Gambling opponents and proponents argue case before Texas House State Affairs Committee

Proponents of expanding gambling told the Texas House State Affairs Committee during a legislative hearing that casinos and sports wagering would bring additional tax revenue to the state, and that Texans should be able to vote on the issue in November.

On Wednesday, the committee heard testimony on bills by Rep. Jeff Leach (R-Plano) — House Joint Resolution (HJR) 102 and House Bill (HB) 1942 — to bring sports betting to Texas. His bill proposes a 10 percent tax on sports betting.

“Texans value freedom and liberty. We also love our sports,” Leach said, contending there should be a “regulatory framework” to protect consumers who are already engaging in sports betting unlawfully.

“I believe Texans should be able to choose what is right for them,” Leach argued.

Giles Kibbe, senior vice president and general counsel of the Houston Astros, told the committee that an estimated $7 billion in illegal bets are placed in Texas every year. Other entertainment companies and professional sports teams also spoke in favor of Leach’s legislation.

A comical moment during the hearing illustrated the dynamics of this issue. A representative of Eilers and Krejcik Gaming, Christopher Grove, recorded his hometown as Las Vegas, Texas instead of Las Vegas, Nevada on the witness registration sheet.

Rep. Shelby Slawson (R-Stephenville) pointed out the error, prompting Chairman Todd Hunter (R-Corpus Christi) to quip, “We hope you calculate better than this form.”

Grove told the committee that legal sports wagering could generate approximately $180 million in annual tax revenue for the state. It could also create hundreds of “direct” jobs and thousands of “indirect” jobs.

Cindy Asmussen, the ethics and religious liberty advisor of the Southern Baptists of Texas Convention, testified against the bill, contending that jurisdictions where sports gambling is legal have experienced “devastating” impacts.

“We could justify any vice as a means for additional tax revenue,” Asmussen said, citing prostitution and marijuana as examples.

Asmussen also said the general public does not have enough savings to cover emergencies, and bringing more gambling to Texas will not help people with their personal finances.

Rob Kohler, a representative of the Baptist General Convention of Texas (BGCT), rebutted Leach’s argument that legalizing sports betting is creating a “regulatory framework” for an activity that is already being conducted illegally.

Kohler said making the millions of smartphones in Texans’ hands “point of sale locations that don’t currently exist” is “enabling” the gambling industry. He argued it is unquestionably an expansion of gambling. Another witness agreed, calling it akin to “tethering a booze bottle to an alcoholic.”

Jonathan Covey of Texas Values, a socially conservative interest group, said his organization opposes HJR 102 due to “public health issues as well as morality issues.”

When he returned to the microphone, Leach defended his identity as a Baptist and born-again Christian.

“I, myself, am a lifelong Baptist, born and raised in the Southern Baptist church. I was saved when I was eight and baptized by my pastor who then became president of the Southern Baptist Convention,” Leach said.

“I served two terms as student body president at the world’s largest Baptist university. I currently sit on the board of Houston Christian University — which just until a few months ago was Houston Baptist University. I taught Sunday School and try my best to get my family to church every week.”

Leach proceeded to cite former President Trump’s position on sports betting. He said whether it is legal or not, people will gamble on sports and the state may as well regulate it to benefit from the tax revenue and protect those participating.

The casino bill, HB 2843 by Rep. John Kuempel (R-Seguin), is the enabling legislation for HJR 155 by Rep. Charlie Geren (R-Fort Worth).

Geren, the speaker pro tem of the House, called his legislation a “compromise” that “allows for the immediate development of destination resorts.” He also said creating a gaming commission in Texas would regulate an activity that is already taking place illegally and in other states.

“We can and must start cracking down on underground gaming operations,” Geren said.

HJR 155 would place a constitutional amendment on the ballot in November to authorize a limited number of casinos in major metropolitan areas. HB 2843 would set up a gaming commission, allow sports betting at casinos, allow casino agreements between Native American tribes and the State of Texas, and enact other measures to expand gambling.

