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The Texas House of Representatives Committee on State Affairs heard extensive testimony Wednesday regarding multiple bills that would address gambling within the state. HB1942 would legalize mobile sports betting, while HJR155 would establish brick-and-mortar casinos. Finally, HB2843 would create a Texas Gaming Commission to regulate in-state gambling.
Legalizing gambling in Texas will be no minor feat, as it requires a state constitutional amendment. However, with revenue estimates in the billions of dollars annually, there are plenty of interested parties eager to bring gambling to the Lone Star State.
Mobile Sports Betting in Texas
The Committee first heard testimony on Representative Jeff Leach’s HB1942, which would grant mobile gaming licenses to Texas’s 14 professional sports teams. The teams would then contract with a mobile gaming operator of their choosing to provide sports gambling within the state.
Testimony was also heard regarding HJR102, Rep Leach’s companion bill to allow the legislature and citizens to vote on a constitutional amendment to permit Texas mobile sports gaming.
“Texans value our freedom and liberty in Texas,” Rep. Leach (R-Plano) told the committee, “We talk a lot about freedom and liberty around here. About protecting and promoting, safeguarding the individual rights and liberties of the people. I believe that the hundreds of thousands of Texans right now who are placing sports bets illegally, criminally right now should be able to come out of the shadows.”
HB1942 would establish a $500,000 licensing fee and a 10% tax rate, with the profits applied mainly to reduce property tax rates. When pressed on those figures, Rep. Leach conceded the numbers are flexible and could potentially be increased.
The bill has no brick-and-mortar component.
Scott Ward, representative for the Sports Betting Alliance, which includes FanDuel, DraftKings, BetMGM, and Fanatics, testified that Texas has an illegal gambling market of almost $7 billion annually, greater than any state that has legalized betting. Ward reported that GeoComply blocked 2.85 million attempts in the state of Texas to make otherwise legal sports bets during the 2022-23 football season alone.
Based upon the parameters of HB1942, Eilers & Krejcik Gaming reported estimates a mature online sports betting market in Texas would generate approximately $2.37 billion dollars in gross annual gaming revenue. That revenue would result in approximately $180 million in direct annual tax revenue to the state. They also estimate legal sports betting has the potential to create hundreds of direct jobs and thousands of indirect and induced jobs in Texas.
Others testifying in support of the proposed bill included representatives for the Dallas Cowboys, Houston Astros, PGA Tour, San Antonio Spurs, PENN Entertainment, Outlier, and Fertitta Entertainment.
Jennifer Hughes testified on behalf of the Kickapoo Traditional Tribe of Texas in opposition to the bill due to its failure to include tribes. However, Hughes acknowledged that she has been in contact with Rep. Leach, and Leach noted in his closing statement that he would be happy to discuss an amendment to include tribal access.
Senator Lois Kolkhorst has proposed companion bills SB 715 and SJR 39 in the Texas Senate.
Brick-and-Mortar Casinos
Representative Charlie Geren, a Republican, authored HJR155, which would propose a Texas constitutional amendment to permit resort-style casinos for in-person gaming. Rep. Geren’s bill attempts to establish world-class iconic casinos that would become tourist destinations for out-of-state visitors.
“The joint resolution would not only keep Texas tourism dollars at home, it will also bring massive out-of-state business and leisure tourism to our state,” Rep. Geren assured the committee.
The bill supports Texas horse racing tracks by permitting owners to apply for the new casino licenses. Track owners could also sell the licensing rights to other interested parties, such as established casinos in other states. As written, HJR155 would only allow sports wagering on site, but Rep. Geren said that the legislature could also authorize mobile sports betting.
The bill would provide for eight resort destinations, and no individual could hold more than two of those licenses. Texas counties that voted no on the amendment would be exempted from having casinos licensed in their county. Gross gaming revenue would be taxed at 15%.
Chris Hughes, testifying on behalf of Las Vegas Sands, explained that the proposed bill requires minimum investments of between $250 million and $2 billion dollars for each casino. It would also require the governor to negotiate in good faith with local tribes to establish casinos on tribal lands. Casino application fees would range from $500,000 to $2.5 million, with those fees used to help fund the Texas Gaming Commission.
Eric Schippers, senior vice president of governmental affairs for PENN Entertainment, testified that Texans spend more than $5 billion annually at casinos across the state border. Schippers likened the proposed casino legalization to PENN’s recent work on sports gambling in Ohio.
Gerry Del Prete, CEO of gaming for Fertitta Entertainment — a Houston-based company that owns the Houston Rockets and the Golden Nugget gambling brand — testified that 80% of the clientele at its Louisiana casino currently comes from Texas. Del Prete believes the Texas market is extremely competitive and that there is a greater upside there.
Representatives from local tribes testified that the bill should specifically provide for inclusion of the three federally recognized tribes in Texas. The Kickappo tribe also proposed an amendment to provide casino gaming at a new location closer to the San Antonio area to counterbalance the increased competition.
A representative from the Republican Party in Texas opposing the bill read into the record a recent resolution that “calls on all Republican Texas legislators to cease and desist any efforts to open the State of Texas to casino gambling.”
Texas Gaming Commission
Meanwhile, HB2843, authored by Representative John Kuempel (R-Seguin), is an expansive bill intended to create a gambling regulatory structure. This bill would establish a Texas Gaming Commission based on the Nevada casino model. The Gaming Commission would serve multiple regulatory roles, including vetting those involved in the casino industry, granting and enforcing licenses, and addressing problem gaming.
The Chair of the Nevada Gaming Board testified in favor of the bill and assured the Committee on State Affairs that the regulatory regime would allow the Texas Gaming Commission not only to vet initial license applicants but also any entity that attempts to buy that license in the future.
The Texas Quarter Horse Association testified that it is neutral on the bill and requested further support for local racetracks be included.
Representatives from Texas organizations including Concerned Women for America, Texas Values, Texas Eagle Forum, Christian Life Commission of the Baptist General Convention of Texas, Texans Against Gambling, and Southern Baptists of Texas Convention testified in opposition to all three bills. Their concerns centered on public health and morality issues, including underage gambling and gambling addiction.
The Institute for Policy Innovation testified against the last two bills, stating it supports legalized gambling in Texas but believes these bills artificially limit the market.
