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Suzii Paynter

Ending the Lottery?

Seems unlikely, but that won’t stop some folks from trying.

As lawmakers look at whether the Texas Lottery Commission is operating effectively, influential Baptists are suggesting that the lottery shouldn’t merely be tweaked. They want it abolished.

“Ask the pertinent questions. Has the lottery fulfilled its promise? My answer would be ‘no,’” said Suzii Paynter, director of the Baptist Christian Life Commission.

The group contends that the lottery was sold to Texans 20 years ago as a “voluntary, nonregressive” way to raise money but instead preys on the poor and caters to impulse purchases of scratch-off tickets. Attempts to attract higher-income players with $50 scratch-off tickets haven’t worked, they say.

They question whether the lottery has provided a revenue increase for public education or simply replaced other revenue sources.

[…]

While there may be bills next session proposing to do away with the lottery, Rep. Dennis Bonnen, the Angleton Republican who leads the sunset commission, warned in a recent public hearing that eliminating the lottery isn’t an option for the panel.

“It’s our job to make sure agencies are doing their jobs effectively with what they’ve been tasked to do,” he said. “Don’t expect that we’re going to put a poison pill in the sunset bill to end the lottery.”

After prize money, retail commissions and other expenses, about $1 billion a year from the lottery goes into a public education fund. Ticket sales in fiscal year 2011 totaled $3.8 billion, most of it coming from scratch-off tickets.

This year, lottery sales are 10 percent ahead of last year and are on track to surpass $4 billion for the year, executive director Gary Grief told legislators this month. Among top-grossing lotteries in the nation, Texas ranks fourth behind New York, Massachusetts and Florida.

I found this story via Believe it Or Not, which adds some more information.

Amid the recent Mega Millions lotto hype, Texas Baptists’ theologian-in-chief Jim Denison discussed the potential for lottery winnings to destroy lives. He warned Christians that playing the lotto can push them to seek happiness through money instead of through Christ.

Texas Baptists also opposes the expansion of legalized gambling through casinos and other gaming venues.

Paynter pointed out that two of the states highest-selling lottery ticket locations are Fiesta stores in Houston, and Rep. Garnet Coleman’s district spends $44 million on the lottery a year, more than others in the state despite being a lower-income area.

Coleman has supported the examination of the lottery system, with his own district spending more on the lotto than middle and high-income areas of Houston.

“I don’t know why I didn’t see it before,” Coleman told the Austin-American Statesmen in 2010. “It’s true and it’s real. I see who plays, and it’s not who folks think. It’s not entertainment.”

I largely agree with the Baptist Christian Life Commission that the Lottery has not fulfilled its promise, and I think there’s merit to their pursuit. The Lottery does generate some money for education, but it does so in just about the least efficient and most regressive way possible. We absolutely should do a better job providing for public education and we should do it in a way that doesn’t hurt lower income folks. But let’s be honest, that ain’t gonna happen. I’d bet on gambling being expanded before I’d bet on the Lottery being even scaled back, which is not to say that the former is a good bet.

One more piece to the puzzle: I recently came across this article in Wired about how it’s possible to get an edge in playing scratch-off games, which are the Texas Lottery’s bestsellers. Note that as of the story’s publication in January of 2011, the North American Association of State and Provincial Lotteries was unaware of this potential security hole, and that there’s a woman in Texas who’s managed to win over $1 million on four separate occasions, three of them coming from scratch-off games. The implication of all this is that there’s a possibility that scratch-off games are an even worse proposition for the average player than they’re supposed to be. Read the story and see why.

Another story analyzing gambling’s odds in the Lege

I have three things to say about this story.

[W]ith a budget crisis looming — and funding to public education, health care and other state services on the chopping block — gambling opponents aren’t taking any chances.

Both sides have said legalizing gambling could generate at least $1 billion in state revenue, which lawmakers could dole out as they see fit. Even with a more conservative Legislature this year, some believe a billion-dollar temptation could sway more lawmakers.

“It’s a situation where a lawmaker could hold his nose and say, ‘public education is too important for me to not take advantage of this financial opportunity,'” said Chuck McDonald, a legislative consultant in Austin who has worked on pro- and anti-gambling efforts in the past.

