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John Kuempel

Why the push for casinos failed

Here’s a long story with a detailed answer to what is honestly a straightforward and easy to understand question.

Photo by Joel Kramer via Flickr creative commons

In its effort to bring casinos to Texas, Las Vegas Sands — the gaming empire started by the late Republican megadonor Sheldon Adelson — hired an army of lobbyists and spent millions more on TV ads, all after an election season in which Adelson’s largesse was key in helping the state’s Republicans remain in power.

But the gargantuan undertaking ultimately did not make it far at the Capitol, with Sands’ legislation failing to make it to the floor of either chamber and not even receiving a committee hearing in the Senate.

The legislation — which required voter approval — would have brought a monumental expansion of gambling to Texas, which has some of the most restrictive gaming laws in the country. The centerpiece of the Las Vegas Sands proposal was to build “destination resorts” with casino gambling in the state’s four biggest metropolitan areas.

The company had insisted it was committed to Texas for the long term. But people involved in the effort point to at least a few factors that stood in the way of more progress in their debut session.

There was the difficulty breaking through in a session dominated by the coronavirus pandemic, the winter weather crisis and Republican leaders’ contentious priorities, which are now leading to at least one special session. There was Lt. Gov. Dan Patrick’s perceived opposition to expanding gambling that made Senate progress a tall order. And there was the relatively late filing of the Sands-supported legislation, giving lawmakers less time than usual to digest what would be a hugely consequential change to the Texas economy.

While Sands took pains to clarify that casinos would not be a fiscal cure-all for Texas, some supporters of the proposal said they were nonetheless hampered when the state’s budget projections turned out better than expected, decreasing curiosity in new revenue streams.

“Something this big and complex takes time, and we’re only up here five months of every two years,” said Rep. John Kuempel, R-Seguin, who carried the Sands-backed bill in the House. “These things take time.”

Las Vegas Sands ended up spending as much as $6.3 million on lobbying at the Capitol, according to state records, plus what the company pegged as at least $2 million on a statewide ad campaign. It is likely that the company’s total spending topped $10 million, given the number of weeks that the company stayed on the air in the state’s most expensive media markets.

It was easily the biggest campaign to expand gambling in Texas that the state has seen in a long time.

As session wound down and it became clear that Sands’ House bill would not advance, Sands issued a statement in which it claimed it made “great strides” this session and promised to “continue to build community support across the state to ultimately turn this vision into a reality.” Sure enough, the company continued airing TV ads promoting its plan in the weeks after the proposal’s fate had crystallized.

One Republican lawmaker who sits on the House committee where the bill died had a less optimistic outlook.

“It fell really flat,” Rep. Matt Shaheen of Plano said of Sands’ overall push this past session. “It just didn’t go anywhere. It was a bad investment on Sands’ behalf, and I think any future investments will continue to be a bad investment.”

Emphasis mine. All of the reasons cited here are valid, and we knew about them in January when this effort began in earnest, but the one I’ve highlighted is the real reason. As long as Dan Patrick rules the Senate, nothing will happen that he personally does not approve of. As with marijuana reform and all of the long analyses of its continued failure, I don’t quite get the reluctance to be clear about that.

To be sure, efforts to expand gambling have been pursued, and have abjectly failed, for a long time now, well before Dan Patrick was on the scene. Earlier efforts had their own reasons for failure, and it should be noted – it should always be noted – that the goal has always been a constitutional amendment, which would require the approval of voters to go into effect. It also requires a two-thirds majority in each chamber, which is a big lift and which suffers from the problem that religious conservatives, mostly Baptist groups, strongly oppose expanded gambling in Texas. That much has not changed, and it too is an obstacle that will endure. All of Sheldon Adelson’s money and army of lobbyists can only do so much about that.

This is where I say again that I am ambivalent about expanded gambling, and if it ever does come to a vote I’ll have to think about it, and my decision will be based on the merits of the specific proposal. Let’s just say that I’m not at all unhappy that a law that would have put a lot of money into the estate of a terrible person like Sheldon Adelson did not make it through.

Finally, the story notes that a parallel push for sports betting, which worked in tandem with the casino effort and also had various professional teams on its roster, also failed. Dan Patrick opposed that as well, so everything I’ve said already applies.

Bills to allow casinos filed

Don’t bet on them, that’s my advice.

Sen. Carol Alvarado

Two Texas lawmakers on Tuesday filed legislation backed by the gaming empire Las Vegas Sands that would legalize casino gambling in Texas.

