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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.

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 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.

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 — winfortexas.com — 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.

Scratch EZ Match

I can’t say this comes as a surprise.

EZ Match is a scratch.

The Texas Lottery Commission pulled the plug Friday on the proposed game that would have allowed players to become instant winners by handing their money to a clerk for a ticket printed from a lottery terminal.

Commission staff had described the game as another way to deliver the sort of instant gratification players enjoy with scratch tickets, since they would not have had to wait for a drawing.

Conservative groups and other critics, however, had charged that the game would be a big step toward slot machines, which lawmakers have refused to approve.

“As long as I am chairman, it is never my intent nor my wish or desire that we overstep our bounds in regards to our authority for making rules,” said commission Chair Mary Ann Williamson.

[…]

Commission staff had emphasized that the ticket could be purchased only through a clerk, not directly from a machine. Proposed rules had specified the game would not be played on a video lottery terminal.

The commission’s assistant general counsel, Pete Wassdorf, had said the only similarity to a video lottery machine is that the ticket would have been purchased from an electronic machine, but that the differences were far greater.

Yes, and those differences are what made the game sound deadly boring to me. If you’re going to put out a new tax on people’s innumeracy, the least you can do is give them a bit of a thrill for their money. Never mind the claims about a back-door expansion of gambling, I never saw how this game was going to appeal to anyone. Now we’ll never know, though I figure the Commission will find a way to try again with something similar. We’ll see if they can do any better.

Now you can blow your money on lottery tickets even faster

Is it just me, or does this sound like much ado about not very much?

A proposed lottery game that would allow players to become instant winners (or losers) without so much as scratching a ticket is under fire from critics who contend it would be a giant step toward slot machines.

Under the proposed EZ Match game — which the Texas Lottery Commission could take up as soon as Oct. 2 — players would hand their money to a clerk and get back an instant ticket printed from a lottery terminal.

No wait for a drawing, and no need to scratch.

“It’s just like a scratch game, only you don’t scratch the latex,” Lottery Commission spokesman Bobby Heith said after being asked about critics’ slot-machine concerns. “There’s no buttons. There’s no spinning wheels. There’s no levers. You can only get the ticket through a clerk-assisted transaction at a lottery retailer.”

Proposed rules for the game specify that it would not be played on a video lottery terminal, a form of slot machine. The commission’s assistant general counsel, Pete Wassdorf, has said the only similarity to a video lottery is that the ticket “is purchased from an electronic machine, but the dissimilarities far exceed that.”

A slew of critics, however, have sent the commission pleas to stop the plan. The key, they say, is that game results would be predetermined in the lottery’s computer system and delivered instantly.

“It is a video lottery system that they are approving,” said Rob Kohler, a former Lottery Commission staffer who is a consultant for the Texas Baptist Christian Life Commission.

“Whether they are going to allow players to immediately start pressing buttons and seeing electronic versions of card games happening is irrelevant …,” Kohler said. He called passage of the rule “the equivalent of allowing assault rifles, but saying, ‘We’re not going to use this to shoot holes in tanks, we’re going to shoot water balloons out of it.’ ”

So let me get this straight: You give your dollar to a clerk at the local Quik-E-Mart, he then prints you a ticket, and you…look at the ticket to see if you won or not. Boy, if that doesn’t scream “hours of fun for everyone”, I don’t know what would.

I guess I can see the argument about this being a camel’s-nose-in-the-tent for video lottery terminals, or video slot machines. Except that you don’t get to play the machine, someone else does it for you, and instead of an exciting video display, you get a piece of paper. Am I crazy for thinking that this has all the sex appeal of toll booth? Again, I understand the logic of not wanting to set a precedent if you oppose VLTs, but I can’t help but think that this would be a complete dud that no one would want to play. What am I missing here?