And it’s still the case that getting a constitutional amendment for anything remotely controversial passed is an exercise in counting votes, and I have yet to see an article that really explores what that means in this Lege. The fact remains that a number of legislators who supported expanded gambling – almost all Democrats – lost in 2010. Those votes have to be replaced, and a few legislators who had previously voted No would have to change their minds, since this same effort has fallen apart in previous sessions. Where are those votes coming from? How many House freshmen are open to voting for more gambling? Are there any opponents who may now be reconsidering? I agree that if a referendum makes it onto the ballot that it is a favorite to pass, as public opinion is in favor of the idea now. It’s how a joint resolution gets passed, that’s what we need to know.

Suzii Paynter, director of the Christian Life Commission for Texas and staunch gambling opponent, is bracing for a fight.

“It’s always tempting and there’s always a big push at the capital . . . especially at a time when revenue is short,” Paynter said.

She has polished up her talking points and put together a fact sheet, ready to tell lawmakers why gambling would not be the best way to collect revenue: Unlike the lottery — where the state makes 33 cents for every $1 spent — Texas stands to make only 2 cents on every $1 bet in a slot machine, Paynter said, noting that sales tax is 8 cents to the dollar.

Instead, she argues, taxes on beer and wine could be raised by $1, bringing in $786 million immediately.

“And you don’t need to build anything or plant any palm trees,” Paynter said.

And again, this isn’t an either-or choice. You can raise the alcohol tax and support gambling, and bring in more money now and hopefully in the future as well. That’s assuming the gambling industry is being honest about its potential, which brings me to this:

In Pennsylvania, for example, supporters of legalizing slot machines in 2004, including then-Gov. Ed Rendell, said it would generate $1 billion a year once all 14 casinos authorized by the law were up and running. Ten are open today, while plans to build four others have been stalled by lawsuits, collapsed financing and local opposition. In the current 2010-11 fiscal year, those casinos are on track to provide roughly $800 million in money for tax cuts and additional funds to support civic development projects, the equine industry and local governments.

That was a remarkably accurate projection, especially given the current economic climate. It doesn’t address the social costs of more gambling, of course, but to predict $1 billion in revenue from 14 casinos and get $800 million from 10 is impressive. I’ll consider us fortunate if Texas has a similar experience, if it ever comes to pass. The Trib has more.

The Sunday liquor sales debate

As we know, one of the Legislative Budget Board recommendations for generating revenue is for the state to allow liquor sales on Sunday. The Statesman takes a look at the debate this proposal has generated.

Legislation to allow Sunday liquor sales died in 2009, but the issue gained momentum this session when the Legislative Budget Board included Sunday liquor sales on a list of revenue-raising options for the Legislature to consider.

It’s an issue that splits the distilled liquor industry.

Distillers are pushing the legislation because they think Sunday sales will increase the demand for liquor. But the Texas Package Stores Association — there are almost 2,500 stores in Texas — opposes it.

David Jabour , the president of Twin Liquors, which has 63 locations in Central Texas, said the legislation would be a burden to store owners.

He argued that opening on Sunday would just spread six days of sales over seven days and increase a store’s overhead.

“It doesn’t pay for itself,” Jabour said. “It ends up costing more in labor and overhead.”

[John Roenigk, co-owner of the Austin Wine Merchant on West Sixth Street,] disagreed.

He said Sunday is second only to Saturday as a popular shopping day. He said he wants a level playing field with his competitors — grocery stores, mainly — who are selling wine on Sundays to his customers.

“The rest of the retail world has changed around us,” Roenigk said. “For the life of me, I don’t know why our industry opposes it.”

Allowing Sunday sales is a no-brainer to me. Let’s be honest, the basis of this restriction is Christian morality – a very specific kind of Christian morality; I can attest that Catholicism has no particular injunction against alcohol. I say that has no place in the law. Individual stores may of course choose to remain closed on Sundays as they see fit, but as Roenigk said earlier in the story, they should have that choice.

The amount of tax revenue at stake here is relatively tiny, which opponents of Sunday sales have used to misdirect the debate a bit.

The budget board staff estimated that allowing Sunday sales would increase liquor consumption by almost 3 percent. That could raise an additional $7.4 million in taxes over those two years, a number that the comptroller has not verified.

Based on the budget board’s numbers, the store owners association estimates that on average a store would only sell an additional 10 bottles of liquor.

