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Texas Gaming Association

No gambling expansion this session

This should not come as a surprise to anyone.

Casino1

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.

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.

Legislation to allow slot machines filed

Fresh from the inbox:

BI-PARTISAN LEGISLATION FILED TO ALLOW STATEWIDE VOTE ON SLOTS AT TEXAS TRACKS, INDIAN RESERVATIONS

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 www.winfortexas.com

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.

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.

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.

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.

One step closer to expanded gambling in Texas?

Maybe, though I’m not sure how much closer this really gets us.

[The] Chickasaw Nation of Oklahoma is poised to take possession of an existing horse racing track in Grand Prairie. The tribe runs one of the biggest Indian casinos in the United States, just across the Texas border.

Gambling proponents believe the tribe may tip the balance to legalizing casinos across Texas.

“The Chickasaw Nation has very successful casinos,” said Jack Pratt, chairman of the Texas Gaming Association. “They certainly didn’t buy this track just to run the ponies.”

A Chickasaw-owned company, Global Gaming Solutions LSP, is expected to buy Lone Star Park next month as part of a bankruptcy settlement involving the track’s majority owner, Magna Entertainment Corp. of Canada.

The most dramatic change Chickasaw ownership of Lone Star is likely to bring to the casino debate in Texas is to alter the dynamics of the fight in the Legislature to amend the state Constitution to allow casino gambling.

The Chickasaw Nation has put more than $362,070 into state political races since 2006. But because of its Winstar Casino on the Texas border, the Chickasaws opposed expanded Texas gambling. With the purchase of Lone Star, the tribe likely will support casino-style gambling — at least at race tracks.

A Global Gaming spokeswoman said the company will support whatever horse owners at the track believe will make Lone Star successful.

One of the biggest stumbling blocks to passing casino legislation in recent years has been infighting between track owners and casino owners. Horse and dog track owners have wanted a law that allows slot machines at tracks but no destination resort casinos. The casino industry has wanted both. Now, there will be a major horse track owner with a foot in both camps.

“Track owners have been cross-wired with the commercial casino owners,” said Pratt. “The track owners have been trying to get a monopoly.”

Mike Lavigne, a spokesman for Texans for Economic Development, an association of track owners that want slot machines at tracks, said his group sees the Chickasaw move as a positive because the tribe in the past has not supported expanded gambling, but now likely will.

Well, there certainly was some bad blood on display between the two sides of the industry this spring, so perhaps this arrangement will bring them all closer, much like the arranged marriages among European royalty in the pre-industrial days was supposed to do. I’m not convinced this makes any progress on an expansion of gambling in the near term, however. None of the constitutional amendments to expand gambling made it to a floor vote in either chamber; only one such resolution even made it out of committee. Rick Perry is still opposed, as are Kay Bailey Hutchison and Tom Schieffer, and while the Governor doesn’t have veto power over joint resolutions, he or she certainly wields influence. I suppose if the industry is serious about getting traction it ought to pour some money into Hank Gilbert’s campaign, since he’s willing to let a resolution come to a vote of the people. (Yeah, I know, Kinky supports casino gambling. I think the gambling industry is smart enough to know where not to place its chips.) Longer term, surely sooner or later a pro-gambling, or at least not-anti-gambling Governor will be elected, and then they can really push if it’s still an issue. Even then, the requirement of a two-thirds majority in both chambers is no small task, and the opposition is quite dedicated. All I’m saying is that I wouldn’t bet on anything being all that different in 2011.