“We know we’re losing that business every August by the lines of cars heading to Texas. We’re losing that tax revenue and watching Oklahoma businesses suffer at the same time. It makes more sense to keep those dollars here in our own state. It’s going to help our citizens, our businesses, and eventually help those businesses grow.” – Oklahoma State Senator Johnnie Crutchfield speaking about the Texas Sales Tax Holiday.
This blog is not a social commentary regarding the morality of legal gambling, but rather its inevitability.
As I noted last week, in 2009 the Texas Legislature will reconvene. High on the Capitol’s priority list is whether or not to legalize gaming. Last week I discussed the natural progression of how states legislate legal gaming: pari-mutuel betting such as dog tracks and horse tracks, state or multi-state lottery, video slot and bingo machines, and finally table games. This week, I want to give you a 2009 preview of the 3 most common arguments in favor of legalizing gaming in Texas: taxes, jobs and economic necessity for horse and dog track industry.
Tax Revenue: As Senator Crutchfield talks about the “line of cars heading to Texas” during the once a year Texas Sales Tax Holiday, some Texas representatives are crying foul as the lines of chartered buses migrate each day from Texas to Oklahoma casinos. Former gubernatorial candidate and famed plain talker, Kinky Friedman, commented on the intense competition between Oklahoma and Louisiana, "It's crazy to have Louisiana gamblers mad at Oklahoma for taking away their Texans." Some of the more realistic figures estimate that Texas will realize nearly $6 billion in direct gaming tax revenue annually. The proponents of legal gambling will argue that this new found money will fund Texas education, health care for children and maybe even put an end to new toll roads, as a lagniappe. But tax revenue is not the only reason, the Legislature will legalize gambling.
Job Creation: The second argument gambling proponents will make is that of job creation. It is true that legal gambling will create jobs, a lot of jobs. First, construction jobs and second, the jobs directly related to the gaming itself. And then there are those jobs that benefit from legal gambling indirectly, such as the hospitality industry, hotels, restaurants and travel. Metropolitan convention and tourism bureaus all across Texas are especially interested in legalizing gambling as a competitive advantage against competing cities such as Chicago, Atlanta and Orlando. If you then include the tax revenue generated from hotel room taxes or rental car taxes, the trickle down economics is compounded.
Economic Necessity: The third argument gaming proponents will cite is the need for legal gaming to save the Texas horse track industry. Despite hosting the Breeder’s Cup in 2004, the operator of Lone Star Park at Grand Prairie is now in dire financial straits. 2008 saw the smallest opening day attendance since the Lone Star Park was first opened in 1997. Magna Entertainment Corp., the operator of Lone Star Park announced that it is considering liquidating it’s assets to fend off creditors. While Magna does not own Lone Star Park, the City of Grand Prairie actually owns the track and leases it back to Magna, it does own significant acreage surrounding the horse track. According to the Dallas Business Journal, Magna Entertainment reported a $113.8 million net loss in 2007, bringing its total debt to $510 million. However, Magna has made it clear that it is hoping that Texas will legalize video slot machines and soon. As reported in the Austin American-Statesman, Reggie Bashur, spokesperson for the horse track industry, describes the need for legal gaming as a necessity for horse racing’s economic viability. "It's not gaming for the sake of gaming. It's gaming for the survival of the horse community as well as the track industry." The horse track industry has captured the attention of the Texas Legislature. In 2007, State Representative Jose Menendez, (D) San Antonio, filed a bill that would allow poker tables at specifically racetracks.
Eventually, the Texas Legislature will declare it is time for Texas to get off the bench and get into the game. And of course, the House will want its cut.
Adam W. Vanek
(214) 890-0991
avanek@tiptonjoneslaw.com