“That’s not generating much, even according to their numbers,” Jabour said.

Suzii Paynter with the Texas Baptist Christian Life Commission agrees.

When Texas lawmakers face a budget shortfall as high as $27 billion, Paynter said, $7.4 million won’t go far.

The real money, she said, would be in raising taxes on all alcohol, including beer.

She said the state’s excise tax rate on beer has remained the same since 1984. In 2006, the last time the Legislature considered — and rejected — raising alcohol taxes, some plans to increase taxes on all alcohol would have raised $800 million a year. The tax on a can of beer would have increased to 22 cents from 1.2 cents.

Mike McKinney, a lobbyist with Wholesale Beer Distributors of Texas, said that kind of increase in beer taxes would cripple the industry.

Let me pause for a moment to call BS on Mike McKinney. People aren’t going to stop drinking beer because a six-pack costs $1.20 more. I’m sure sales would drop a little, but “cripple the industry”? Please.

As for Paynter, why is this an either-or situation? I say go ahead and do both – raise alcohol taxes and allow Sunday sales. No, I don’t expect the Lege to seriously consider that, I’m just saying that an argument for one is not an argument against the other. Allowing Sunday sales is an easy one for me, and it should be something the Lege is willing to do. I don’t see the argument against it.

Some reactions to LBB recommendations

The Statesman asks around about three of the Legislative Budget Board recommendations for raising revenue. First, the suggestion to allow liquor sales on Sunday, which it projects would generate an extra $7.4 million. Not surprisingly, the liquor industry favors this, but some others don’t:

David Jabour, president of Austin-based Twin Liquors, said the demand wouldn’t be high enough to warrant another business day.

“Based on some analysis that we have done, it would actually simply spread the business over seven days,” Jabour said.

Jabour also said the guarantee of having Sundays off attracts higher quality employees.

Suzii Paynter, director of the Christian Life Commission of the Baptist General Convention of Texas — a group that opposes the expansion of alcohol availability — said the money raised by Sunday sales would be a drop in the bucket. By comparison, raising the tax on beer to a level similar to the tax on cigarettes would bring in nearly $700 million, she said.

I can’t address Jabour’s argument about Sunday sales cannibalizing other days’, but I will note that being allowed to open on Sunday doesn’t mean you have to be. As for Paynter, that isn’t actually an argument against. She’s right, higher taxes on beer would raise more money, but 1) there’s no way in hell that will happen, and 2) even if that were an option, there’s no reason you couldn’t allow Sunday liquor sales as well. It’s not an either-or choice.

Then there’s the recommendation of a fee on gas guzzlers:

Environment Texas director Luke Metzger said heavier gas-guzzlers tend to cause more wear and tear on roads.

“If the direction lawmakers are going is increased fees, that’s one fee that certainly makes sense — as a way to recoup from the damages they cause and to encourage the production of more environmentally friendly vehicles,” Metzger said.

Metzger said his group would prefer that lawmakers “take on some of the biggest polluters with direct taxes on the industries themselves, rather than regular Texans. But this is a reasonable next-best policy we could hope for.”

Yeah. Too bad this will never happen, because I think it’s a great idea, too. I just can’t see anyone on the Republican side touching it with a ten foot pole.

Finally, there’s suspending the sales tax holiday:

Dick Lavine, senior fiscal analyst at the Center for Public Policy Priorities, which advocates for low- and middle-income Texans, said the holiday was originally intended to help lower-income families. But most of the savings actually go to higher income families that can afford to purchase a full year’s worth of school supplies and clothing tax-free, he said.

Lavine said the cost to the state is not worth keeping a holiday that doesn’t help families that already carry a disproportionate share of the burden of the sales tax.

He said the additional revenue “could make a large difference in any of the programs that are being threatened with cutbacks or being shut down.”

I must admit, I hadn’t thought of it that way. This perspective makes me a lot more favorable to the idea. But as with the gas guzzler surcharge, I have a hard time seeing it get passed. In another year, with a different legislature, maybe. Not this time.

Poker bill dies

Last night at midnight was the first major deadline in the House. Any bill that had not been passed on second reading was officially dead for the session, though some may get reincarnated as amendments to already-approved bills. About three quarters of the 5000 bills filed in the House suffered this fate, including some high profile ones such as the concealed-carry on campus bill and, I’m sad to say, HB222, the poker bill.

