Realizing the Potential of Legalizing Gambling

Gambling in Texas

Texas tends to not restrict an individual’s right, however; the Texas government in the past seemed to always restrict an individual from gambling. The first Texas constitution banned all types of gambling even though many citizens seemed to enjoy culture of gambling. The Texas ban on gambling was very strict. Any bet on random chance and any form of gambling was part of the definition of illegal gambling. The ban on gambling stayed relatively the same for quite some time. The first change in attitude in gambling happened in 1933, when betting on horse racing was made legal. This only lasted for 4 years where horse race betting was made illegal again, but made legal again in 1989 again in Texas.

The Texas government in the past have attempted to shutdown tribal casinos and boat casinos. The Texas ban on casinos was quite imposing and affected tribal lands that had casinos. When the Texas authorities shut down many of the tribes gambling sites, the tribes took Texas to Federal courts, where Texas won the right to shut down many of the tribes gambling sites. One of the few legal Tribal casino now is the Lucky Eagle. The Lucky Eagle is located all the way down near the Mexico border and is still operating.1

Texas have also restricted casinos on water in the past. While the Texan government tried to shut down boat casinos, the boat casinos claimed to be operating games in international waters and outside Texas laws and jurisdiction, Texas lawmakers combated this by requiring boat casinos to stay afloat for 24 hours and be docked at a foreign port. This worked quite well to some degree and many Texans would rather cross state borders to gamble than to visit a boat casino in Texas.

Although the Texas government tried to wage war against gambling and attempted to push gambling sites outside of state borders, Texans who wish to gamble can simply cross state borders and travel to Louisiana and Oklahoma where gambling laws are less restrictive.1 While the Texas government can ban casinos, gamblers still find a way to continue their activity. Gamblers who still wish to gamble can still visit the last Tribal casinos called the Lucky Eagle and water casinos operating on international waters, and gamblers can even cross state borders into Louisiana or Oklahoma where gambling is less restrictive.

The main reason why Texas and Louisiana have such different laws on gambling is because gambling is because gambling is mainly seen as a state issue. For example, Hawaii and Utah completely outlaw all forms of gambling while Oklahoma and Louisiana are less restrictive on gambling. It is up to the states to decide whether or not to outlaw gambling. Some states have a total ban on gambling and other states have no ban on gambling. The federal government doesn’t have much say on the legality of gambling and leaves it mainly to the states, but the federal government may get involved if an interstate gambling crime is involved. If gambling is illegal in the state and wagering information was sent through phone lines or the internet, then the federal government may get involved.

18 USC 1084 is used by the federal government to help criminalize interstate gambling if gambling is illegal in that state. This is one of the few things that the state gets help from the federal government to help prosecute gamblers if the state is hard on gambling. It seems that the state government and federal government are working well together. If the state is hard on gambling, then the federal government can help regulate interstate gambling crimes if the gambling is across state lines. This seems to be most similar to cooperative federalism where the state government and the federal government have shared powers regarding to gambling.

It seems that policy area regarding to gambling have changed over the years in Texas. At first, Texas outlawed all forms of gambling and have waged war on gambling, fighting Tribal casinos and boat casinos with good success but unable to stop Texans from crossing state borders to Louisiana to gamble. But after some time, the Texas government have slowly lessened their restrictions on gambling, first by allowing betting at horse racing events, then giving licenses for charitable gambling with a constitutional amendment in 1980 and later creating the Texas State lottery as income for the state. The federal side of gambling policy has not changed much. The federal government used to make sports betting illegal but the US Supreme Court ruled the federal ban on sports betting unconstitutional, which the US Supreme Court ruling helped make gambling policies up to the states. The federal government also passing 18 USC 1084 helped states to criminalize interstate gambling crimes. The federal government seems to have gotten more involved and more willing to help the states when gambling is illegal in the states.

What is interesting is that Texas is now slowly lessening the restrictions on gambling and realizing the potential of legalizing gambling and taking advantage of the income received from legalizing gambling. What may have helped Texan legislatures see gambling as a money maker for the state is most likely looking at Louisiana successfully taxing riverboat casinos as well as the Texas state lottery. The Texas state lottery makes about 4 billion dollars with roughly 1.3 billion dollars to pay for education. The income from the state lottery may not be much but the state lottery is still income that can offset some cost. The state lottery is helping Texas pay for schools and education and it seems that recently that Texas legislatures are noticing how much money could be made from allowing gambling into the states. Louisiana’s taxes on gambling from riverboats have contributed over 2 billion dollars to the state. The Louisiana gambling industry have also created 14,000 jobs and 40% of the Louisiana State police being funded from riverboat taxes. Lawmakers in Texas are taking notice of this and have thought of legalizing gambling and casinos to create more income for the state.

Recent events have made the need for new revenue more important than ever. With the recent school funding overhaul, Texas needs a new source of revenue. Property taxes have been cut and many Texan lawmakers are reluctant to raise property takes to match the school funding overhaul. Roland Gutierrez stated that “Texas is losing billions of dollars annually to neighboring states where full-scale gambling with slot machine and table games is permitted.” Lawmakers in Texas are acknowledging the potential for a gambling tax and have drafted up TX HB3043. The bill would recognize the operation of 12 licensed casinos in Texas within counties that have approved the casinos. This bill and the state lottery shows that the Texas negative attitude on gambling is changing slowly. The bill was thought to be unlikely to be passed because most republican legislatures and Governor Abbot are biased against casinos. But now that the Texas legislatures need to find a new source of revenue to pay for the public school overhaul, this bill is likely to pass to help offset the cost.

The Texas state lottery already proved to be effective and helped Texas with financing public schools, but it may not be enough. The new public school funding overhaul without new sources of revenue is disastrous. The new public school funding passed alongside with the passing of lowering property taxes is likely to put a strain on the Texas budget. Losing one source of income without creating a new source of income while also increasing spending is not the best decision that our legislatures have drafted. But since this is what our legislatures decided to do, we now need someway of paying for the new public school finance reform that is sustainable and likely to pass. Increasing property taxes is unlikely as Texan legislatures and voters are unlikely to support an increase in property taxes. The state lottery is helping but not by much as most of the money that is gained in the state lottery is given back to the winners with only 27% actually going to education and the 27% is only about 1 billion dollars. The Texas lottery by itself is not enough to pay for the new public school reforms.

The best solution to get new revenue is to legalize gambling and tax it. Following Louisiana example by legalizing and taxing a gambling industry will not fully solve the problem but will add a new source of revenue for the state. Louisiana has enjoyed much wealth and economical impact from the legalization of gambling, it may be wise to Texas to follow that path. Legalizing and taxing the gambling industry is hidden potential in the state of Texas that legislatures have simply not tapped into. Many Texans already cross state borders to gamble in Louisiana or Oklahoma and many Texans gamble recreationally in a legal social setting. Legalizing casinos will allow Texas to tap into a new source of income without increasing property taxes. While it will not fully finance public schools, it will offset the cost.