Gambling on Gaming Coming to Texas?

Story By Lyndsey Garza

Since I moved to the Island 13 years ago, every year I would hear talk of casinos coming to Galveston, but I really did not start paying attention to the speculations and opinions from fellow islanders until about five years ago when I started my career in real estate. As each year passed, more and more clients would ask me what I knew about the controversial issue and what impact it would have on the City of Galveston. It seems that this became a popular debate and ‘what-if’ scenario for island property owners since 2009.
After the painful year Galveston experienced in 2008 due to Hurricane Ike’s wrath as well as the temporary closing of UTMB, one of the island’s major sectors of the economy, laying off over 3,000 employees, more and more people seemed to support the idea of expanded legalized gambling in Texas. Many people see it as the only way for Galveston to get back to the “glory days” and get back on its feet. It’s not only Galveston. And it’s not because of Ike. The state of Texas is experiencing a historic budget deficit of an estimated $11 billion. Texas legislators are looking at various cuts in other important government sectors, such as education, instead of slapping a higher tax bill into our laps. Within the past few years, the environment has improved for proponents of expanded legal gambling in other states that ended up adopting legalized gambling as a way to overcome budget pitfalls. It seems financial despair has had an effect on some lawmakers’ stance on adopting expanded gaming. So far this year, I feel like there is a story in the paper at least three times a week addressing the controversy and updating island residents on the saga that never gets resolved. And, with each new session, our elected officials seem to start the whole process over again. In order to come up with my own stance,
I researched the facts. I wanted to have the information to share with clients, or have the ability to provide them with Internet resources when asked, “When is gambling coming?” As a realtor, I take a lot of pride in the value I place on being ethical with my clients, so having documented facts from the state’s government website to discuss makes me a lot more comfortable. I do, however, have my own opinion as an individual and would like to share some things that I learned and read that helped me reach my position on this controversial topic.
I was quite aware of the fact that the states bordering Texas all offer gambling, especially since I am one of those Texans that looks forward to that trip across the state line to the casino to play three-card poker, Texas Hold ‘Em, and of course, Wheel of Fortune! What I was not aware of was that 32 states have casinos, and every state other than Utah and Hawaii has some form of legal gambling. (Although while doing my research, I did see an article published last week that Hawaii may be changing their minds on this as well.) Americans, especially Texans, are ready to play. Money spent, or lost, by Americans has more than doubled since 1995, growing from $16 billion to $33 billion in 2010. Tax revenue projections brought in by expanded legalized gambling in Texas reach as high as $4.5 billion. There is also a push for electronic gaming and slot machines to be added to state racetracks. Reports have estimated that by adding these gaming devices, an additional $1 billion revenue can be generated for the state.
It is starting to look like gambling’s best bet may be the support from the House of Representatives if the issue can make it to a public vote. Rep. Craig Eiland (D) Galveston, Sen. Rodney Ellis (Houston), and Rep. Jose Mendez (D) San Antonio, presented a joint resolution to the House supporting expanding legalized gambling. (HJR 112) The main call to action within this joint resolution proposes creating a constitutional amendment that would allow the creation of the Texas Gaming Commission. This commission would be responsible for authorizing and regulating slot machines and casino table games. This resolution would also create the Texas casino and slot gaming fund into which all revenue collected by the state due to expanded gambling would be deposited. The governor would also be required to appoint the members of the Texas Gaming Commission by January 1, 2012. Individuals that would serve on this commission will be asked to adopt the rules necessary to be in the position to begin running casinos and slot machine establishments by March 1, 2012. Apparently, up to six to seven casino gaming licenses could be issued to ‘destination areas’ within Texas, and up to two more casino licenses could be issued to development projects on Gulf islands that meet the requirement of having had at least 1,000 guest rooms for visitors as of January 1 of this year. (Hmm…wonder where they could be talking about?)
From what I have read, one of the most positive things expanded legalized gambling can bring to an area is money, which is what our state, including our island, is in dire need of. Gambling laws often require steep taxes from their operators, which end up funding much-needed services within the state, county and especially the municipality the casinos and slot machine establishments are located. Let’s look at the numbers proposed:
Application fee for an owner’s casino license = $50M
Application fee for a slot machine establishment = $25M
Tax taken from general gaming revenue in casinos = 15%
Tax taken from slot machine income at a racetrack = 35%
That’s quite a bit of money collected by the Gaming Commission, even right up front. This is how the joint resolution suggests the revenue be dispersed:
1/30th of taxes collected would go to the municipality (city)
1/30th of taxes collected would go to the county (1/15th if no municipality)
1/20th of general revenue collected would be contributed to a compulsive gambling program
1/30th of general revenue collected would go to the Gaming Commission to investigate and prosecute gambling offenses
Remaining gaming tax revenue would be directed towards property tax relief across the state by lowering the homeowner’s property taxes and providing additional financial aid for higher education students
The great part of creating a constitutional amendment is that it would not require a signature from the governor. Because the resolutions propose constitutional amendments, a two-thirds “yes” vote by the Texas House would be required before moving to the Texas Senate where a two-thirds “yes” vote would also be needed. If the Senate approves the House resolutions without amendment, the proposed constitutional amendment would be presented to Texas voters at the next statewide election, as early as November 2011.
This is part one of a two-part series. Look for part two in next month’s Islander.
References:
San Angelo Standard Times “Gambling: The Real Deal or the Devil?” Kiah Collier April 22, 2011, www.parade.com 2007 edition = May 20, 2007, “Is Gambling Good for America?”, www.texastribune.org “In Texas, Gambling’s Odds Have Improved,” February 25, 2011, Ross Ramsey & Fiscal Notes, 82nd Legislative Regular Session – HJR 112 March 28, 2011
Lyndsey Garza is a Galveston resident of 13 years, is the Director of Sales – Texas with Terramesa Resorts, a licensed Texas real estate broker and a provisional member of the Junior League of Galveston County. Please don’t hesitate to e-mail her with comments, questions, anything real estate related at lyndsey.garza@terramesaresorts.com. Additional information about the resort style communities she promotes and loves can be found on the following websites: Pointe West, Galveston Island – www.pointewestgalveston.com and The Hollows on Lake Travis – www.hollowslaketravis.com.

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