A proposed constitutional amendment to legalize casino gambling never made it onto the calendar. Sponsors had said they would not ask it to be set unless there were enough votes to pass. They never reached the necessary 100 votes.

The bill to legalize poker games at horse and dog tracks had a chance of getting on the calendar, but sponsor Rep. Jose Menendez, D-San Antonio, said he was pulling it off because Gov. Rick Perry’s staff assured him the governor would veto it.

“Sometimes you flush good will if you put a dead bill out on the floor,” Menendez said, explaining his decision to withdraw the measure without debate.

And with that, none of the bills that would have authorized an expansion of gambling made it through.

Their chances looked better than ever this year, with a strapped state budget and a new House speaker with interests in a San Antonio racetrack.

But in the end, lawmakers say, the expectation of federal stimulus dollars kept the state from getting desperate for money. And the major casino gambling legislation needed 100 votes in the 150-member House, a threshold that the bill’s sponsors couldn’t reach in such a divided chamber. And even if the poker bill had passed, Gov. Rick Perry probably would’ve vetoed it.

“We came into the session billions of dollars short. The stimulus pulled us out of dire straits,” said Menendez, D-San Antonio. “If we were cutting school budgets and not giving teachers raises, we would see a lot more willingness.”

Gambling opponents say it’s easy to blame the bill’s failure on a budget bailout. But they argue that the real reason gambling gets no traction session after session is because it’s bad policy.

Suzii Paynter, with the Baptist General Convention’s Christian Life Commission, said the promises of jobs and tax revenue that supporters make are exaggerated.

“Gaming legislation has failed because the more people look into the promises that are made, the more weaknesses they see in the proposal,” Paynter said.

I think there’s some merit to the argument about stimulus money having an effect. I certainly thought the gloomy budget picture at the start of the session would act as a catalyst for gambling proponents. The real test will come next session, when everyone is already expecting a huge deficit and a fight over the rainy day fund, and no stimulus package to come to the rescue. I do agree that the claims of jobs and tax revenue are overstated, but they’ll likely look a lot more tempting when the alternative is deep, slashing cuts to needed programs.

CLC gambling update

Today there will be committee hearings on various gambling-related bills. I am reprinting here an email sent by Suzii Paynter of the Christian Life Coalition, which is one of the leading organizations that are fighting the expansion of gambling in Texas, as it has a pretty good summary of what has gone on so far.

Casino Hearing

On Wednesday, April 8, the House Committee on Licensing and Administrative Procedures will hear all the major gambling bills filed in the House this session. There are 16 gambling related bills currently on the notice of hearing which can be found here. This hearing is sure to draw the most vocal gambling proponents from all segments of the casino industry. We think it is important that the committee hear the other side of the argument as well. The CLC will be at the hearing to offer testimony. This is an entirely new committee made up of members who may not know this issue. It is important that they know people out in the state care about the issue and are paying attention. If your representative sits on this committee it would be an excellent time to let them know you oppose the expansion of gambling in Texas. A list of the committee members and their contact information can be found here.

The CLC recently completed a comprehensive newsletter outlining our most important arguments against the expansion of predatory gambling and in support of our current family-friendly economy. You can view the newsletter here (large PDF).

First Gambling Bills Voted Out of Committee

On the same afternoon that the House Licensing and Administrative Procedures Committee announced the agenda for Wednesday’s hearing, they quietly passed out two gambling expansion bills. Both bills now sit in the Calendars committee and await a chance to be considered on the House floor.

The first bill is HB 222, by Rep. Menendez (D-San Antonio). This bill would legalize poker to be played at electronic tables in certain bars, restaurants, horse and dog race tracks and on Indian reservations. The proponents claim that only simple majorities in both the House and Senate are needed to pass this bill. It is the opinion of the CLC, based on previous opinions offered by the Attorney General, that the element of chance inherent in this card game requires a constitutional amendment and the support of 2/3rds of the House and Senate. Additionally, the electronic facsimile of a game of chance makes this a Class III game as described under the Indian Gaming Regulatory Act (IGRA). As other states have experienced, and according to IGRA, the approval of a Class III game in Texas will lead to the expansion of Native American gambling in Texas above and beyond what is contemplated in this bill and in a way that weakens the state’s ability to control further casino expansion.

