Chris Shields, the group’s chief lobbyist. Their previous work has promised larger revenue numbers for both the state government and for the economy. And the rivalry between the various gaming factions has been the secret weapon of gambling opponents. Casinos vs. tracks has been a losing proposition in recent sessions.

“It’s different this year because of the situation with the budget,” Shields says. “What hasn’t changed, but I think will change, is the willingness of the gaming interests to work together. I don’t think there’s any way for a bill to pass without that — and everybody wants a bill to pass.”

I’ve noted the racetrack/casino rivalry a few times myself. If they really are going to work together to get a bill passed, that changes things considerably. The question is, what does it mean for them to work together? Since it isn’t in the interests of one group for there to be legislation that would only allow for the other – indeed, such legislation might close the door on them for years to come – what this suggests to me is that they’ll jointly push for a multifaceted expansion. The question then is will that be too much for some legislators, or does the budget situation make this just the right time to reach for the brass ring? I don’t know how this will play out, but it will definitely be worth watching.

By the way, you can see the study mentioned in that last paragraph here (PDF). I blogged about a similar study I got from this group last year, which was sent to me in response to a previous post that had asked questions about the economic impact of expanded gambling. This study is an update to that one, as noted in their press release. The Trib also has a from the hearing.

LSG hearing on expanded gambling

The Legislative Study Group held a hearing on Wednesday to start the discussion about the various proposals for expanded gambling in Texas that will be brought to the Lege next year.

Racetrack and casino interests that want to expand Texas gambling dangled promises of new tax revenue before lawmakers Wednesday, but faced tough, skeptical questions from Democrats about the economic benefits and social costs.

“Could I make a suggestion to you? Don’t pretend like there’s not a downside. Somebody needs to talk about how we’re going to mitigate the downside,” Rep. Garnet Coleman, D-Houston, told Jack E. Pratt Sr., chairman of the Texas Gaming Association, which is pushing a proposal that would include destination resorts with casinos.


Their questions ranged from details of the $1 billion to $1.5 billion projected annually in new state tax revenue to the likely bidding process for casino licenses, as well as the people likely to play and whether they can afford it.

Rep. Lon Burnam, D-Fort Worth, said the hearing was meant to make public the private conversations that are occurring about the possible legislation for the 2011 session. He said he would like to get updated revenue figures besides those generated by the interests involved.

Racetrack and casino interests testified, as did gambling opponents from the Texas Baptist Christian Life Commission. At this point, I’m just glad to see decent information getting out there. If people are going to be called upon to vote on this next year, they should have as much accurate data at their disposal as possible. Texas Politics and First Reading have more.

Here come the bingo interests

In the discussion of expanded gambling so far, I’ve spoken of two potentially competing interests, casinos and racetracks. Turns out there’s a third player in the game, and they’re not about to be left behind: Bingo interests.

Steve Bresnen, who represents bingo halls as a lobbyist for the Bingo Interest Group, said charitable bingo groups would be devastated if the state expands gambling without giving them the electronic-game technology that would allow them to compete in a market that includes casinos or video lottery terminals at racetracks.

The industry previously has sought the ability to offer electronic instant bingo in a gambling expansion, which has failed before in the Legislature.

State law prohibits using bingo proceeds on lobbying the Legislature and prevents bingo charities from working for or against a proposed constitutional amendment on the state ballot, which a gambling extension would require.

Bresnen said a federal court lawsuit is planned to challenge that law.

They plan to use the Citizens United decision to argue their case. Quite the can of worms the Supreme Court opened there.

Bingo charities net about $36 million a year in bingo proceeds, Bresnen said. Bingo interests want to establish a fund of at least $5 million “to mount a major media campaign that will allow bingo charities to defend their interests,” according to a “plan of action for survival of Texas charitable bingo.”

Even if the bingo industry doesn’t prevail in the lawsuit, it will work to affect the debate through such means as a statewide voter registration and mobilization campaign targeting those attending Texas bingo halls.

Well, if they’re looking for someone to design a logo for them, I have a suggestion for them. It’s going to be very interesting trying to keep up with all of the groups that want a piece of whatever gambling pie that may come out of the next legislative session. Seems to me a viable strategy for the anti-gambling folks will be to get these competing interests to work against each other as much as possible. Just keeping track of all the bedfellows is going to be a full-time job.

I should note that there is at least one other interest that will be involved, though I have not heard anything from them yet: Poker interests, who managed to get a bill passed out of committee last session, but it died without coming to a vote in the House. Someone may want to print up a scorecard, we’re going to need all the help we can get.

