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Games in the time of coronavirus

I came across this story in Slate by Stefan Fatsis about a recent Scrabble tournament he attended, and it got me thinking.

Before the tournament, I reminded players to wash their tiles and bags. (They’re an obvious germ vector, and also get really stinky.) There was hand sanitizer on the playing tables. My skin was so dry from spritzing and washing that my knuckles bled. But now—with “social distancing” and “self-quarantine” making early runs for 2020 Word of the Year—I’m questioning the wisdom, and ethics, of my decision to play.

When I drew my first tiles of the tournament—ADEEHIR; alas, HEADIER didn’t play, nor did the only possible eight-letter word, DEHAIRED—nobody in American society had started hanging CLOSED signs, particularly sports society. A week later, professional and college basketball are gone. So are baseballsoccerhockeyfootballgolftennisrugbyroad racescar races, and chess and esports tournaments.

But the little world of competitive Scrabble is playing on, its official governing body declining to suspend play. The debate among players over whether games should continue is representative of the debates being waged in other corners of America that haven’t gone dark. People are still grabbing subway poles and flying in airplanes, believing Rush Limbaugh and Fox News. What are the risks of doing what you love doing? Who gets to decide when you have to stop?

Scrabble is owned by Hasbro Inc., but the toymaker has almost no involvement in the competitive game. The 2,200 active players, 150 or so clubs, and 400 or so tournaments a year are regulated by the North American Scrabble Players Association, which is funded by player dues and tournament participation fees. Hasbro grants NASPA a license to use the word “Scrabble” in its name and promotional efforts.

NASPA hasn’t ignored the coronavirus crisis. Its website includes a detailed COVID-19 wiki. The guidelines are all sensible, some are obvious, and a few very specific: Don’t play if you’ve tested positive, wash your hands, disinfect your equipment, use a smartphone app instead of a communal laptop to adjudicate word challenges. “If you have to sneeze or cough, and are not wearing a face mask, do so into a tissue or your elbow and away from all playing equipment and players,” the guidelines advise. “Then pause the [game timer] and call the director to discuss whether you should withdraw from the event.”

As Fatsis points out, Scrabble tournament players tend to be older (average age 65), so they’re quite vulnerable to the COVID-19 threat. That got me to thinking about another group of mostly older people that like to congregate to play a game, bridge players. I played a lot of tournament bridge when I was younger – partners moving out of town, and a distinct lack of time, put an end to that. Bridge tournaments feature hundreds or thousands of people at a hotel or convention center, and a lot of those people are seniors. If they’re still like they were 15 or 20 years ago, a lot of them smoke, too. Definitely right in the vulnerability demographic.

And right now, one of the three annual North American Bridge Championships – the biggest tournaments on the calendar – should be going on. Fortunately, the March NABC has been canceled, though the summer (July) tournament is still on, for now. But there are smaller tournaments happening every week, across the continent – across the world, though those are under the purview of other bridge organizations – and who knows what’s happening with them. Most of the April ones have been canceled at this point, but not all, and those that are in states that haven’t clamped down on public gatherings in the same way may still happen. (Oh, and there are bridge clubs, too, though at this point the local shutdown order will have taken care of that.) With local and state governments putting out restrictions on public gatherings and the CDC’s “no more than 50 at a time for the next eight weeks” directive, this may have resolved itself, but I wouldn’t take anything for granted right now.

Oh, and after I started writing this post I saw this story about how Houston is becoming a hot city for poker clubs in the Sunday print edition. The story has a dateline of March 5, and tells of the reporter’s visit to one of these clubs on February 29, but wow, talk about inconvenient timing. I’m sure that like bridge and Scrabble, poker is more fun when played in person with other people, but in the short term we have to stick to playing the online version.

Poker clubs

I wish them luck.

Michael Eakman, a poker aficionado from a very young age, has hosted poker tournaments from around the country, but Texas gambling laws have long shut him out of his own state and his hometown of Houston.