The legislation was filed by Rep. John Kuempel, R-Seguin, in the House and Sen. Carol Alvarado, D-Houston, in the Senate. The proposals would create special casino licenses for four “destination resorts” in the state’s four largest metropolitan areas: Dallas-Fort Worth, Houston, San Antonio and Austin. At the same time, it would establish a Texas Gaming Commission to regulate the casinos, and it would separately legalize sports betting.

The legislation would require amending the Texas Constitution, which currently bans most gaming in Texas. That is only possible with a two-thirds vote of lawmakers in both chambers, and then voter approval in the November election.

Kuempel is the vice chair of the House Licensing and Administrative Procedures Committee, which oversees industries regulated by the state, including current gaming options. Alvarado, meanwhile, chairs the Senate Democratic Caucus.

Las Vegas Sands, founded by the late GOP megadonor Sheldon Adelson, has spent the past few months building a massive push at the Capitol, spending millions of dollars to hire nearly six dozen lobbyists. The bill-filing deadline for the biennial legislative session, which got underway in January, is Friday.

“We appreciate the work of the bill’s sponsors and we are excited to engage in further discussion with elected leaders and community stakeholders on the possibilities for expanding Texas’ tourism offerings through destination resorts,” Andy Abboud, Las Vegas Sands senior vice president, said in a statement.

The legislation is consistent with the vision that Las Vegas Sands has laid out for casinos in Texas: a limited number of licenses for mixed-use “destination resorts” in the state’s biggest population centers, with a high minimum investment intended to attract only the best operators. To that end, the legislation calls for a land and development investment of at least $2 billion in Dallas-Fort Worth and Houston, as well as $1 billion for San Antonio and Austin.

The “destination resort” licenses would be considered “Class I” licenses. The legislation would then create three “Class II” licenses for “limited casino gaming” at horse-race tracks in Dallas-Fort Worth, Houston and San Antonio. After that, two “Class III” licenses would be made available for similarly limited casino gambling at greyhound tracks in Corpus Christi and Harlingen.

The full casino legalization would also extend to the state’s three federally recognized Native American tribes at their reservations in El Paso, Eagle Pass and Livingston. They are currently able to offer limited gaming.

See herer and here for more on the casinos’ latest push to legalize more forms of gambling in Texas. As the story notes, that recent DMN/UT Tyler poll included questions about casinos and sports betting, and found them both to have popular support; not a surprise, as gambling has always polled well in Texas. (They also have Mattress Mack in their corner.) The obstacles remain the same: Neither Greg Abbott nor Dan Patrick support this, and a two-thirds majority, which is needed to put the propositions to a vote, is a high bar to clear. Maybe this is the year it happens, but you could have said that about many previous legislative sessions. The smart money remains on the bills not passing.

Legislative hearing on emergency leave

Figure this will be on the legislative agenda next spring.

Best mugshot ever

Best mugshot ever

At a Texas House hearing Tuesday looking into how some state agencies were able to keep some departing employees on the public payroll by granting them emergency leave, lawmakers expressed frustration that vague state rules may have allowed the practice.

“I want to know exactly … if there [were] any violations of the law or violations of the process, and I think that’s incumbent upon everybody on this committee to figure out if that transpired,” said Rep. Lyle Larson, R-San Antonio. “If the law wasn’t broken, then I want to know exactly how we can correct it.”

Lawmakers on the House Committee on General Investigating and Ethics were looking into whether heads of agencies have too much discretion when it comes to awarding emergency leave.

“There’s going to be absolute certain change to this statute, but let’s work together to get it right,” said Committee Chairman Rep. John Kuempel, R-Seguin, during the hearing.

Texas does not award severance pay to state employees, but recent news reports showed that Texas Attorney General Ken Paxton paid both his first assistant attorney general and communications director for months after they left the agency by categorizing both as being on emergency leave. Other reports revealed a similar practice in the General Land Office where departing employees continued to receive compensation, though not through emergency leave.

Emergency leave is often used as a way of permitting state employees to take a leave of absence for a death in the family, but the law also allows agency heads to grant it for other unspecified situations.

In June, House Speaker Joe Straus, R-San Antonio, asked the Legislature to examine the issue. He had previously called for limiting the practice in order to ensure “that agencies use taxpayer dollars appropriately.”

See here and here for the background. There’s a request for an investigation by the Rangers into the severances, but I don’t know where that stands. As a philosophical matter, I don’t particularly object to severance packages for state employees. There ought to be some limit on them, but I don’t think they need to be banned completely. The use of emergency leave as a form of severance package, done as a way of keeping people quiet as they’re being shown the door, is another matter, one that deserves a close look from the Lege. I don’t know what action they’ll take, but it will be something. The Chron has more.