Obstacles to expanded gambling

Burka lays out the reasons why expanded gambling will have a tough road ahead in the Lege next year, even as budget writers openly speculate about it, and concludes it won’t happen. I think the situation is more fluid than he gives it credit for, but I definitely agree that competing interests between the racetrack and casino factions will be a hindrance. We saw this in the last session, and the dynamic is unlikely to change. Racetrack owners can make a credible argument they can generate cash for the state more quickly, but casino licenses are where the real tax revenue is. Eventually, anyway, which as I’ve said isn’t much help for this biennium. Anyway, it’s worth keeping this in mind. Even if the will exists for more gambling, what form it takes will be a fight that maybe no one can win.

Rodney Ellis makes the case for expanded gambling

Via the Trib, here’s State Sen. Rodney Ellis on why he will once again carry a bill to expand gambling in Texas:

For what it’s worth, the “People are already gambling, why not let them do it here where we can get some revenue from it” argument is the most persuasive to me. It’s not enough to make me a proponent, or even more likely to vote for an eventual constitutional amendment, but it’s an argument I understand and respect, as long as it’s not making any dubious promises about how much revenue we can expect from it. Rick Casey has more.

And in case you were wondering about gambling

And to complete this impromptu threeparter about the state’s budget situation, we ask the question “What about gambling?”

Lawmakers had been warned to expect a shortfall of at least $11 billion in the next two-year budget period. But Appropriations Chairman Jim Pitts, R-Waxahachie, on Tuesday put the gap at $18 billion — and said lawmakers should consider casino gambling as one way to fill the hole.


The expansion of gambling would require a constitutional amendment, Pitts said. That means a two-thirds vote of lawmakers and voter approval on a statewide ballot.

Casino gambling could bring in $1 billion in the next two-year budget period and $4 billion annually in the future, he said.

“I’m going to look at every revenue enhancer that we can get,” Pitts said, adding that Texans now travel to other states to gamble “and we need to grab that money.”

While I agree there’s revenue to be had by these means, I remain skeptical of pretty much any actual number that gets put out to quantify it. I’m particularly dubious of the $1 billion claim for the next biennium, especially if we’re talking casino gambling. Assuming a joint resolution passes, and it gets ratified by the voters, there would still be the need for local option elections in places like Galveston where any proposed casino would be situated. By the time you get past that, it’s already May of 2012, and you haven’t even started construction yet. I suppose this could be an opening for the slot-machines-at-racetracks crowd, since those could be in place within days of the November constitutional amendment vote. We’ll see if anyone picks up on that argument when the session opens. Just remember that there’s still plenty of opposition to expanded gambling out there, so even getting to the first step is not guaranteed.

The pitch from the gambling industry

We know that the gambling industry, which never sleeps, has been busy preparing for the next legislative session. The Trib gives us an overview of their pitch, about which I’m sure you’ll be hearing plenty more in the coming months. Most of this is familiar territory, so let me just zoom in on two points. One has to do with the numbers:

Promoters of gambling have been trying to get everything from slot machines to casinos legalized in Texas for years, but they were brushed aside last year after the stimulus money relieved the budgeteers of many hard choices. Now, the gambling side says, the continuing recession improves their odds, and they’ve managed, for now, to keep all of their own constituencies from squabbling.

“They’re all getting along and singing from the same hymnal,” says Mike Lavigne, who’s working for Texans for Economic Development, a group of track owners, horsemen and others who want the state to okay expanding gambling at tracks. They’ve got a web site — — and have lobbyists and others strategizing in advance of the 2011 legislative session.

That group wants lawmakers to allow video lottery terminals, or VLTs, at the state’s horse and dog tracks and on reservations of the state’s three Indian tribes: the Tiguas, the Kickapoos, and the Alabama Coushattas. They say those “racinos,” (a combination race track and casino, would bring $1 billion into state coffers each year (twice that for a two-year state budget) once they’re up and running and would be an economic boon to their communities and to the horse business in Texas.

“Eventually, they’ll be facing taxes, or fees, or something else,” Lavigne says. “This is the lowest-hanging fruit. If you need $2 billion fast, call us.”


Rob Kohler, who’s been lobbying against legalized gambling for years, doesn’t buy the budgetary justifications. “The difference between now and when we did horses and the lottery is that, then, we didn’t have a lot of data,” he says. “Now we have the data. This isn’t a viable revenue mechanism.” Horse and dog tracks never produced any more than a trickle of revenue for the state in spite of flagrantly optimistic economic forecasts at the time lawmakers were asked to legalize it (at the start in 1986, proponents forecast the state would net $110 million annually; the revenues have never been more than a small fraction of that amount, and the costs of regulation have negated any fiscal benefit to the state treasury). The lottery has produced more or less as predicted, but didn’t become the public school funding panacea sold to voters, he says. “The perception is that they were sold a bill of goods,” he says.

