Betting on Higher Education

The 81st Texas Legislature is once again looking at the possibility of legalizing casino style gambling at existing horse and greyhound race tracks. Numerous bills also proposed legislation or a constitutional amendment allowing large new resort casinos to be built throughout the state. During previous years broadening gambling has faced an uphill battle but supporters may get lucky this year.

The House Licensing and Administrative Procedures Committee on April 8, 2009 met to discuss compromises to the numerous pieces of gambling legislation filed. The bill leading the way is HB 1724, authored by Rep. Jose Menedez, D-San Antonio.

If HB 1724 is able to pass the Legislature, it is not certain that it would make it past the governor’s desk. Gov. Rick Perry during previous attempts threatened to veto any legislation expanding gambling. Perry has publicly expressed doubt the Legislature will pass a gambling bill, but has not confirmed he would veto the bill if it passed.

Menedez's bill would need a two-thirds majority to pass the Legislature. A simple majority of the public would be necessary to pass a constitutional amendment to decide whether to legalize gambling.

A survey conducted by Baselice & Associates in February 2009 showed 63 percent of respondents supported allowing slot machines in existing horse and race tracks, or “racinos,” and another poll by Wilson Research Strategies showed 63 percent supported a limited number of resort style casinos.

Both surveys were conducted by competing supporters of legalized gambling. Texans for Economic Development supports racinos and paid for the Baselice & Associates survey. The Texas Gaming Association paid for the Wilson Research Strategies survey to show Texans’ supported casino building. Both surveys showed a majority of Texans want a constitutional amendment to decide the issue.

Menedez's bill proposed abolishing the Texas Racing Commission and transferring all horse and greyhound race track authority to the Texas Gaming Commission. The commission would spell out all licensee requirements and have oversight over all constructed casinos. Nine casino licenses are suggested to be initially awarded, and later, with no specific time frame given, six additional casino owner's licenses would be issued.

Each of the three federally recognized Indian tribes in Texas would get one of those casino licenses. The other three licenses would go to areas where a casino would have a large positive economic impact.

However, once gambling is legal there is not guarantee there will be any money to collect. Horse and greyhound race tracks are regulated by the Texas Racing Commission and in February 2009 the commission asked for an emergency grant of $250,000 to continue operating for the rest of the fiscal year ending Aug. 31. Overall, the commission is in debt by nearly $678,000.

For several years, the horse and greyhound race tracks have seen their revenue diminish each year. The commission cited hurricanes in recent years and Texans going to other states to gamble as some of the reasons for the shortfall. Hurricane Ike damaged many racing tracks located along the Gulf Coast and an estimated $2 billion is spent in tourism in New Mexico and Louisiana by Texan gamblers.

Texas' race tracks are not the only ones losing money. Las Vegas saw 4 percent less profit this year, the first time since Sept. 11, 2001 when it dropped by 1 percent. Florida's gambling industry has lost millions of dollars in revenue for several years.

Menedez's bill requested a 15 percent tax on the profit of casinos and a 35 percent tax on race tracks profits. Only a fraction the tax collected is designated to higher education since the Legislative Budget Board has divided each tax into five separate funds, some to pay for administrative costs and compensate counties and municipalities with casinos.

I find it amusing that one of the new funds proposed is called Problem Gambling and Addiction Grant. At least they are looking ahead at the negative effects passing this legislature will cause. Another great thinking is dedicating $200,000 every two years to the Department of Public Safety to investigate and prosecute crime related to illegally possessing gambling devices.

This session's slow Legislature has the bill still in the The House Licensing and Administrative Procedures Committee. Opponents of legalized gambling are fighting back hard against a strong lobbying campaign by supporters such as casino developers.

I hope the economy is not used by legislators as the excuse for passing legalized gambling. If the gambling tax collects a lot of money, it would be by creating chronic gamblers throughout the state. Mostly affecting lower income individuals and creating a more degenerate and dangerous society.