Why Gambling's Odds Have Improved (Hint: We're Broke)

Gov. Rick Perry was for legalized gambling before he was against it.

In 2004, the governor added video lottery terminals at racetracks to the list of issues he would allow lawmakers to consider during a special session — when the governor controls what’s on the agenda. They ultimately didn’t produce any legislation, but it was an indication that Perry wasn’t hostile to expanding the state’s legal gambling — at least if the money was for school finance.

His position has changed, and like the Republican Party of Texas and many of his core voters, he no longer supports expanded gambling in Texas — although that might not make any difference this year. Texas allows bingo and parimutuel wagering on dogs and horses, and runs a lottery, but for casino games and slots, Texans go elsewhere.

In its annual reports to its governor and state Legislature, the Louisiana Gaming Control Board frequently writes about Texas. We’re apparently the mother lode for the Sportsman's Paradise. In the most recent report, for 2009-10, the state recorded $723.5 million in gaming revenue. The board members are worried that competition from other states could take away money and cut into SELF, the Support Education in Louisiana Fund, where the gaming money goes.

For instance, the state’s Lake Charles market accounted for $482.4 million in revenue in that latest report, and has this asterisk attached to it: “Most of this area’s customers originate from the Houston area, and, like Shreveport-Bossier, would be hurt by legalized gambling in Texas. Pro-gambling lobbyists have so far been unsuccessful at bringing gambling to Texas, but persist in their efforts to do so.”

That they do.

The promoters here are lobbied up, with groups advancing sometimes competing arguments for more liberal bingo rules, for allowing slot machines to operate at existing racetracks and on Indian reservations, and for full-blown destination resort casinos in the state’s major cities and coastal tourist spots. The casino bill will be carried, once again, by state Rep. Jim Pitts, R-Waxahachie, which is significant in part because he’s the chairman of the House Appropriations Committee, which is writing the state budget.

The existing forms of gambling in Texas all got through the Legislature in previous tough financial times. It’s a simple formula: the state needs money to keep programs going, it’s not a tax, it doesn’t require the governor’s signature and it does require voter approval. That’s four kinds of political insulation, and they’re all in play now.

Texas has a budget shortfall of $15 billion to $27 billion, depending on whether you’re measuring how much it would take to match current spending — the low number — or current services.

Perry reverted to his anti-gambling position after the 2004 effort, but unless he launches a vociferous campaign against it, that probably won’t matter. Slots or casinos go straight from the Legislature to the voters without stopping at the governor’s desk. Public opinion, measured both in industry polls and in third-party polls, shows support for expanded gambling, especially for proposals that have local options and when the money is directed at something voters support, like public education.

The promoters say slot machines could be shipped into the state and be operating in no time at all. That’s important to lawmakers looking to balance the budget: If the machines are up and running quickly, they’re producing state revenue quickly. That makes the budget part work.

Casinos take longer to set up, but one proposal would charge the licensees a huge fee up front — $50 million, say, or $100 million — and that income could help budgeteers while the casinos are being built. Neither is technically a tax — at least not the kind of tax that attracts voters to anti-government rallies at the state Capitol.

It’s not an easy issue. The opposition, which includes a diverse mixture from moralists to budget experts to policy wonks, is strong and persuasive. Lawmakers tried in 2003 and in 2005 but couldn’t get the votes even though the state faced a budget shortfall and needed a financing source for a major rewrite of the state’s school finance formulas.

This is the biggest shortfall in the state’s modern history, and it’s a remarkably anti-tax Legislature, even for Texas. In spite of the odds, for gamblers, hope springs eternal.