This year, however, he opened the city’s first restricted membership-based poker club, joining several Texas entrepreneurs who believe they have found a way to circumvent those regulations and host everything from friendly poker games to competitive tournaments.

Unlike traditional gambling houses, Mint Poker in southeast Houston does not take a share of any gambled money, referred to as raking the pot. Instead, the club and similar ones across the state charge membership fees for players wanting to play in the club, a business approach that pushes the boundaries of legal gambling.

But so far, Eakman and other entrepreneurs in Austin and north Dallas haven’t drawn any unwanted attention from the Legislature or state regulatory agencies. Their efforts are gaining enough traction that they’re looking to expand. They have formed an association to represent their interest and are hoping to establish more clubs across Texas.

“In our conversations with the city attorney here in our jurisdiction, we made everyone aware of what we were doing before we even signed the lease,” Eakman said. “I certainly don’t want to challenge anyone to bring a court case, but I think at the end of the day we’re handling this by being proactive instead of reactive is the way to do this. … There are no regulations and guidelines other than the narrow scope of a very vague law.” Bingo, horse and dog racetracks, Native American casinos and even the state-run Texas Lottery all provide outlets for Texans trying to test their luck.

[…]

At least three other membership-based poker clubs have opened in addition to the Houston business: Texas Card House with two locations in Austin, and Poker Rooms of Texas in north Dallas. They recently joined forces as the Texas Association of Social Card Clubs, and have begun working with longtime utilities lobbyist Tim VonKennel to represent them within the Texas Legislature, Eakman said.

VonKennel is the father of Texas Card House owner Sam VonKennel, and said he helped organize the Texas Association of Social Card Clubs to increase legislators’ awareness of membership-based poker clubs in Texas.

“The Legislature hasn’t really seen it yet because it hasn’t really existed,” VonKennel said. “As they pop up, I want to make sure the Lege is aware of them. What I would really like to do is get these guys to become licensed with the Texas Department of Licensing and Regulation, and that way they’re absolutely certain they’re on the right side of the law.”

Sen. Jose Menendez, a Democrat from San Antonio, said he was involved with the creation of membership-based poker in Texas, encouraging Eakman to devise a business model that could clear the hurdles of Texas gambling laws when they met at a poker tournament.

“I think it’s a little hypocritical that we can have a state lottery or horse racing in texas but we can’t let people play poker,” Menendez said.

Basically, as far as I can tell, these things are legal until proven otherwise, which is to say until some law enforcement agency makes an arrest, or until Ken Paxton issues an opinion. The story above appeared a few weeks ago and fell into my drafted-but-never-got-around-to-publishing pile, then I saw this AP story and dug it back up. As noted, while the state has not given an opinion on this sort of thing, local law enforcement has, at least in some places.

On Sept. 7, Dallas police executed a search warrant at CJ’s Card Club on Walnut Hill Lane. Police filed a report alleging the keeping of a gambling place. The case remains under investigation. A department spokeswoman declined to release any further information.

The club has since closed, its website and Facebook page have been shut down, and its operators could not be reached.

Around that same time, Poker Rooms of Texas closed after Plano police questioned the legality of that operation. The club opened late last year in a strip center storefront on Parker Road off Independence Parkway. It reportedly attracted scores of players each night.

Its website states that it “is working with local authorities to resolve operational issues.” Its owners did not return messages.

The website for Lucky’s Card Room in Fort Worth says the club is temporarily closed while it works on a new location. And the site for TopSet Poker Club in Plano stated that its grand opening, formerly set for September, has been delayed while it considers options in light of problems identified at similar businesses.

Big Texas Poker Club opened in late August in a commercial building off Jupiter Road in Plano. Owners Fred and Heather Zimmerman said they did their homework to ensure that they would be legal. Three weeks later, they shut down to avoid arrest.

“This is a legitimate business, and it’s better than illegal poker rooms,” Fred Zimmerman said.

The couple said they were transparent about their club as they sought a city permit to open. Only after they started gaining members did they receive “threatening letters” from police stating that their business model violated the state’s gambling law.