An attorney for the Kickapoo Traditional Tribe of Texas, Jennifer Hughes, testified against the bill, saying the tribe believes the compact should be written into the bill rather than being left up to the governor.

Under Kuempel’s proposal, members of the Texas Gaming Commission would be appointed by the governor for six-year terms with the “advice and consent” of the state Senate and be required to submit to financial disclosure requirements. Gaming commission members would also have to pay a $25,000 bond “conditioned on the member’s faithful performance of the member’s duties of office.”

Casino licenses would be issued for terms of 50 years. The tax on the “gross gaming revenue” of casinos would be 15 percent. No one under 21 could patronize or be employed by a casino, and the gaming commission would have full access to casino facilities at all times.

The use of tax incentives for the construction of casinos would be proscribed by the bill.

“When the Legislature finally gives Texans the freedom they want to decide the issue of gaming I am confident they will overwhelmingly approve the constitutional amendment,” Kuempel told his colleagues.

“This proposal of eight large-scale destination resorts with integrated hotel, entertaining, shopping, retail attractions, casino gaming, and sports wagering is precisely what the voters of Texas would approve.”

He added, “It is not the creation of a Las Vegas strip, and it is not slot machines in gas stations and convenience stores.”

Chris Hughes of Las Vegas Sands, which poured millions of dollars into Texas elections in 2022, testified in favor. Brin Gibson, former chair and executive director of the Nevada Gaming Control Board, also answered questions from lawmakers on behalf of Sands about the oversight of casinos.

Kuempel suggested the regulatory provisions of his bill are modeled after the framework Nevada uses.

His bill provides for a 15 percent tax on casino revenue and a 10 percent tax on sports wagering.

Some of the taxes collected from casinos would be spent on the commission itself, and a small percentage would also go to support the horse racing industry and the compulsive gambling program set forth in the bill. 90 percent of the tax revenue would be divided three ways for property tax relief, public safety, and education.

Kohler, the BGCT lobbyist, said the tax revenue for the state would not be enough to justify the unintended consequences.

“I don’t think the juice is worth the squeeze,” he said.

Rep. Senfronia Thompson (D-Houston) also pointed out the Legislature has tried to use gambling to solve fiscal problems before.

“I was here when the Lottery was passed, and we did make a commitment to the people of Texas that we thought the Lottery was going to be the golden egg that was going to solve funding for public education — and it didn’t happen,” Thompson said.

The Texas Lottery broke its all-time record for ticket and draw game sales in Fiscal Year 2022. However, only $2 billion went to the Foundation School Fund.

Kuempel clarified that he is not suggesting casinos as an end-all solution for any fiscal predicament, but as a way to “capture lost revenue.”

Before Wednesday’s hearing, the Texas Freedom Caucus published a statement on social media in opposition to the constitutional amendments proposed by Geren and Leach.

“We oppose HJR 102 betting on sports and HJR 97 for casinos. This is corporate welfare at its worst by giving special privileges to existing wealthy and woke professional sports and gambling businesses,” the caucus said. “This isn’t a free market, and not worth the harm to families in Texas that comes from gambling addiction.”

HJR 97 is a different version of HJR 155 that Geren previously filed. Sen. Carol Alvarado (D-Houston) has also filed casino legislation in the Senate.

The Texas Constitution prohibits most forms of gambling, though there are exceptions for the state’s lottery and other limited circumstances, such as charitable raffles and church bingo. Opponents of gambling expansion measures say they will fall short of the promised economic benefits and inevitably contribute to addiction and crime.

Gov. Greg Abbott and Speaker Dade Phelan (R-Beaumont) have expressed cautious openness to casinos. Abbott’s staff said in October that he would be willing to review “a very professional entertainment option.” Phelan commented in January that he might be amenable to “high-quality” casinos.

However, Lt. Gov. Dan Patrick said before the 88th Legislative Session began that he does not expect it to make progress, a familiar sentiment that he voiced in 2021.

The casino and sports betting bills were left pending in committee. Committee members can now send them to the House floor, pass committee substitutes, or take no action and let the bills expire.