The second bill is HB 1474 by Rep. Geren (R- Ft. Worth). This bill is meant to be a “clean up” bill to standardize and improve the regulation of Bingo in Texas. However, the bill also greatly increases the number and type of organizations that are eligible to receive a bingo license. The CLC is concerned that bingo in this state is moving far beyond the original public understanding of the game and that the charitable purpose is being watered down. Specifically, during the legislative interim period after last session, the lottery commission approved new bingo games which would allow versions of electronic pull tab bingo as well as a type of Keno. We are concerned that these new games could lead to a rapid expansion of electronic casino-style games. This threat is even more possible with the broadening of organizations eligible to apply for a license stated in HB 1474.

The list of members on the Calendars Committee can be found here. If your representative is member of this committee, let them know that the best way to defeat these bills is to never allow a vote on the House floor.

Indian Gambling Bills Get Hearing

On Monday, March 30, two Native-American casino bills by Rep. Chavez (D-El Paso) were heard in committee. The first bill, HB 1308 was heard in the subcommittee on Criminal Procedure of the Criminal Jurisprudence Committee.

The CLC testified in opposition to this bill. HB 1308 would give a defense to prosecution for Indian tribes that conduct otherwise illegal casino gambling operations. The bill is the exact same piece of legislation which failed to pass the House last session. According to Rep. Chavez and other supporters, the bill would simply allow two tribes, the Tigua of El Paso and the Alabama-Coushatta of Livingston to reopen illegal casinos that were shut down several years ago. While sympathetic to the desperate conditions on these two reservations, the Christian Life Commission opposes this piece of legislation because we believe that the consequences of passage may be far more expansive than what proponents are indicating.

HB 1308 does not improve the legal standing of gambling by the Texas tribes bound by the Restoration Act. The state has never used criminal charges to shut down illegal Native-American casinos. The state has the right to sue the tribe in federal court and seek injunctive relief. This is how the casinos were closed in the past and the bill cannot prevent the state from closing any casino opened by the Tigua or Alabama-Coushatta. The gambling activity the tribes seek to conduct is not just an illegal violation of the penal code that this bill amends; it is UNCONSTITUTIONAL according to the Texas Constitution. A statute passed by a simple legislative majority cannot trump the state constitution. While it may preclude criminal penalties the state may still seek to have any operating casino shut down in federal civil court. The bill is an attempt to expand gambling by a simple majority vote in the legislature rather than the two-thirds majority needed for a constitutional amendment. The end result of this bill would likely be more costly litigation on the part of the state in federal court.

Additionally, the vague language in the bill would actually open a legal loophole to Native-American tribes that are 1) named in the list of tribes referenced in the bill, 2) which have historic, recognized land ties to Texas and 3) are not bound by the Restoration Act. The list of tribes referenced in the bill includes over 300 tribes from across the country, several of whom have entered into agreements with state agencies acknowledging “historic property” in Texas. There are currently letters of intent to petition for recognition on file with the Bureau of Indian Affairs from 10 tribes seeking recognition in Texas.

The members of the Criminal Jurisprudence Committee should hear from those opposed to this bill so that it is defeated in committee. A link to the committee and their contact info can be found here.

That afternoon, the House Committee on Border and Intergovernmental Affairs heard testimony on HJR 108. This Joint Resolution proposes a constitutional amendment to allow the Tigua tribe of El Paso to operate a full blown, Las Vegas style casino. The CLC testified in opposition to this bill as well. Any constitutional amendment which would allow Class III gambling as defined under the Indian Gaming Regulatory Act (IGRA) would be a “trigger” for further Native-American casinos beyond what is authorized in this resolution. It is impossible to authorize gambling for only one tribe without affecting the rights of other tribes in this state. As has been the case in other states, once the Class III threshold is crossed, the state loses much of the ability to control casino expansion since many of the decisions will be made on the federal level.

A link to the members of the Border and Intergovernmental Affairs Committee can be found here.

A news report of these two hearings can be found here.

To learn more about HB 1308 and the history of Native-American gambling in Texas see here (PDF).