Plano City Attorney Paige Mims said certificates of occupancy are about the fitness of a building and have nothing to do with the activity inside. As for whether a private card room can operate, she said the city does not give legal advice.

Police spokesman David Tilley declined to go into details about his department’s conversations with the poker rooms. “Gambling is illegal in the state of Texas,” he said.

In other words, if you have a favorite spot to play Texas Hold’Em, don’t get too attached to it. I should note that there was an effort in the 2009 legislative session to carve out a legal exception for poker, but it didn’t make it. If there’s been a similar effort since then, I’m not aware of it; that one had a social media/PR push behind it and there’s been no such thing in subsequent sessions. The legislator who filed the pro-poker bill back then was then-Rep., now-Sen. Jose Menendez, who as you can see still supports the idea. Like I said, I wish these guys luck. I’m not a poker player myself, but I see no reason not to let ’em play.

Here come the bingo interests

In the discussion of expanded gambling so far, I’ve spoken of two potentially competing interests, casinos and racetracks. Turns out there’s a third player in the game, and they’re not about to be left behind: Bingo interests.

Steve Bresnen, who represents bingo halls as a lobbyist for the Bingo Interest Group, said charitable bingo groups would be devastated if the state expands gambling without giving them the electronic-game technology that would allow them to compete in a market that includes casinos or video lottery terminals at racetracks.

The industry previously has sought the ability to offer electronic instant bingo in a gambling expansion, which has failed before in the Legislature.

State law prohibits using bingo proceeds on lobbying the Legislature and prevents bingo charities from working for or against a proposed constitutional amendment on the state ballot, which a gambling extension would require.

Bresnen said a federal court lawsuit is planned to challenge that law.

They plan to use the Citizens United decision to argue their case. Quite the can of worms the Supreme Court opened there.

Bingo charities net about $36 million a year in bingo proceeds, Bresnen said. Bingo interests want to establish a fund of at least $5 million “to mount a major media campaign that will allow bingo charities to defend their interests,” according to a “plan of action for survival of Texas charitable bingo.”

Even if the bingo industry doesn’t prevail in the lawsuit, it will work to affect the debate through such means as a statewide voter registration and mobilization campaign targeting those attending Texas bingo halls.

Well, if they’re looking for someone to design a logo for them, I have a suggestion for them. It’s going to be very interesting trying to keep up with all of the groups that want a piece of whatever gambling pie that may come out of the next legislative session. Seems to me a viable strategy for the anti-gambling folks will be to get these competing interests to work against each other as much as possible. Just keeping track of all the bedfellows is going to be a full-time job.

I should note that there is at least one other interest that will be involved, though I have not heard anything from them yet: Poker interests, who managed to get a bill passed out of committee last session, but it died without coming to a vote in the House. Someone may want to print up a scorecard, we’re going to need all the help we can get.

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.

Poker bill coming to a vote

HB222, the bill that would legalize poker rooms, is on the House calendar for today, so barring a point of order or some other complication it will get a floor vote. It hadn’t looked too good for the bill’s prospects last week, so this is a turnaround. That may be because, as its author Rep. Jose Menendez said, that it was “ratcheted back” to limit poker to racetracks and Indian casinos, in the event they get legalized. I can’t quite tell from the bill’s text if that’s the case. In any event, I know about this addition to the calendar because of an email alert I received from Texans Against Gambling, which included a statement of their opposition to HB222. I have also solicited and received a response to TAG’s statement from Mike Lavigne on behalf of the Poker Players Alliance. Both are reproduced beneath the fold for your perusal. I appreciate TAG’s position, but I still support HB222. We’ll see if the House does as well.

UPDATE: And it’s off the calendar and possibly officially dead for the session as Rep. Menendez postpones it to seek an assurance from Gov. Perry not to veto it.

(more…)

No Tigua casinos

We may still get some form of expanded gambling in Texas, but at least one form of it is off the table for this session.

