Online Sports Betting Bill Filed In Texas

A gaming lobbyist earlier this week predicted that “something is going to happen in Texas,” and on Thursday, he was proven right. Democratic Rep. Harold Dutton filed what could be the first of multiple sports betting bills in a state that has long been opposed to legal gambling but at the heart of the sports betting debate in recent weeks.

Dutton’s HB 1121 was filed Thursday and appears to be a pretty straightforward bill that allows for statewide mobile gaming with a 6.25% tax rate — which would be the lowest in the nation. The bill does not mention brick-and-mortar sportsbooks, so should it pass as is, Texas would become just the second state behind Tennessee to legalize digital sports betting only.

The bill does prohibit betting on local Texas college teams — which is notable since the football-mad state accounts for 12 of the 127 teams playing at the FBS level and 24 schools that play Division 1 basketball — and caps the number of sports betting permits at five. The regulator would be the Department of Licensing and Regulation, which would collect a $250,000 application fee and a $200,000 annual renewal fee from sportsbook operators. The legal sports betting age would be 21.

Absent from the proposal are a mandate to use official league data and any kind of payout to professional leagues.

Given that a constitutional amendment will be required to expand the state’s gaming laws, even if lawmakers approve this bill, it could be years before a legal bet is placed in the Lone Star State.

Cap of five licensees seems low

The five-license cap seems relatively low, especially in a state as big as Texas (27.7 million). For comparison, Virginia (8.5 million) also has a cap of about 14 licenses and got 25 applications. Tennessee (6.8 million) has no cap, and so far has had at least seven applicants, four of which are currently live and accepting wagers. The two biggest states by population with live, legal sports betting are Pennsylvania (12.8 million) and Illinois (12.6 million). Illinois could eventually have more than one dozen sports betting platforms tied to existing casinos and professional sports venues while Pennsylvania capped the number of licenses at 13, to reflect the number of brick-and-mortar casinos in the state when sports betting was legalized.

There has been plenty of speculation about whether or not Texas lawmakers would take up sports betting this session. The legislature meets only every other year. Lawmakers went into session Tuesday, and the session is set to adjourn May 31. It could be a very heavy lift for legislators to legalize sports betting in 2021, considering that the state has no gaming infrastructure and this is the first time that a sports betting bill has been filed. It typically takes multiple sessions and plenty of discussion for a legislature to legalize.

Earlier this week, Bill Pascrell III, a lobbyist with the Princeton Public Affairs Group, said, “It’s complicated because there’s no gaming culture and nothing definitive yet. But the governor is interested and the legislature is interested.”

The filing of the bill shows that at least one lawmaker has sports betting on his mind, and Pascrell indicates that Gov. Greg Abbott has reversed course on legal sports betting. But Abbott in 2015 called off the state lottery exploring gambling expansion options, and two years ago, he wrote a letter to Congress opposing the expansion of Indian gaming.

Other signs of interest are that before his death this week, Las Vegas Sands gaming magnate Sheldon Adelson had spent $10 million to lobby for legal gaming in Texas.

HB 1121 is not the first gaming bill to filed in Texas this session — HB 477, which would legalize Class III gaming (in which sports betting is included), was filed ahead of the start of the session. That bill would legalize “any game of chance, including a game of chance in which the outcome may be partially determined by skill or ability, that involves the making of a bet” and allows for retail gaming at specific locations, sets an 18% tax rate, and sets the gambling age at 18.

Either bill would require a constitutional amendment, which means voters would get to decide whether or not to legalize sports betting or otherwise expand gaming in the state. The sports betting bill would take effect on Jan. 1, 2022, and there do not appear to be any statewide election dates on the calendar for 2021.

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