Slot machines, Kohler says, would bring the dangers of expanded gambling without much benefit. Racinos, he says, would add little to the state’s annual budget, which is approaching the $200 billion mark. “Take 200 pennies. Throw them in a bag. Throw in one more penny. That’s what you’re getting,” he says.

Kohler’s point about the relative size of gambling revenue to the overall budget is correct, but not particularly responsive. What matters now is the size of the deficit and how it can be shrunk, and even a small new revenue source still contributes to that. Note that one reason we’re having the conversation about gambling as a source of revenue is because all of the more sensible sources are for a variety of reasons politically untenable, and even in Texas most people recognize that cuts only get you so far. If we could have an adult conversation about the state’s tax structure, there would be less attention being paid to casinos and video lottery terminals.

Of course, as we’ve discussed before, even if the gambling industry got everything it wanted in the next session, the revenues they promise would not materialize right away. That’s the second point, the timeline:

The racinos wouldn’t produce money immediately. [State Rep. Ed] Kuempel and others say the state will need the money in subsequent budgets and argue that the earlier the gaming is allowed, the quicker the money will come in. One proposal would let the state sell licenses for the VLTs — that would bring in money up front — but the track operators say they can’t afford the licenses until the gaming parlors start generating cash. And they say the Legislature isn’t ready to approve full-blown resort casinos, either. “We’re not talking about opening up new casinos all over the state,” Lavigne says. “These things don’t happen overnight.”

However we answer the question about gambling this session, the questions about the budget shortfall will have to be answered separately. Expanded gambling will not do anything to affect this biennium.

The gambling industry is ready for the next legislative session

Bad budget times are fertile ground for those who want to see an expansion of gambling in Texas.

“We are planning to lay out our case again to the Legislature,” said Duane Galligher, a spokesman for the Texas Gaming Association, which led the push to bring Las Vegas-style casino gambling to the state during the 2009 Legislature. “Anytime the state is looking for additional revenue, gaming always gets a more serious study. We believe this will generate a substantial amount of revenue.”

Galligher cited previous studies showing that 68 percent of Texans would approve the proposals, despite resistance in the state Capitol. Studies over the past several years have shown that revenue for casino gambling would generate between $3 billion to $4.5 billion in state and local tax revenue, he said.

Sen. Rodney Ellis, D-Houston, a leading sponsor of the 2009 casino gambling bill, has also said that he plans to revive the bill, presenting it as a huge revenue generator that could put billions into public schools and highways. The Fort Worth Stockyards have long been eyed by gambling interests as a potential site for a casino.

“If we’re going to ask Texas families to sacrifice in these tough economic times, I think it’s the responsibility of the Legislature to consider all reasonable options to help generate revenue,” Ellis said.

Remember, the gambling industry never sleeps. Doesn’t matter that neither candidate for Governor is much of a fan, they’re out there working it. You have to respect that. Again, not to rehash old debates, the main point is that even if all their dreams come true in 2011, it still won’t help with the current situation. I agree with Sen. Ellis that we need to consider all reasonable options for generating revenue, I just don’t think this one should be in the top half of the priority list.

White: No expansion of gambling

I’m okay with this.

Democratic gubernatorial nominee Bill White said today he does not support the legalization of slot machines and does not think Texas should legalize casinos across the state.

“I don’t think the State of Texas should be promoting gambling and something for nothing,” White said.

White said he does not want to get distracted from issues such as education and workforce development and developing a long-term transportation plan for the state.

You are all familiar with my feelings about expanded gambling in Texas, which ranges from ambivalence to general dislike. Had White come out in favor of more gambling, which as Marc Campos notes would put him more in line with his supporters in the Lege, I can’t say I’d have been okay with that, but I would not have cared that much. Casinos and slot machines are just not that high on my priority list one way or the other. I do think that White is correct to emphasize those other issues, and I hope that will help to remind people that even if expanded gambling were a sure thing for adoption next year, it still wouldn’t affect the current budget situation. Focus on that, and on fixing those real problems we face in education, employment, and transportation, and then we can talk about stuff like this.

How are you going to balance the budget?

If you’re thinking that the candidates for Governor are being a bit vague about how they’re going to deal with the looming budget shortfall, you’re not alone.

