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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Texas legislator pushes legalized gaming

14 May 2010

AUSTIN, Texas -- Texas has become the latest state to float the idea of legalizing casinos and using the tax revenues to close what potentially could be an $18 billion budget hole.

Texas House Appropriations Chairman Jim Pitts, a Republican, said Tuesday that legalized casinos in the Lone Star State could bring in $1 billion in the next two-year budget period and $4 billion annually in the future.

"I'm going to look at every revenue enhancer that we can get," Pitts told Texas media outlets covering legislative meetings in Austin, adding that Texans now travel to other states, such as Oklahoma and Louisiana, to gamble.

"We need to grab that money," he said.

The Texas Legislature meets every other year with 2011 hosting the next scheduled session.

Casinos would require a two-thirds majority in the Legislature in addition to majority approval in a voter referendum.

"We believe recent public polls have indicated 65 percent in support of casinos," Union Gaming Group Principal Bill Lerner said. "However, proponent polling data typically looks favorable this early in the process."

Kentucky, Massachusetts, New Hampshire, Illinois and Maryland have also considered gaming expansion this year with varying degrees of success. Casinos in Kansas and Ohio are expected to open over the next few years.

Any casino expansion is viewed as beneficial to slot machine manufacturers looking for new markets. Equipment makers expected casino operators to go on a buying spree this year to replace older games, but the replacement market didn't materialize.

Janney Montgomery Scott gaming analyst Brian McGill hasn't listed Texas as a potential new market in a recent report on the prospects for slot machine makers.

"We still see several new properties and markets that are not officially added to the forecast yet, but could be in the next several months," McGill said.

Texas has floated the idea of legalized casinos several times over the past decade.

Last year, Las Vegas Sands Corp. Chairman Sheldon Adelson visited with lawmakers in Austin when the state was exploring the idea of adding casinos to several markets.

Oklahoma's Indian casinos have expanded greatly in the past few years, drawing steady business from Northern Texas communities. According to Casino City's Indian Gaming Industry Report, Oklahoma's 110 gaming facilities collected $2.9 billion in gaming revenue in 2008, an increase of 18.3 percent.

Meanwhile, Las Vegas-based Pinnacle Entertainment operates the L'Auberge du Lac resort in Lake Charles, La., which draws a heavy customer base from the Houston market and is the company's leading revenue producer.

"If you go across the border (to) Oklahoma and Louisiana, you're going to see Texas cars," Pitts said.

Pinnacle Chief Executive Officer Anthony Sanfilippo said the possibility of Texas adding casinos was one reason behind the company's cancellation of a $305 million second casino for Lake Charles. Still, even if casinos come to Texas, Sanfilippo thought it would be several years before the locations became operational.

Texas Gov. Rick Perry and Republican leaders have consistently opposed any casino expansion.

Pitts said some forms of gambling wouldn't offer much help in closing the budget hole looming next year. But he said lawmakers should consider allowing slot machines at racetracks or even full-scale casino gambling.