“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
Showing posts with label Legal gaming. Show all posts
Showing posts with label Legal gaming. Show all posts
Tuesday, April 29, 2008
Wednesday, April 23, 2008
Get Ready… Legal Gaming is Coming to Texas
“Anytime you open the door to any form of legal gambling, entrepreneurs are going to ram it open and run through.” - Nelson Rose, Law Professor, Whittier Law School.
Legal gaming is coming to Texas. The question in everyone’s mind is when? In 2009, the Texas Legislature reconvenes and will have several video gaming bills waiting for them in committee. Each bill will have its own version of how and where to legalize gaming. First, the Texas Legislature will authorize video gaming machines: video 8-Liners or slot machines, video poker, and video bingo. The proposed legislative bills will restrict these gaming machines to horse tracks and dog tracks, “off-shore casinos”, such as riverboats, and Native American reservations primarily located in West Texas. Eventually table games will be allowed and maybe even full-fledged casinos, but that won’t be for some time.
The best way to predict the future legislative course of legal gaming in Texas is to look at what is going on in other states. For example, in 2007, the Indiana legislature authorized legal gaming at horse tracks. Indiana has only 2 horse tracks, Hoosier Park approximately 40 miles north of Indianapolis and Indianapolis Downs Park approximately 30 miles southeast of Indianapolis. Each track must pay an initial license fee of $250 million, provide $100 million or more in additional construction or capital improvements, and the new slot machine facilities must connect to the racetrack facilities. Indiana is expected to generate close to $500 million in annual revenue within the first 5 years, exclusive of the licensing fee. Indiana will also require an annual $100 license fee for each video gaming machine in use. In a cash strapped state, such as Texas, the Legislature cannot afford to ignore those numbers.
Akin to the 1991 campaign establishing the Texas Lottery, gaming proponents will declare that the tax revenue generated from legal gaming will fund public education. And, just like the Texas Lottery, the proceeds will actually be deferred to the State’s general fund. It will be up to the Texas Legislature to actually determine how much is allotted to education. By 2006, the State of Texas received more than $3.7 billion in lottery ticket sales and only allocated $1 billion to public education.
Opponents to legal gaming will declare the need to protect the moral fabric of Texans. However, a closer examination of such opponents will reveal that casinos located in neighboring states, such as the Oklahoma Chickasaw Nation, are some of the largest campaign contributors to Texas politicians. Oklahoma and Louisiana casinos have good cause to play a major role in Texas politics. Texans make up approximately 80% of Choctaw Casino’s revenue. Similarly, shortly after Texas legalized pari-mutuel betting at horse tracks in 1987, Louisiana Downs, located in the border city of Shreveport, declared bankruptcy. Once gaming is made legal in Texas, there will be no need for Dallasites to drive 100 miles to visit the $60 million plus Winstar Casino in Durant, Oklahoma when they can visit Texas Lone Star Park in neighboring Grand Prairie. And that’s the idea.
One thing is for certain, legal gaming is coming to Texas and soon. Whether a new gambling law will pass in 2009 or 2011 is up for grabs. What is not in dispute is that Texans bet millions of dollars annually in Oklahoma, Louisiana and New Mexico. The Texas Legislature will eventually stop this mass exodus of untapped tax revenue in the name of education, our children and all that is good. For those who have doubts, just follow the money.
Adam W. Vanek
(214) 890-0991
avanek@tiptonjoneslaw.com
Legal gaming is coming to Texas. The question in everyone’s mind is when? In 2009, the Texas Legislature reconvenes and will have several video gaming bills waiting for them in committee. Each bill will have its own version of how and where to legalize gaming. First, the Texas Legislature will authorize video gaming machines: video 8-Liners or slot machines, video poker, and video bingo. The proposed legislative bills will restrict these gaming machines to horse tracks and dog tracks, “off-shore casinos”, such as riverboats, and Native American reservations primarily located in West Texas. Eventually table games will be allowed and maybe even full-fledged casinos, but that won’t be for some time.
The best way to predict the future legislative course of legal gaming in Texas is to look at what is going on in other states. For example, in 2007, the Indiana legislature authorized legal gaming at horse tracks. Indiana has only 2 horse tracks, Hoosier Park approximately 40 miles north of Indianapolis and Indianapolis Downs Park approximately 30 miles southeast of Indianapolis. Each track must pay an initial license fee of $250 million, provide $100 million or more in additional construction or capital improvements, and the new slot machine facilities must connect to the racetrack facilities. Indiana is expected to generate close to $500 million in annual revenue within the first 5 years, exclusive of the licensing fee. Indiana will also require an annual $100 license fee for each video gaming machine in use. In a cash strapped state, such as Texas, the Legislature cannot afford to ignore those numbers.
Akin to the 1991 campaign establishing the Texas Lottery, gaming proponents will declare that the tax revenue generated from legal gaming will fund public education. And, just like the Texas Lottery, the proceeds will actually be deferred to the State’s general fund. It will be up to the Texas Legislature to actually determine how much is allotted to education. By 2006, the State of Texas received more than $3.7 billion in lottery ticket sales and only allocated $1 billion to public education.
Opponents to legal gaming will declare the need to protect the moral fabric of Texans. However, a closer examination of such opponents will reveal that casinos located in neighboring states, such as the Oklahoma Chickasaw Nation, are some of the largest campaign contributors to Texas politicians. Oklahoma and Louisiana casinos have good cause to play a major role in Texas politics. Texans make up approximately 80% of Choctaw Casino’s revenue. Similarly, shortly after Texas legalized pari-mutuel betting at horse tracks in 1987, Louisiana Downs, located in the border city of Shreveport, declared bankruptcy. Once gaming is made legal in Texas, there will be no need for Dallasites to drive 100 miles to visit the $60 million plus Winstar Casino in Durant, Oklahoma when they can visit Texas Lone Star Park in neighboring Grand Prairie. And that’s the idea.
One thing is for certain, legal gaming is coming to Texas and soon. Whether a new gambling law will pass in 2009 or 2011 is up for grabs. What is not in dispute is that Texans bet millions of dollars annually in Oklahoma, Louisiana and New Mexico. The Texas Legislature will eventually stop this mass exodus of untapped tax revenue in the name of education, our children and all that is good. For those who have doubts, just follow the money.
Adam W. Vanek
(214) 890-0991
avanek@tiptonjoneslaw.com
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