Couple things. First, as you know, I support HB222. Of all the various gambling expansion options I’ve seen, allowing for poker seems to me to be the most sensible and least potentially harmful. Plus, as a bridge player who has had the chance to play for money legally, I think poker is a legitimate game of skill and should be treated as such. In fact, poker players in Pennsylvania and South Carolina recently won court rulings that agreed poker is a game of skill. As such, it’s not clear to me that the AG’s opinion would agree with the CLC about the inherent level of chance here. Of course, I Am Not A Lawyer, and Lord only knows what Greg Abbott will do. The point is that recent legal history is on the poker players’ side. I welcome any feedback on that question, and on the other legal points raised, by anyone who has more expertise on the topic.

Second, you can’t talk about the Tigua and Alabama-Coushatta tribes and the litigation over their past attempts to open casinos without noting that a lot of the opposition to them has come from out of state Indian tribes and casinos, who have an obvious interest in minimizing their competition, and that along the way some really sleazy double-dealing was done by former Christian Coalition honcho Ralph Reed and Tom DeLay’s felonious friend Jack Abramoff. Here’s some previous blogging on the subject, plus a couple of corrected links to Observer articles to give you the background.

Finally, just to reiterate, outside of HB222, I am officially agnostic on the subject of expanded gambling in Texas. I have plenty of issues with it, and I may wind up voting against any future ballot propositions to allow for more gambling, but I am not comfortable being opposed to the idea. I thought this email was informative and worth highlighting, but please don’t take that as an endorsement, because it’s not intended as one.

Expanded gambling: It isn’t just for race tracks any more

Here’s an update to the story about the big expanded gambling bill that was filed yesterday.

Slot machines also would be allowed at the state’s existing race tracks under the proposal by Sen. Rodney Ellis, D-Houston; Sen. John Carona, R-Dallas; Rep. Jose Menendez, D-San Antonio, and House Appropriations Committee Chairman Jim Pitts, R-Waxahachie. In addition, the three federally recognized Indian tribes could operate a casino on their tribal lands.

“Texans already are voting with their feet and going out of state” to gamble, Ellis said. Menendez noted that Texas is “surrounded by gaming.”

Opposition immediately arose from conservative and Christian groups and a racetrack group pushing more narrowly for slot machines at tracks. Backers of Joint Resolution 31 and Senate Bill 1084, the broad gambling legislation, said their proposal would bring in at least $3 billion a year in new state and local revenue.

The legislation calls for $1 billion to be funneled to a trust fund for college scholarships and another $1 billion to transportation. Casino proponents also said their proposal would create 90,000 to 120,000 jobs.

I don’t believe any of those economic projections. Then again, I never believed the projections that the horse racing interests gave about their slots-at-racetracks proposals. I think there will be a net benefit to the state, at least in terms of revenues taken in – the bulk of the social costs will not be borne by the state, so the books will looks good – but $3 billion a year and 100,000 jobs is just crazy talk, as far as I’m concerned.

The way this is being done, as an alternative to slots-at-racetracks, will make for a fascinating dynamic in the sausagemaking process. I see it as lobbyist versus lobbyist, with some folks like the religious conservatives taking potshots from the sidelines. There’d be a hell of a reality TV show in there if someone had seen this coming early enough.

The legislation calls for $1 billion to be funneled to a trust fund for college scholarships and another $1 billion to transportation. Casino proponents also said their proposal would create 90,000 to 120,000 jobs.

Up to 12 casinos would be allowed statewide, with designated areas for nine of them: Galveston, South Padre Island, Bexar County, Tarrant County, Travis County and two each in Dallas and Harris counties.

A plan critic, Tommy Azopardi, of Texans for Economic Development, said the legislation would create a “widely disparate tax rate” between casinos and tracks (15 percent versus 35 percent), wouldn’t allow tracks to have the same games as casinos and would greatly expand “the footprint of gambling in the state.”

Casino backers said tracks could apply for one of the casino licenses but would have to go through the same process as other applicants.

I got a press release from Azopardi, not coincidentally sent by the same guy who sent me the earlier poll information, which I’ve reproduced beneath the fold. It’s going to be a bear trying to sort out the objective facts from the spin on this one, that’s all I know. Maybe I’ll get lucky and the CPPP or someone like that will weigh in. In the meantime, keep your hip-waders handy.

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