The casino industry once again has its eyes on gaming expansion into Texas

The casino industry once again has its eyes on gaming expansion into Texas

  • Howard Stutz
December 2, 2020 2:01 PM

To the casino industry, Texas is Captain Ahab’s white whale, Sir Galahad’s Holy Grail, and James Hilton’s Shangri-La. It’s the state about which casino operators have long dreamed.

“Texas remains the largest untapped market for gaming in the United States. COVID-19 has seemingly made the state reachable,” said Global Market Advisors Director of Government Affairs Brendan Bussmann. “The Lone Star State has the opportunity to be one of the largest gaming markets in the U.S.”

The pandemic’s economic fallout has left Texas with a budget deficit of some $4.6 billion as the state heads into its biennial legislative session, which starts on Jan. 12. With just 140 days to come up with a solution to fill the hole, discussions on legalizing casinos and marijuana are beginning to take place.

The Texas Tribune was the first to report that two Nevada-based casino companies are more than just contemplating the state’s gaming potential. They want to participate in pushing the idea across the goal line.

Las Vegas Sands enlisted several former top aides to Gov. Greg Abbott and the Texas House speaker to plead the company’s case during the upcoming session. With Texas still solidly a red state, the company helmed by Sheldon Adelson, who donated some $250 million to GOP election efforts over the past few months, is a serious contender.

Not to be outdone, Boyd Gaming has brought on board a former top aide to the lieutenant governor.

Texas State Capitol/via Shutterstock

Spokesmen for both companies declined to comment.

History has proven Texas to be a tough market to crack, with forces both inside and outside the state opposed to casino legalization.

In 2012, anti-gaming conservatives won election to the Texas Legislature for the 2013 session, ending a push for casinos that barely got off the ground.

Texas is a feeder market, rather than competition for casinos in neighboring states.

In the Louisiana communities of Lake Charles, Shreveport, and Bossier City, casinos draw a healthy amount of business from Dallas, Houston, and parts in between. The Chickasaw Nation’s WinStar World Casino Resort in Thackerville, Oklahoma, is roughly a one-hour drive north from the Dallas-Fort Worth metroplex. To the west in Las Cruces, New Mexico, Sunland Park Racetrack and Casino is the primary gaming destination for El Paso area residents.

Texas casino proponents can expect pushback from those locations.

Meanwhile, Texas is home to two small tribal casinos that don’t register on gaming revenue scales. The Kickapoo Traditional Tribe of Texas operates Kickapoo Lucky Eagle Casino in Eagle Pass, about 100 miles south of San Antonio. Naskila Gaming is an electronic bingo casino owned by the Alabama-Coushatta Tribe in Livingston, 15 miles from Houston.

The state has connections to gaming even absent a vibrant casino market. Texas operates a state lottery and there is a large racetrack community. Regional casino operator Penn National owns three Texas facilities: Sam Houston Race Park in Houston, Retama Park in Selma, and Texas Valley Race Park in Harlingen.

Texas billionaire Tilman Fertitta owns the NBA’s Houston Rockets and the Golden Nugget casino brand.

Other connections include the Fertitta family, which had ties to Galveston’s infamous casino business the state shut down in the 1950s. Today, Red Rock Resorts is controlled by Frank Fertitta III and Lorenzo Fertitta, whose late father was born and raised in Texas. Houston billionaire Tilman Fertitta owns the Golden Nugget casino chain.

The games segment for Las Vegas-based casino equipment provider Everi Holdings is headquartered in Austin in offices that were the corporate headquarters of Multimedia Games, which became part of the company in 2015.

Texas has long been an uphill battle for the casino industry.

“Every session of the Texas Legislature has had gaming bills as far back as I can remember, but have failed in the past, because of competing interests or because it was a nice to have and not a need to have in terms of the budget,” Bussmann said.

Abbott, who is expected to seek a third term as governor in 2022, has opposed commercial casinos and has attempted to slow the expansion of Indian gaming.

On Monday, Texas Comptroller Glenn Hegar said the budget deficit “is not nearly as dire as we feared in July.”

For gaming, Texas remains an elusive market.

Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.