Just by moving out of a House committee, Texas sports betting bills have already advanced farther than ever.
Getting them passed in the House would be seen as a significant victory this cycle, according to some in the industry. However, the idea of TX sports betting being legalized in 2023 remains a longshot.
LSR examines why:
Early Texas sports betting optimism
Some in the industry had been optimistic that Lieutenant Governor Dan Patrick would soften from his long-held, anti-gambling stance. Patrick is considered arguably the biggest stumbling block in the process.
There were multiple reasons for that:
- One of Patrick’s key allies, Sen. Lois Kolkhorst, is a sponsor of the standalone online sports betting legislation. Joined by fellow sponsor Rep. Jeff Leach, the bill is Republican-led in both chambers.
- Houston Rockets owner Tilman Fertitta, thought to have Patrick’s ear, publicly supported the standalone bill as part of the Texas Sports Betting Alliance.
- Patrick had just won re-election, potentially freeing him from electoral pressure.
Patrick: No gambling support in Senate
Yet Patrick has shown no indication of changing his mind.
In fact, he has continually said that there is not enough support for expanded gambling in the Senate.
“Our members have been clear: they’re not in support today. We don’t have any votes in the Senate,” Patrick told an Austin radio station recently. “Couldn’t find one Senator who supported it.”
‘I need Republican consensus’
Additionally, Patrick added:
“Unless I have 15 to 16 Republicans, meaning it’s a Republican-driven bill, because we’re a Republican-driven state, I’m not bringing a bill to the floor. I need Republican consensus, otherwise it’s a Democrat bill.”
Industry: Patrick cannot betray base
Industry sources believe Patrick saying the Senate doesn’t want it is code for ,“I don’t want it.”
His base is composed of conservatives and religious groups that are anti-gambling.
“He got his rise through conservative talk radio and the far religious right,” one industry source said. “Until they tell him it’s OK, he’s not going to let it happen. It’s very much a part of his base. I think that base would view it very much as a betrayal.”
Could Patrick sway House vote?
Some observers wonder how Patrick’s comments about a lack of support in the Senate will impact a House vote, should the online standalone legislation and/or the casino resort-sports betting combo bills it make it onto the floor.
“When you send that signal to the House, it makes it much more unlikely that the House is going to pass a bill,” a second industry source said. “Because if you’re a House member who is 50-50 on it, why would you cast a vote for something that you know is going to die in the Senate?
“I think it’s Patrick playing smart political games for his objective of not pushing this forward.”
Texas House Speaker open to gambling, maybe sports betting
However, others remain optimistic about House passage because House Speaker Dade Phelan said he was open to expanded gambling in January.
“I want to see destination-style casinos that are high-quality and create jobs. … I think the average voter would approve,” Phelan said.
Texas sports betting in 2025?
Still, unless key stakeholders can change Patrick’s mind before the end of session May 29, Texas will not be able to pass sports betting again until 2025.
“It’s an audience of one in the Senate until there’s enough pressure applied,” a third industry source said.
That pressure, the source believes, has to come from an influential stakeholder like Fertitta or Dallas Cowboys owner Jerry Jones. Jones, whose franchise is valued at $8 billion, has been publicly supportive of legalizing sports betting.
“I would’ve thought the sports teams could’ve gotten Patrick to where they needed him to be, or at least kept him quiet until the House passed the bill,” the second industry source said.
Las Vegas Sands problem?
Aside from Patrick, another roadblock in the path to the legalization of online sports betting is Las Vegas Sands.
Sands has spent piles of money on lobbying for the expansion of Texas casinos. The Dallas Morning News reported that LVS has hired at least 63 lobbyists while paying them at least a combined $5.9 million this year.
“There’s a very powerful faction out there that’s saying it’s all or nothing,” the second industry source said. “Either we do casino and sports, or nothing happens at all.”
Texas budget surplus hurts sports betting
Texas has a $32.7 billion budget surplus, so the state does not have a need for gambling revenue.
“Selling this as a revenue panacea or a budget panacea is probably not a good idea,” the second industry source said.
A better angle could be consumer protections and public policy, the source added, “but that’s never been the biggest motivator for states to pass gambling. It’s usually ‘show me the money.’”
Poll: Texans want expanded gambling
If there are grassroots efforts pushing Texas sports betting, it is hard to find them.
Yet a University of Houston poll showed that 75% of Texans supported a proposed bill amendment by Sen. Carol Alvarado that would legalize sports betting and allow for the addition of up to four resort-style casinos.
“Maybe that’s what scares them,” the second source said. “Some of these guys just don’t want casinos. And I’m sure there’s a lot of Oklahoma casinos that are trying to make sure that Texas never gets a casino.”
Committee concerns can be fixed?
In the online standalone House committee hearing, Rep. John Smithee pointed out potential concerns over the tax rate (10%), licensing fee ($500,000) and tribal pushback (Kickapoo.)
“All of those things are negotiation points that could be figured out, but why even bother if we think the bill is going to dead in the Senate?” the second source said. “I think the industry would like to see it get out of the House to take that as some incremental progress. And I think this going to be hard to achieve.”
There are less than two months for Texas to pull off a relative miracle. Otherwise, it is on to the next cycle in 2025, as Texas legislators only convene every two years.
