California, Florida, Texas Are Legal Sports Betting Deserts, Stranding 28% Of American Population

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CABAZON, Calif. – Four 40-somethings from Arizona sidle up to Splash Bar in the center of the casino floor.

Business is late-afternoon brisk on a Thursday here at Morongo Casino Resort on the eastern reaches of the Inland Empire. The Rams and Raiders are about to kick off about 90 miles west in Inglewood, and bar seats near the televisions behind the bourbon shelf are filling in quickly.

As one of the men berates his buddy for ordering ice with his tequila, another cocks his head and lowers his phone.

“No FanDuel?,” he asks another.

No. Not like back home in Arizona. And just a few weeks after two ballot propositions — Prop 26, which would have allowed for sports betting at tribal casinos, like the Morongo — and Prop 27, which would have legalized mobile sports betting were rebuked by voters, not any time soon in California, either.

If legal sports betting was running for president, it would have won in an electoral landslide already with 323 votes.

But with no California, no Florida, and no Texas, it hardly seems like a mandate. While 44% of the American population now has access to legal mobile sports betting, these three very big prizes, comprise 28% of Americans alone.

The push to legalize sports betting in these states has been difficult, messy, expensive, and, most importantly, unsuccessful.

Florida legalized mobile sports betting through a compact with the Seminole Tribe in 2021, but the enterprise was shut down by a federal court after a month and remains in litigation that could last for years.

The industry moved on to California, where a record $450 million was spent promoting or denigrating Props 26 and 27, yielding nothing but a weary electorate and a reminder of how strong tribal gaming influence is there.

What if California, Florida, Texas Don’t Want Sports Betting?

Morongo-Casino-Resort

“California’s unique and goes its own way. Many, many instances. And maybe this is one of them.”

  • Daniel Little, San Manuel Band of Mission Indians chief intergovernmental officer

The California debacle, where 67% voted against Prop 26 and 82% against 27, was a sobering insinuation that maybe some states don’t want legal sports betting or are at least agnostic enough to prevent its legalization while ignoring the fact that illegal betting happens in them every day. The defeats were at least a reminder that forming coalitions over potentially controversial pastimes in hugely populated states would be difficult and time-consuming. And not for sale.

Frank Sizemore, the chief operating officer of the San Manuel Band of Mission Indians, which owns Yaamava’ Resort and Casino in San Bernandino, asserts that California casino customers aren’t largely interested in sports betting.

That, he told Gaming Today, was one of many reasons the tribe that owns Yaamava’ spent in excess of $100 million in negative advertising to bury Prop 27 and hardy supported Prop 26.

But things seem to be different here where the ice meets the tequila, just 35 miles away at the Splash Bar.

With the Casamigos-on-the-rocks crew off toward the craps tables, the bartender looks up from his chores to answer a query about the frequency of the type of exchange from a few minutes ago.

“A lot,” he said. “All the time.”

Texas the Big Prize of the Moment, as Florida, California Smolder

With the Florida sports betting odyssey awaiting its next phases in the U.S. District Court of Appeals, DC Circuit, stakeholders reassessing how to make another run at California, and Ohio’s online sports betting market live, Texas becomes the lone star of the big-state land grab.

Like with Florida and California, forces have been marshaled on both sides of the debate in Texas, because the prize is seen as worth it.

PlayTexas estimates a Texas sports betting market could generate upwards of $2 billion yearly in gross gaming revenue.

“Big states are big prizes,” Chris Grove, a partner at Acies Investments told Gaming Today. “The bigger the prize, the less incentive stakeholders have to bend on their vision for legal sports betting.

“Remember, it’s always easier to kill a bill than to pass a bill. It’s always easier to maintain the status quo than to change it. And the larger the state, the more stakeholders you tend to have at the table.”

How are California, Florida, Texas Alike Regarding Gambling?

The disparate political and demographic makeup of these large and populous states makes finding a throughline, and a single strategy for expanding legal gambling in them, difficult for the broader industry and amenable politicians in them.

“Las Vegas stands to lose a lot in California, as do the tribes.”

Tribes control casino gambling in California and Florida — 110 in California and the Seminoles in Florida — but Texas has only a handful of venues operated under the federal auspices of three federally recognized tribes. Gambling is outlawed in the state constitution.

All three states have thoroughbred horse racing, but Texas tracks like Lone Star Park have no interstate simulcasting since the Texas Racing Commission shut down the signal, claiming the state could not comply with the Horseracing Integrity and Safety Authority.

All three states are in the Sun Belt, tourist hubs, and the sites of numerous professional and college championship games that attract out-of-state fans and dollars. Lotteries thrive in all three.

California remains decidedly Democrat-leaning, but Florida and Texas are Republican territory.

