Texas Racetracks Take Reins For Casino Expansion

February 6, 2023
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The latest major proposal to legalize casino-resorts in Texas was introduced in the state’s House of Representatives on Friday after being expanded to include a central role for incumbent racetracks.

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The latest major proposal to legalize casino-resorts in Texas was introduced in the state’s House of Representatives on Friday (February 3) after being expanded to include a central role for incumbent racetracks.

House Joint Resolution 97 was filed on Friday by Republican state Representative Charlie Geren of Fort Worth and would authorize up to seven destination-resort casinos in four areas of the Lone Star State.

“Every year, Texas is losing billions to neighboring states that allow gaming. I believe it’s time we allow Texans to vote on bringing that money and the benefits back to Texas,” Geren said in a statement after introducing his bill.

Geren said he would “look forward to making the case and working with my colleagues in the House to get this legislation passed this session.”

HJR 97 is the sequel to similar legislation from the 2021 session that would have authorized one new-build destination-resort in each of Texas’ four major metro areas, with the state’s established horse and greyhound racetracks eligible to obtain secondary licenses limited to 750 gaming positions.

This year’s measure instead allows only local Texas racing associations or their designated casino partners to apply for licenses.

Two casino-resorts would be permitted in the Dallas-Fort Worth metro area, two in Houston, and one each in San Antonio, Corpus Christi and the McAllen-Edinburg-Mission area near the state’s southeastern border with Mexico.

Speaking with the Texas Tribune, Las Vegas Sands head of government relations Andy Abboud said that tying casino expansion more closely with Texas racing interests “brings everyone together, by and large, that in some ways were divided last time.”

Las Vegas Sands has been the most prominent lobbying force behind casino expansion in Texas in recent years, hiring dozens of lobbyists in Austin to advance the issue.

“We have a much broader coalition of people behind this,” Abboud said of HJR 97 in comparison with earlier House and Senate bills from 2021 that died without passing out of committee.

Prominent racing interests in Texas include the Chickasaw Nation, which owns Lone Star Park near Dallas, as well as Penn Entertainment, owner of Sam Houston Race Park in Houston and Retama Park near San Antonio.

In a seemingly significant statement on Friday, the Chickasaw Nation appeared to welcome Geren’s bill by saying they would engage with Texas lawmakers to advocate for the “economic benefits and tens of thousands of jobs destination resorts will bring to the Lone Star State.”

The Chickasaw tribe have been a formidable opponent of gambling expansion in Texas, with Texans accounting for thousands of visitors annually to their flagship WinStar World tribal casino-resort in neighboring Oklahoma.

One day before HJR 97’s introduction, Penn Entertainment CEO Jay Snowden told analysts and investors that his company was also “very engaged” in legislative discussions in Austin, citing Penn’s “ownership and/or controlling positions in a number of racetracks in Texas that we think sets us up really well if and when something does happen in Texas.”

The bill requires casino operators to spend a minimum $2bn to develop destination-resorts in the Dallas and Houston areas, $1bn in San Antonio, and $250m in the two other regions.

A newly-formed Texas Gaming Commission would be established to license and regulate casino gaming. Online gaming would be allowed strictly on site at physical casinos. Gross casino revenue would be taxed at a rate of 15 percent.

A Senate bill consistent with the 2021 measures proposing a narrower role for racetracks was also filed in December, but the conventional wisdom remains that legislation is most likely to advance first in the House, where senior lawmakers appear to be more amenable to gambling expansion.

House Speaker Dade Phelan said in January that he opposes allowing slot machines at locations throughout Texas, but not so “destination-style casinos that are high quality and that create jobs and that improve the lifestyle of those communities.”

Republican Governor Greg Abbott made similar comments prior to his successful re-election last November. However, Lieutenant Governor and Senate President Dan Patrick, also a Republican, has opposed any kind of gambling expansion and remains a significant potential roadblock because he controls the legislative agenda in the upper chamber.

Penn Entertainment’s Snowden told investors last week that although it was still very early in the 2023 session, there was “a lot more conversation and openness this legislative cycle than we have really ever seen.”

“There seems to be support on the House side and from the governor, and the Senate is really a TBD,” Snowden said.

In addition to casino games, HJR 97 would authorize the Texas Gaming Commission to regulate sports wagering, subject to the approval of separate legislation by Texas lawmakers.

Legislation related to online and retail sports betting is expected to be reintroduced in due course, with backing from an alliance of Texas sports teams and major U.S. sports-betting operators.

The Texas legislature is in session until May 29. If passed by both the House and Senate, HJR 97 would also require approval of a state constitutional amendment through a voter referendum to be held on November 7, 2023.

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