Rangers finish Stickland report

Rulebreaking but not lawbreaking is the conclusion.

Rep. Jonathan Stickland

A Texas Rangers investigation released Tuesday found that the staff of state Rep. Jonathan Stickland, R-Bedford, filled out witness registration forms for people who were not in the Capitol but that no one committed any prosecutable offenses.

House leaders have long said that legislative rules require witnesses who want to participate in a hearing to be physically in the room. Participants are asked to register through electronic kiosks outside the hearing rooms.

The Rangers’ report is the latest twist in a state investigation that began immediately after an April 30 House Transportation Committee hearing at which Chairman Joe Pickett, D-El Paso, accused Stickland of breaking the law by listing witnesses who were not in Austin as supporters of his bill to ban red light cameras. He then ordered Stickland to leave the hearing.

The House General Investigating and Ethics Committee, which launched a probe into the hearing and requested assistance from the Texas Rangers, met for nearly two hours Tuesday, almost entirely in executive session. The closed-door portion of the meeting featured testimony from Rangers involved in the investigation, according to Chairman John Kuempel, R-Seguin.

Kuempel said afterward that the committee members will need time to review the report before deciding on the next step.

“The Rangers’ investigation is closed,” Kuempel said. “Ours is still ongoing.”

The committee also voted unanimously to request that the House Administration Committee plan training sessions for House members and staff on House rules and operations.

See here, here, and here for the background. Stickland is claiming victory and redemption, which of course he is. For everyone else, it’s more training and a rewrite of the rules that were apparently not clear enough for Jonathan Stickland. What a great use of everyone’s time. Trail Blazers has more.

Rangers to investigate Stickland

It’s starting to get real.

Rep. Jonathan Stickland

The Texas Rangers will investigate allegations that witnesses were improperly registered to testify last week on a bill banning red light cameras at a House Transportation Committee hearing.

The House General Investigating and Ethics Committee voted Thursday evening to refer the investigation to the Rangers, a division of the Texas Department of Public Safety. Last week, the committee’s chairman, state Rep. John Kuempel, R-Seguin, announced plans to look into the situation.

“The integrity of our committee process depends on reliable and accurate witness information,” Kuempel said Thursday evening.

[…]

After meeting for about two hours in executive session Thursday, Kuempel made a motion for the Texas Rangers to investigate the allegations involving improper witness submissions at the Transportation Committee hearing and report back to the General Investigating and Ethics Committee. The committee approved the motion.

The move represents the latest effort by lawmakers to give the Texas Rangers more authority into investigating allegations of impropriety in state government. The Legislature has also considered a proposal this session to move the state’s public integrity unit, which investigates public corruption cases, from the Travis County district attorney’s office to the Texas Rangers.

See here and here for the background. As noted before, this could be a violation of the law as well as a violation of House rules, hence the Rangers’ involvement. As with their involvement in L’Affaire Paxton, this will be an interesting test of the new “keep the Travis County DA out of it” procedures, though I’d have to assume that if they turn up evidence of something prosecutable they’d turn it over to the Travis County DA, since the crime in question certainly occurred there. But who knows?

Of course, this could also turn out to be a bunch of sound and fury. RG Ratcliffe has an interesting aside in a post comparing the styles and successes of Stickland and fellow “constitutional conservative” David Simpson.

(I have seen a witness testify from the London airport via Skype. Several lobbyists told me they register for or against a bill but aren’t in committee when it comes up. Although someone has to be in the Capitol complex to register over the Internet, I’m told it is possible to register merely by pulling into the driveway of the John H. Reagan Building. The House may have more problems with its electronic witness registration than just Stickland’s bill.)

Make of that what you will. You can see video of the critical exchange between Stickland and Pickett, where the latter calls a couple of the witnesses to verify their whereabouts, at TrailBlazers, and you can read a transcript of it on the Trib. The whole thing is bizarre, no question about it, but how much more than that is the key question. At a guess, I’d say Stickland is in line for some kind of slap on the wrist from his House colleagues, but I’ll be surprised if it goes beyond that.

Stickland responds

He says he did nothing wrong.

Rep. Jonathan Stickland

esponding to claims that he improperly registered witnesses at a committee hearing, state Rep. Jonathan Stickland released a statement Monday standing by his actions.

