Texas Sports Betting Could Be a 2021 Reality, GOP Power Broker Says

Texas Sports Betting Could Be a 2021 Reality, GOP Power Broker Says article feature image

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Texas could be among a dozen states seriously considering legal sports betting next year, said state government consultant and GOP power broker Phil Cox during a gaming industry event Thursday. It’s the latest indicator that the potential largest sports wagering market in the country could be in play in 2021.

Speaking at a G2E conference webinar, Cox said Texas officials could consider sports betting as it looks to make up a $4-to-$5 billion projected budget shortfall heading into its newest fiscal year.

One of just a handful of states that only meets regularly during odd-numbered years, a failed sports betting effort in 2021 likely means no legal betting in Texas until at least 2023, increasing interest in what could quickly become the highest-grossing market in an industry that already eclipses several billion dollars in monthly handle.

Texas Sports Betting Background

Possible momentum doesn’t mean Texas sports betting is a sure bet.

Cox said Republican Gov. Greg Abbott told him that he could support legal sports betting, a potential political boost in the GOP-controlled legislature. But Dan Patrick, who in his role as lieutenant governor has broad control over the Senate, remains opposed.

“(Abbott) doesn’t love it, but he could go along with it,” said Cox, who previously served as executive director of the Republican Governors Association. “I think the issue is (Patrick), who has a lot of influence in the Senate and is not in favor right now and will likely block it.”

Cox’s comments come a few weeks after Las Vegas Sands, one of the world’s largest casino operators, hired a team of Austin-based lobbyists, reigniting prospects for what would be the state’s first commercial casino. Sports betting legalization would be a logical complement to any casino legislation.

Meanwhile, high-profile sports team owners such as the Dallas Cowboys’ Jerry Jones, the Dallas Mavericks’ Mark Cuban and the Houston Rockets owner Tilman Fertitta, who also owns Golden Nugget, continue touting gaming’s potential within in their state. A boost to their own financial bottom lines, taxes from legal sports betting could nevertheless be a small part in filling the hole in the state’s upcoming budget, which typically exceeds $100 billion annually.

However, gambling has remained politically taboo in Texas despite its rapidly growing population and changing demographics. Conservative politicians such as Patrick continue to control much of the state’s political apparatus, which has largely opposed new gambling for decades.

Still, the potential for legal betting in the nation’s second-most populated state remains an industry focal point.

Texas has roughly 28 million residents, trailing only California’s nearly 40 million. With California sports betting unlikely until at least 2023, quick action next year in Texas could make it, at least temporarily, the most lucrative markets in the U.S.

More States Consider 2021 Legislation

Texas was the most prominent of roughly two-dozen states Cox told webinar attendees he believes will consider sports betting legislation in 2021. Cox said half of these states have a realistic shot to pass legislation before the end of next year, including Arizona, Kansas, Missouri, Maine, Massachusetts and Connecticut.

Cox said cumulative state revenues had dropped 5% year over year and were facing a similar drop heading into 2021. Ten states have already depleted their “rainy day” funds, including major gambling states such as Nevada and New Jersey.

“The bottom line is that states are looking for new sources of revenue and for new sources of revenue that haven’t existed before,” said Cox, a veteran Republican campaign strategist and founding partner of state-government consulting firm 50-State. “For a lot of these states, it comes down to two things; one is marijuana, and we’re seeing a lot of action on that, and two is gaming.”

More than 20 states have legal sports betting or have passed legislation to accept bets, and an estimated 60% of the nation will live in a state with legal wagering by 2022.

Though sports betting would be a minor boost to most states’ budget deficits, which have been exacerbated by rising healthcare costs and dwindling tax revenues due to the COVID-19 pandemic, it remains a revenue-generating tool for lawmakers, Cox said. Even a few million dollars in annual tax revenues could be a much-needed boost in what will undoubtedly be difficult decisions in all 50 statehouses next year.

“There’s a lot of downward pressure on state budgets. There’s been no resolution on state and local funding with an additional federal package,” Cox said. “There was no appetite to raise taxes in the middle of a pandemic with small businesses facing a lot of pressure and folks out of work. I don’t think you’re going to see any broad-based tax increases, but states will continue to look for new sources of revenue.”

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