The Tiguas hopes to restart lucrative gambling operations on their reservation are dead for this legislative session, state Rep. Norma Chavez, D-El Paso, said Friday.

Part of the reason was the criminal record of Tigua Gov. Frank Paiz.

“I believe the Tigua legislation is not salvageable,” Chavez said in an interview.

Lawmakers this week told the tribe chances were minuscule that any gambling legislation would pass this year.

Paiz’s 20-year criminal history, they said, diminished what were already small odds.

“There are insurmountable obstacles,” said state Rep. Pete Gallego, D-Alpine, who spoke with the tribe this week about its flagging gambling efforts.

My understanding of this is that bills specific to Tigua matters, such as HB1308 and HJR 108, both of which are Chavez bills, are dead. Other gambling bills, such as HB222 and SJR 31, are still in play.

More details are in this version of the story.

The El Paso Times reported on Paiz’s long history with the law last year after he was elected to lead the tribe.

Court records and police documents show that Paiz was charged with offenses including theft in 1987, drunken driving in 1992 and assaulting a police officer in 2001. He repeatedly failed to comply with the terms of his probation, and spent at least a month in jail. He was also charged with domestic violence, though the case was dismissed.

Paiz said then that he had changed, had gotten an education and had become a leader in the tribal community. The tribe, he said, knew about his past and decided to give him a second chance.

[…]

Chavez said she told the Tiguas that Paiz’s past would be a problem for legislators.

The only chance for gambling this year, she said, was an amendment to the Texas Constitution. That requires approval from 100 of the 150 House members and 21 of the 31 senators before the proposal could be placed on the ballot in November for voters to make a final decision.

Chavez said she could not ask 100 of her colleagues to vote for the tribe when its leader had such a problematic background. Doing so, she said, could put the lawmakers at risk in future elections.

“A CEO of any gaming corporation with the same exact background of the governor wouldn’t be allowed to sign a contract with the state, so it’s hard to ask my colleagues to do something a CEO can’t do,” she said.

So there you have it.

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.

Poker bill passes out of House committee

I mentioned before that there was a bill to expand legalized poker this session. That bill is HB222 by Rep. Jose Menendez (D, San Antonio). Today it moved a step closer to passage as it was approved by the the Licensing and Administrative Procedures Committee.

[The bill] passed 6-3 — with the agreement that local communities would be able to vote on whether to legalize the game.

“The vast majority of communities in Texas will hold successful elections allowing Texas Hold’em at specific locations,” said Mike Lavigne, state director of the Poker Players Alliance (PPA). “This is a smart way to allow local control over what will quickly become an economic development issue.”

In Texas, it’s legal to play poker for fun, or to play for money in a private home. But once the house or the dealer profits, the game becomes illegal, which has pushed the state’s poker scene underground.

[…]

If cities voted to legalize poker, the state would be able to issue poker licenses to establishments, and allow them to collect fees on poker hands and game buy-ins. The poker operators would be taxed based on their revenue, money that would be returned to the state.

Getting passed out of committee is just Step Two of that thousand-mile journey, so don’t go making any plans just yet. As I said before, this is an expansion of gambling I have no problem supporting. I wish the PPA luck in taking this the rest of the way.

UPDATE: The committee hearing for the bigger kinds of expanded gambling, “racinos” and casinos, will be next week.

Response from the racetracks

When I wrote my earlier post about how much revenue expanded gambling would generate for Texas, I said I’d be more than happy to do a similar exercise for someone on the pro-gambling side of things. Sure enough, I got an email from Mike Lavigne on behalf of Texans for Economic Development, who sent me a copy of a study done by TXP that examined the question for the horse racing interests. I’ve uploaded it here (PDF) for your perusal. The main thrust of the argument is as follows:

Texans are already gaming at a high level. Based on data from a variety of sources, including state gaming commissions, convention and visitors bureaus (CVBs), and other academic studies, TXP has estimated the current gaming revenue in a seven-state region that is attributable to Texans at approximately $2.3 billion during 2007, the equivalent of about 3.8 percent of the national total. This is the assumed universe of current Texan gaming; while there undoubtedly are individual instances of Texans gaming elsewhere in the country, it does not appear to be significant.