Texas expects a shortfall of at least $12 billion when lawmakers meet to write the next budget, but major candidates for governor have few specifics on how they would exert their leadership to close the gap.

“The silence is deafening,” said House Ways and Means Committee Chairman Rene Oliveira, D-Brownsville. “None of the candidates are really coming out with a plan or even an awareness of how bad the situation is.”

Asked how they would close the budget gap, the five major candidates suggest largely unspecified spending reductions.


The five’s suggestions leave more blanks than specifics as lawmakers prepare for a projected minimum budget gap of $12 billion to $13 billion, before accounting for expected population growth.

“You can’t just get there with a simple brush stroke. It’s going to require a fair amount of spending cuts, and probably they’re going to have to look at other things they can do to raise revenue as well,” said Dale Craymer, of the Texas Taxpayers and Research Association.

Yes, raising revenue has to be part of the solution, despite what the know-nothing types would like to make you believe. I’ll defend the lack of specificness to some degree, in that I’m sure everyone is hoping that the picture will improve a bit in the next few months, and no one wants to come across as too alarmist. In addition, it’s really the Legislature’s problem more than it is the Governor’s, since it’s the Lege that writes the budget. The Governor can effect some cost savings via the line-item veto, but he or she would be doing so to a budget that’s already been certified as being balanced. Mainly, the Governor can provide big picture guidance, plus the threat of vetoing a solution he or she deems unacceptable. As far as that goes, we really don’t know what’s truly off the table – Rick Perry, for example, has waffled quite a bit on the subject of the gas tax – which leaves us with this largely theoretical conversation.

Let’s also talk about casinos for a minute, since they were mentioned in the story. I’m at best ambivalent about an expansion of gambling in Texas, whether that means casinos or slot machines at racetracks or whatever. I probably would vote against any constitutional amendment authorizing an expansion of gambling, but I probably wouldn’t crusade against it, though I do reserve the right to change my mind about either of these. My point here is simply that whatever the merits of casinos – and as you know, I am skeptical that they will do much to benefit Texas’ bottom line – they will not be a part of the solution for the 2011-12 biennium. If the Lege manages to pass the joint resolutions to put an amendment on the November, 2011 ballot, and if that manages to get ratified by the voters, then casinos – if that’s what gets authorized – still have to be built. Slot machines at racetracks can happen more quickly, but it still won’t be instantaneous. I could imagine there being some revenue from expanded gambling for the 2013-14 budget, but that won’t help any next year. Again, gambling is not a fix for the next budget. Beyond that, maybe, but we still have to make it through the next two years.

One more thing:

Senate Finance Committee Chairman Steve Ogden, a Bryan Republican facing a primary challenge, said he was not too worried about whether the candidates have budget ideas. Although he said governors have significant powers, including the line-item veto, and their suggestions are welcome, he noted that lawmakers craft the budget.

“At the end of the day, governors don’t write the budget,” Ogden said. “If they can’t think of anything, it’s not essential.”

I note that mostly as a reason to link to this Trib story about Ogden’s primary race, in which he faces a challenge from the right from someone who doesn’t really have a firm grasp on what’s in the budget. This pretty much said it all to me:

In an apparent attempt to solidify his more-conservative-than-Ogden bona fides, Bius has made the elimination of “generational welfare” a centerpiece of his campaign. “If we begin requiring drug testing for those trying to get cash payments for welfare and require them to be citizens of the United States and Texas, it’ll go along way toward solving our social problems,” Bius says. “My momma told me, you get what you pay for. If you want drug addicts, give them money. If you want illegal immigrants, give them money.”

Ogden brushes off the idea as cynical stereotyping of the poor — and wholly unnecessary in a conservative state that already has among the nation’s stingiest public doles. “It bothers me, because it’s kind of a code word,” he says. “I’m not sure exactly what he means by it, but Texas is the least-generous state when it comes to welfare. The majority of people on it are children. Another large category is people in nursing homes. Neither of these groups fit into the category of ‘generational welfare.’ … We have not incentivized anti-social behavior, but when you’re dealing with unemployed mothers with children, you have to do something. You can’t just say, ‘It’s not our problem – good luck.’”

Yes, it is a code word, and not a particularly subtle one. It’s weird being put in the position of defending Steve Ogden, who’s far too conservative to be the guy I want writing the budget, but that’s the state of the GOP these days. The alternative to Steve Ogden is someone who lives in a fantasy world. The sad thing is that Ogden’s experience and understanding of reality won’t be an asset for him in his race.