California almost meets all the criteria for gambling expansion put forth by Jason Ader, co-founder and CEO of SpringOwl Asset Management LLC. But the resounding defeats of Props 26 and 27, demonstrated how powerful the final box remains to check.

“I generally think the liberal states that need to have other sources of income sort of fit the profile, like New York,” Ader told Gaming Today. “California, the tribes are pretty well organized. That’s not really the case in New York. And California, of course, is still a very critical feeder market to Vegas. It’s the biggest feeder market to Las Vegas. Las Vegas stands to lose a lot in California, as do the tribes.”

This generates lobbying pressure and millions in PAC and advertising spending.

High-Profile Texans Pushing for Legal Sports Betting

Mattress-Mack-World-Series-AstrosWeirdly, the most high-profile sports bettor in the United States is a Texan.

Jim “Mattress Mack” Macingvale has parlayed a clever business hedge into invaluable free publicity and a perch as the veritable Colonel Sanders of the enterprise, trundling from Houston to neighboring Louisiana or elsewhere to lay his massive wagers — he won $75 million on the Astros’ World Series victory — as part of an ongoing play to leverage winnings against huge promotions run in conjunction at his furniture stores.

Hopeful for the chance to keep his money home one day, but not counting the seconds, Macingvale (left) continues to fluff out tax revenue in other states when he loses or, as with Iowa — where two sportsbooks paid out $10 million on his World Series bets — flattens them when he wins.

Now it appears that gambling advocates are finally going to mess with the norm in the state of 30 million residents and some of the most restrictive gaming laws in the country.

The state’s constitution specifically forbids gambling, which has in the past limited legal options to a lottery, three tribal casinos operating under federal law, and a small pari-mutuel racing industry that can’t offer its product beyond state lines.

There is definitely a groundswell afoot in Texas. If it envelops Austin is another matter.

“It’s a pretty conservative state, in a lot of ways like Florida,” Ader said, “and states that really have moved and accelerated, gaming where there’s high population, tend to be more liberal, tend to be more in economic need.

“New York is a good example. It’s just a liberal state that very much needed the income from alternative sources like gaming and cannabis, unfortunately. Texas has a pretty strong lobby against both those areas, and it’s not going to be easy.”

But some national players are trying. Las Vegas Sands launched the Texas Sands PAC with a $2 million war chest in 2022.

Ader sees it as a very long-term goal. Sands also help bankroll an unsuccessful ballot initiative last year to allow it to build a casino near Jacksonville.

“That’s such a big company. They sort of have to pursue opportunities in those markets,” Ader said. “I don’t know. I think it may take much longer than they think.”

That’s because momentum is hard to maintain with the Texas Legislature meeting only for 140 days in odd-numbered years.

Texas Sports Team Owners Push Gambling Ambitions

Pin-pointing the first domino to fall in this process is imprecise, but the Dallas Cowboys inking of Oklahoma-based WinStar Casino as its official casino in 2018 was a milestone. The deal was announced four months after the repeal of the Professional and Amateur Sports Protection Act, which made sports betting a legal possibility beyond Nevada.

Eventually, influential professional sports team owners in the state began voicing support for the legalization of sports betting, notably Dallas Mavericks owner Mark Cuban and Cowboys owner Jerry Jones. They later formed the Texas Sports Betting Alliance to leverage their lobbying heft as a group.

Cuban (right) has stated intentions to partner with Las Vegas Sands for a proposed new arena for his NBA team.

“My goal, and we’d partner with Las Vegas Sands, is when we build a new arena, it’ll be in the middle of a resort and casino,” Cuban told The Dallas Morning News. “That’s the mission.”

Mark Cuban at the "Shark Tank" Season 8 Premiere at Viceroy L'Ermitage Beverly Hills on September 23, 2016 in Beverly Hills, CA

Jones told the Dallas Morning News last week:

“Well, I think [sports betting is] really a thing that needs to be addressed at this time. One of the reasons why I think it does is because it’s happening at this time.

“There’s a huge amount of gaming going on in and around sports at this time. And, so, to have all of the benefits or all of the control over it, it needs to be recognized and parameters put on it and discipline put in it. … Then, also the benefits that can go in Texas could adhere to the right kind of people, or some property tax. Certainly, help educate our great state’s children. All of those things can be enhanced by something that’s presently going on in a big, big way.”

 

Texas Sports Betting and Gambling Bill Awaits Legislature

Hello, 2023.

With Florida’s sports betting future slogging through the federal court system, and the embers of Props 26 and 27 finally cooling in Pacific breezes, Texas becomes the belle of the sports betting expansion ball.

And how could Texas not love that?