The Innovation Group was engaged by Texans for Economic Development to estimate the size of Texas’ gaming market. A summary of their results follows. As the table indicates, the total Texas market approaches $4.2 billion in gaming revenue at full implementation. However, there is still leakage out of state, as some Texans will continue to game elsewhere.

A significant share of the revenue that would occur in Texas with the implementation of racinos would be recaptured from other states where Texans currently game. Measurement of the volume of this spending is done through subtracting the leakage out-of-state ($840.2 million) from the $2.4 billion figure, yielding recaptured spending of approximately $1.8 billion.

They estimate a total of about $3.4 billion in gambling revenue, which when taxed at 30% (the rate for racetracks is higher than what has been proposed for casinos) yields about $1 billion a year for the state. They make other claims as well about related economic activity and employment, which I’ll leave to you to examine.

I remain basically skeptical of the claims made here – I think some of these projections are optimistic, especially the ones made separately about the economic benefits for other businesses that flow from expanded gambling. I also think it’s foolish to rely on gambling revenue for anything other than “found money” – the Texas Lottery should be an object lesson there. Finally, there is a moral case to be made against expanded gambling, and I think we greatly underestimate the social costs associated with it, which the state does precious little to mitigate. I’ve got a future post planned for that, since it’s outside the scope of this one. Having said all that, I can at least see where the racetracks’ numbers are coming from, and while I think they’re sunny, they’re comprehensible and reasonable. We can argue over these numbers because they’re here to be argued over, which remains more than I can say for the casino interests, whose claim that they would generate $3 billion for the state looks even more ludicrous to me based on this.

I also asked Lavigne in an email exchange after he sent this to me about the bleak picture the racetracks have painted for their industry today, and why they would be a better vehicle for capturing the “leakage” than regular casinos. Here’s what he said, reproduced with permission:

The Racing Commission did indeed paint a glum picture. There is no denying the shape the industry is in right now. The primary reason is that purses in Texas are so low, there is no incentive for breeders to breed in Texas. If they take the same horse and breed it in Louisiana, NM or OK they will be eligible for much larger prizes. A large chunk of the money made in this bill will go toward growing purses here that will be competitive with not only with our neighbors, but with the eastern seaboard, where racing has had a lot more success. This model is the reason our industry in Texas has fared so poorly. When parimutuel wagering was legalized in Texas, there were very few (if any) racinos in our bordering states.

We don’t oppose the proposal for regular casinos on its face, but we do object to the disparate tax rates. That would surely kill any chance racinos would have to be successful.

As to why we think racinos would better capture the money than casinos? I think that is the wrong question. Both would be able to get at that money. We do have to look at political reality though. What is more palatable to the legislature? Full on casino gambling overnight? Or a smaller expansion at existing sites with legal wagering already taking place.

The Governor and many Republicans have repeatedly said that they do not want to expand the footprint of gambling. We believe our proposal is a more modest one.

The most important thing to remember about these figures is that the Comptroller will ultimately make the decision as to how much money these proposals would raise. She will do her own math.

So there you have it, the case for racinos. My thanks to Mike Lavigne for engaging me on this. If someone with the casino interests wants to show me their numbers, I’ll be more than happy to do this for them as well.

Finally, on a related note, whatever reservations I have about casino and/or racetrack gambling, I do support an expansion of legalized poker in Texas. HB222, introduced by Rep. Jose Menendez as the Poker Gaming Act of 2009, would establish poker as a “game of skill and not a lottery or gift enterprise prohibited by the Texas Constitution” and would thus allow for the creation and regulation of legalized games. In particular, it would allow establishments that hold a license to serve alcoholic beverages issued by TABC or a license issued by the Racing Commission to have the ability to host the game of poker. There was a hearing for this bill yesterday in the House before the Licensing and Administrative Procedures committee. I have no issues with this bill and support its passage.