Stakes Raised in Gambling Battle

Galveston County Daily News, March 9, 2007
by Laura Elder

Texans would get to decide whether to allow casino resorts in cities such as Galveston and slot machines at dog tracks like the one in La Marque under legislation proposed Thursday by two Texas senators.

But if history is a teacher, you can bet on a battle royale, even among some gambling proponents.

The issue for many comes down to money and morality.

Old island families, Houston hospitality moguls, West End landowners and influential mainland business leaders all have a stake and a say in the legislation.

State Sens. John Carona, R-Dallas, and Rodney Ellis, D-Houston, are proposing Senate Joint Resolution 45 and Senate Bill 1359, which they say would generate about $4 billion a year in revenues for the state and would earmark $1 billion for higher education financial aid programs.

The resolution calls for a constitutional amendment that would allow — if voters approved it — limited casino gambling in Texas, including on resort islands and video lottery games at horse and greyhound racetracks around the state.

The constitutional amendment would need approval of two-thirds of the Legislature before it went before voters in November. Counties in which casino operators seek permits also could reject gambling, the lawmakers say.

“If voters of Texas don’t want it, turn it down,” Ellis said. “And even if voters legalize it statewide, if the county doesn’t want it, turn it down. It’s hard for me to see what the big political uproar is about.”

SB 1359 provides the detailed legal framework to regulate gambling in a state where social conservatives time and again have rejected casinos and slot machines.

Texans Gamble

The legislation would allow up to 12 casinos in Texas, spread among resort islands, Indian reservations and urban areas. It also would allow for slot machines at the eight dog- and horseracing tracks around the state.

And it would require big casino operators to spend at least $400 million for land and development costs in urban areas and $200 million on island resorts, such as Galveston.

Ellis and Carona argue that Texans already spend $10 billion a year on gambling by traveling to states such as Louisiana and Oklahoma, where casino gambling is legal.

Texans buy lottery tickets, place bets at racetracks, gamble online and help keep the illegal eight-liner industry humming, they say. Money Texans spend on gambling pays for public education and roads in other states, Carona said.

“Our legislation would capture gambling, regulate it, protect neighborhoods and make sure Texans benefit from it,” he said.

Perennial Topic

The issue of legalized gambling is becoming a legislative perennial, more accurately a biannual. The topic gets particularly frothy during budget crises.

Although the Legislature expects $14.3 billion in new revenue in the next two-year budget period, it’s also looking for new revenue to cover promised school property tax relief.

Casino operators, track owners and other stakeholders often pursue their own legislation.

But Jimmy Hayley, president of the Texas City-La Marque Chamber of Commerce, is optimistic that pro-gambling forces will work together this session.

“The groups are collaborating,” Hayley said.

Last year, chamber board members voted to support efforts to legalize video gaming, such as electronic poker and blackjack, at horse and dog tracks. The board argued La Marque’s Gulf Greyhound Park, which posted a net loss of $11.2 million in 2005 because of dropping attendance, would benefit from slot machines.

Racing Roulette

The chamber also argues that legalizing video lottery terminals at tracks could help combat illegal gambling throughout the state on so-called eight-liners.

Track operators say slot machines would allow them to host races with bigger purses and finance expansions to include shops and hotels.

But lawmakers, including state Rep. Larry Taylor, a Republican who represents northern Galveston County, have argued that any law authorizing video lottery terminals in Texas venues would not be limited to pari-mutuel racetracks, which would be bad news for La Marque.

In the 2004 legislative session, state Rep. Craig Eiland, a Galveston Democrat, pushed to amend a bill that would have allowed video slot machines to go beyond racetracks. Massive tourism complexes in Galveston and Kemah stood to gain.

But Hayley said he isn’t opposed to casino gambling as long as the tracks can have their video lottery terminals.

Developer and Landry’s Restaurants CEO Tilman Fertitta, who leads companies that have invested more than $150 million in the county on tourism venues, has argued that allowing slot machines solely at race tracks would be unfair and keep people away from Galveston.

Fertitta has said his island properties aren’t positioned for gaming.

But Landry’s, which owns the Golden Nugget casino brand, expects to be a player if gambling comes to Texas, Fertitta has said.

But whether Fertitta supports legislation proposed by Carona and Ellis is unclear. He could not be reached for comment Thursday.

Placing Their Bets

It’s long been rumored that developers are waiting in the wings for Galveston to get casino gambling.

Robert Moody Jr., like a lot of West End landowners, said developers have come calling seeking to buy his property. So far he’s holding on to his working ranch.

But if someone wanted to buy it to build a casino, he’d be willing to listen, he said.

Moody is the son of Robert L. Moody, who runs island-based American National Insurance Co. and whose family controls the tourist complex Moody Gardens.

His views, he said, don’t reflect those of his family members or the businesses or organizations they run.

Moody, who heads Moody Insurance Co., said casino gambling in Galveston was inevitable and he’d like to see profits from it pumped into projects that fight beach erosion or help to subsidize the high cost of windstorm insurance on the Texas coast.

‘No Doubt’

“No doubt it would be a huge opportunity for the island and a huge benefit,” he said. “I think it’s going to happen.”

Opponents say casinos bring with them gambling addictions, social ills and a 24-hour neon lifestyle to cities where they operate.

Harris L. “Shrub” Kempner Jr., also from an old-guard island family, has long spoken out against gambling in Galveston. He hasn’t changed his mind.

“I still believe profoundly that casinos here would be far more destructive than any benefits they could bring to the island,” Kempner said. “It would be destructive to the island businesses, neighborhoods and the island’s vitality.”

Before the legislative session is done, lawmakers are expected to propose other gambling measures.

Passing them won’t be easy, political observers say.

“It’s got a rough way to go,” said Gregory Weiher, a political science professor at the University of Houston. “There is a strong morally conservative constituency in Texas that is dead set against this kind of legislation.”