During a Thursday night hearing of the House Transportation Committee, Stickland, R-Bedford, and state Rep. Joe Pickett, D-El Paso, the committee’s chairman, got into an argument as Stickland presented House Bill 142, which would ban red light cameras. Pickett ordered Stickland to leave the hearing and accused Stickland of listing witnesses who were not in Austin as supporters of his legislation.

“Unfortunately, when I went to lay out my bill, I was prevented from doing so in a very deliberate and dramatic way,” Stickland said in Monday’s statement. “It was what I can only characterize as an ambush by a political opponent. ”

Stickland said that his attorneys had reviewed applicable laws, rules, and legislative manuals and “have been unable to locate anything that commands that a person must be present in the Capitol to register their support or opposition to a bill.”

[…]

State Rep. John Kuempel, R-Seguin, the chairman of the House Committee on General Investigating and Ethics said Friday he plans to investigate allegations that witnesses were signed up improperly to speak at the transportation committee meeting. He said the investigation would not target a specific member or bill.

See here for the background and here for the full statement. It can’t be the case that both Stickland and Pickett are right. Either Pickett overreacted or Stickland really did break a rule (and possibly violate a law), despite what his attorneys say. For what it’s worth, I haven’t seen anyone side with Stickland in the coverage I’ve seen so far. RG Ratcliffe certainly seemed to buy into the idea that Stickland might be in trouble, and this Star-Telegram story strikes a similar tone:

Capitol insiders say this fight over rules and procedure may well go deeper.

“At best, it is the appearance of impropriety,” said Harvey Kronberg, publisher of the Quorum Report, an Austin-based online political newsletter. “At worst, there’s potential for criminal violations.”

Doesn’t sound too good for Stickland to me, but what do I know? I look forward to seeing how the House investigation goes. The Statesman and Trail Blazers have more, while the Observer has what may be the definitive Jonathan Stickland article of our time. Check it out.

Good times for craft distillers

Just as Texas’ craft brewing industry finally got legislation passed that will allow them to operate more freely, so too did Texas craft distillers.

Gov. Rick Perry on Monday declared September “Texas Craft Spirits Month” as the state begins to implement new laws that give distillers more freedom to produce and sell in the state.

“I think that the main benefit of this is making sure that we have got a solid framework for our distilled craft industry to grow,” state Sen. Leticia Van de Putte, D-San Antonio, who co-sponsored four new laws that affect Texas distillers, said during a Monday press conference.

Van de Putte said the new laws put Texas in line with other states that have more relaxed distilled spirits laws, paving the way for Texas to quickly gain national traction in the industry. Distilled spirits include alcoholic beverages such as vodka, gin, tequila and rum. In Texas, distilling is a growing industry with companies like Treaty Oak producing rum and Deep Eddy Vodka making the drink named for one of Austin’s famous swimming holes.

“For the longest time, Kentucky and Tennessee have been the states that have had bragging rights on distilled spirits,” Van de Putte said.

Much of the new legislation seeks to put Texas distillers on a level playing field with other states, giving them more options to produce and sell. Under one bill co-sponsored by Van de Putte and state Rep. Ryan Guillen, D-Rio Grande City, Texas distillers can now buy beer and other liquor used in the making of spirits from other Texas distillers. Another bill by Van de Putte and Guillen allows distillers to solicit and take orders from wholesalers — something only out-of-state distilleries could do previously — and lets companies conduct product samplings at their distilleries with a specific permit to do so.

Daniel Barnes, president and cofounder of the Texas Distilled Spirits Association, said the new legislation would help the industry grow because consumers can now sample the products at the distilleries where they are made and talk to the experts who make them.

“They’ll be able to not only appreciate the craft spirit, but get to know us and get to know how to use craft spirits,” Barnes said.

See here for the background. You know that I approve of this, and would ideally like to see more done on all of these fronts to put craft brewers and distillers on even footing with their larger competitors and with other states. What we got was still a big win after a long and complex battle, and it’s very much something to build on. One of the things I noted when I blogged that earlier story was that the Yellow Rose distillery was planning to move from a suburban location to one near Old Katy Road and Loop 610 inside Houston city limits if these bills passed. They are in the process of moving and hope to have tours available beginning around Thanksgiving. I’m not a spirits drinker myself, but I’m glad to hear that and I wish them all the best.

That’ll just about do it for gambling this session

Sen. Carona calls the chances “slim”, but it sounds like slim just left town to me.

[Sen. John] Carona, chairman of the Senate’s Business and Commerce Committee, said last week he expected to vote his sweeping gambling bill out of his committee Tuesday. But the morning committee hearing came and went, and Carona declined to bring the bill up for a vote.

