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Will the 87th Texas Legislature Expand Gaming?

There was a lot of talk before the start of the 87th Texas Legislature and even up through last week about the possibility of expanding gaming in Texas, despite the fact that movements to do so have failed for more than a decade at the Capitol.

A state revenue crunch is often touted as a factor that could warm up lawmakers’ reception to the idea, but when Texas Comptroller of Public Accounts Glenn Hegar recently released his revised revenue forecast, the state was not nearly as bad off as first feared.

Then there were the significant election season contributions to Texas GOP lawmakers, $5 million worth, by casino entrepreneur Sheldon Adelson in 2020. 

Adelson wanted to see Texas legalize casino gaming and readied a 2021 lobbying blitz to bring such facilities to the state.  It was not to be; he died Jan. 11.

Undeterred, Texas professional sports franchises, as reported by The Dallas Morning News, including the Dallas Cowboys, Dallas Mavericks, and the Texas Rangers, and others recently launched the Sports Betting Alliance to get the State of Texas to allow sports books at team stadiums and approve online sports betting within the state.

While advisors to Gov. Greg Abbott and other high-profile Republicans have indicated in recent months they were warming to the idea of expanding gaming in Texas, Lt. Gov. Dan Patrick threw cold water on the idea last week.

Speaking on KFYO-AM Lubbock’s Chad Hasty Show, Patrick said “It’s not even an issue that’s going to see the light of day this session.” 

As the gatekeeper of the Texas Senate, Patrick has the power to stop any piece of legislation in its tracks, which is why veteran political scientists say the Lt. Governor in Texas has, at least in some ways, more power than the governor.

Patrick said the combined revenues that promoters of either casino gaming or sports betting forecast for Texas would pay for only a small part of Texas’ annual $125 billion budget.

He noted the difficulty in passing such a measure because it would require a constitutional amendment to do so.

Later that day, a report that the Dallas Mavericks were not playing the national anthem at its home games incensed GOP lawmakers.

As reported by the Texas Tribune, Patrick announced a top legislative priority would be passage of a bill requiring playing of the anthem at “at all events which receive public funding.”

The next day Patrick said on KSKY-AM Dallas’ Mark Davis show, “There were already people saying, ‘Well, why would I approve sports betting, these are people who don’t even make people stand for the flag, why would I do this?' Again, because it doesn’t generate much money for Texas, it generates a lot of money for them.”

Gaming proponents, however, are undeterred.

Speaking to reporters later in the week, Andy Abboud, a senior vice president of government affairs for The Sands, said “We’ll see how things feel toward the end of the session later this spring. I believe that we can change anybody’s mind if we do it effectively.”

The Sands was founded by the late Adelson.

Abboud indicated that legislation was coming in the next few weeks.

“Does it happen this legislative session? We will see,” Abboud said.

“Does it happen in the near future? It is inevitable.”

State Law Limits Gaming Advertising
A provision in the Texas Penal Code, §47.05, makes it a criminal offense to “communicate, with the intent to further gambling, information as to bets, betting odds, or changes in betting odds.”

Attorney Stacy Allen, a partner with TAB’s state counsel Jackson Walker LLP said “There is little case law interpreting this statute and nothing material at the appellate level.  In fact, the statute was downgraded to a misdemeanor several years ago. 

Regardless, Jackson Walker has always advised TAB members to be wary of accepting advertisements of companies who offer such services.

There are exceptions such as the Texas State Lottery, parimutuel wagering on Texas horse and dog tracks, and Indian-owned casinos in neighboring states who have compacts to conduct Class Three gaming with those states.

Federal law allows tribes with legal compacts to advertise the availability of slot machines, roulette, blackjack, and other banked card games such as poker at the tribes’ casinos, even to other states’ audiences such as Texas.

There are Indian-owned casinos with such compacts in New Mexico, Oklahoma, and Louisiana.

In the past decade numerous Texas broadcast outlets have had inquiries about advertising eight-liner halls, private poker clubs and online gaming sites.

The latter often feature a free component in their advertising, only to have a paid component on the entity’s website which could be viewed as illegal gaming by a local Texas prosecutor.

Therein lies the problem for Texas radio and television stations.

TAB cannot say with certainty as to how a local prosecutor might view such advertising.

While the penalty for promotion of illegal gaming is a Class C misdemeanor punishable by $500 fine and up to six months in jail, a criminal investigation might have a significant impact on a station’s future license renewal.

If approached with such controversial advertising, TAB strongly advises stations to consult with their legal counsel before agreeing to broadcast such commercials.

Questions? Contact TAB’s Michael Schneider or call (512) 322-9944.

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