An actual bill arrived in the form of State Sen. Carol Alvarado’s Senate Joint Resolution 17 “proposing a constitutional amendment to foster economic development and job growth and to provide tax relief and funding for education and public safety by creating the Texas Gaming Commission, authorizing and regulating casino gaming at a limited number of destination resorts and facilities licensed by the commission, authorizing sports wagering, requiring occupational licenses to conduct casino gaming, and requiring the imposition of a tax.”

Getting constitutional amendments in front of Texas voters is difficult: they must come from the legislature, not citizen efforts, and they must be approved by two-thirds of legislators in both bodies.

But Texans have been amenable to amendments, approving 74% of them since 1876, according to a Texas Legislative Council report.

Austin, Lobbyists Buzzing Over Possible Movement on Gambling Expansion

The players are treading carefully — but at least treading — in the capital.

The potential for movement on gambling and the movement of lobbyists into Austin ahead of the legislative session — which began on Jan. 10 — was bolstered in October when Gov. Greg Abbott moderated his gambling stance while successfully campaigning against Democrat Beto O’Rourke for re-election. As O’Rourke advocated for legalizing sports betting, Abbott signaled support for an expansion of casino gambling.
Lt. Gov. Dan Patrick is seen as crucial in the process, given his sway over the Texas Senate, but he recently said there was “no movement” on gambling expansion.

In late November, former Texas governor Rick Perry announced he’d reprise his role as a former Texas A&M Yell Leader by becoming a spokesperson for the Texas Sports Betting Alliance.

“The legalization of mobile sports betting in Texas would mean implementing smart and efficient oversight to preserve the integrity of sporting events, empower Texans to safely participate in mobile sports betting, and fight illegal gambling,” Perry said in a press release. “Given that Texans are already participating in mobile sports betting, legalization would be a win for all involved.”

The Alliance estimates $8.7 billion in illegal offshore wagering by Texans each year.

Perry later clarified, however, that he wouldn’t actively lobby for gambling expansion.

Texas Gambling Expansion a Red River Shutdown?

Oklahoma-impact-Texas-gambling-expansion

Gambling expansion in Texas matters a great deal to tribal operators in Oklahoma, which include one of the largest casinos in the world, the Chickasaw Nation’s WinStar World Casino in Thackerville and the Choctaw Casino & Resort-Durant. Both are within easy Ford F-150 range of the Dallas/Ft. Worth suburbs.

While estimates on Texas’ impact on Oklahoma gambling vary, Valerie Spicer, founding partner of Trilogy Group and Chief Gaming Officer at Vetnos, quipped, “Have you ever seen the license plates in the parking lot?”

“It’s a lot,” added Sheila Morago, executive director of the Oklahoma Indian Gaming Association.

The Dallas Morning News estimated the amount Texans spent in Oklahoma, Louisiana, and New Mexico casinos at $2.5 billion yearly in 2019.

Morago told Gaming Today that she believes Texas will eventually legalize sports betting, but the effort will fail this year because the state’s legislative calendar blunts momentum.

“It’s a huge lift,” she said at the National Council of Legislators from Gaming States. “It’s a statewide initiative because they have to change their constitution. Anybody who’s ever run any statewide initiatives at all knows that it takes years to line it up and get it ready and go.”

Tilman Fertitta, owner of the Houston Rockets and the Golden Nugget gambling company, estimated on the Michael Berry Show on AM 740 in December that “in the mid-80s percent” of the business in his Lake Charles, Louisiana, casino comes from the Houston area.

Fertitta also predicted that gambling expansion wouldn’t come to Texas for at least eight years, long enough to pay off his investment in the Louisiana property. Part of the reason, he said, was because of a conservative legislature and a state economy not in need of the type of cash infusion gambling could provide.

Gambling Industry Waits for Big Notches in Sun Belt

Sports betting’s electoral map is filling in — granting three notable exceptions — and the industry is ready to pivot to the legalization of the more lucrative online casino gaming beyond the six states where it’s already active.

But California, Florida, and Texas are too important to forsake in regard to sports betting. And the nettlesome job of eventually launching iGaming there, as usual, will start with sports betting as the gateway. These states will require a realization among industry stakeholders that cash, amenable legislators, and ad blitzes can’t easily negate their complexities.

They will most definitely require patience.

“I think we need to give Texas, Florida, and California a chance to percolate,” Bill Parcells III, an industry lobbyist with Princeton Public Affairs Group said at NCLGS. “I think it’s clear sports betting has been a monster, it’s great and it continues to progress, more states are coming on and launching.

“But it’s really important for the industry to pivot and start working on some low-hanging fruit, get better organized and come in together.”

Mark Cuban photo by Kathy Hutchins

About the Author
Brant James

Brant James

Brant James is the lead writer for Catena Media Sharp Sites including Gaming Today. He has covered the American sports betting industry in the United States since before professional sports teams even knew what an official gaming partnership entailed.

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