Carona’s fellow senators told him they didn’t want to take a vote on the controversial topic if it doesn’t have much of a chance, especially in the Texas House, Carona said.

State Rep. John Kuempel, R-Seguin, agreed that there is not much of an appetite for gambling in the House this year.

“I don’t think it has a great chance over here,” said Kuempel, who supports expanded gambling to bring additional revenue to Texas. “It’s challenged in the 83rd legislative session in the Texas House.”

[…]

Even if his legislation fails this session, Carona said a lot has been accomplished in the past several weeks. Notably, two often clashing pro-gambling interests — those seeking slot machines at racetracks and those advocating casinos — have worked well together on a broad gambling bill.

“Time is always your enemy in a legislative session,” Carona said, adding that he is not ready to pronounce gambling dead just yet.

Sure sounds dead to me, but as always, you never know. There will almost certainly be a special session to deal with school finance next year, however, and barring anything unexpected from the Supreme Court the Lege will need to find more revenue for the schools, so expect the subject to be on the front burner. Having the cover of a court order sufficed to get the business margins tax created, and it could well do the same for some kind of gambling measure. If nothing else, we’re going to have to pay for Rick Perry’s irresponsible tax cuts somehow. So don’t bury expanded gambling too deeply just yet.

More on the microbrew compromise

Brewed And Never Battered gives its report from the House Licensing and Administrative Procedures Committee hearing yesterday.

Briefly on HB 602: No one expressed opposition, not even the Wholesale Beer Distributors of Texas, who have opposed the bill in the past. There is some forthcoming compromise on that bill that apparently everyone is happy with and it looks like you’ll be able to take beer home after a brewery tour later this year.

HB 660 had a tremendous number of supporters, and the roll of names read into the record as supporters of the bill was long and impressive. Among those in support but not wishing to testify were a number of beer distributors and the Texas Restaurant Association.

As you may have read, we’ve gained the support of the other tiers through thoughtful discussion with interested stakeholders. Beer distributors were concerned about self-distribution for a business type that already sells directly to the consumer, and we understand their points. Self-distribution has been removed from the bill. We also lowered the annual limit for aggregate production to 15,000 barrels per brewpub. A number we are very comfortable with. I’m pleased that we were able to come up with a bill that all three tiers really like.

We did have one person oppose our bill, however. Keith Strama, representing the Wholesale Beer Distributors of Texas, stood up and presented a semi-coherent rambling about how we should allow these kind of changes to the code because… well, just because. Seriously. Strama did present some other barely comprehensible argument, which was called onto the rug in short order by Committee Vice-chair Chente Quintanilla of El Paso. Video of the entire hearing, which you can find here, proves quite entertaining. Strama should have just stuck to “Uh… just because” – turns out that was a better argument than the one he was trying to make.

[…]

What’s Next.

With the WBDT exposed, the ball is back in our court. We have one or two weeks at the most to earn the votes of the committee, after that it will be too late to advance this session. Right now I think we have 4 votes. We need 5. Time to turn up the pressure and continue to urge members of the committee that this the right thing to do. Continue those calls and emails (I’ll post a sample follow up letter tomorrow).

The link to find committee members is here – you can search for the Licensing & Administrative Procedures committee, or just take my word for it that it contains the following members:

Chair: Rep. Mike Hamilton
Vice Chair: Rep. Chente Quintanilla
Members: Rep. Joe Driver, Rep. Charlie Geren, Rep. Roland Gutierrez, Rep. Patricia Harless, Rep. John Kuempel, Rep. Jose Menendez, Rep. Senfronia Thompson

It would be especially helpful for you to express your support for HBs 660 and 602 if one of these folks is your Representative. There clearly is a lot of support for this bill, but until the committee votes it out, that doesn’t mean anything. Lee Nichols has more.

Kuempel wins his father’s seat

We have a full House again.

John Kuempel, son of the late state Rep. Edmund Kuempel, won a special election Tuesday to fill his late father’s seat, state election officials said. With all precincts reporting, John Kuempel, 40, received 65 percent of the votes cast.

Voters chose between six Republicans, two Democrats and a Libertarian. The second-runner, Republican Gary Inmon, got 10 percent.

Any time you can win a multi-candidate special election with a majority of the vote, never mind 65%, it’s impressive. With the two party switchers, the GOP caucus now stands at 101 members. I wish the younger Kuempel all the luck in the world as he helps his party try to fix all of the problems they created.