Texas Legislature Holds Public Hearing on Sports Betting Bills

On Wednesday, March 22, 2023, the Texas State Affairs Committee held a public hearing on two separate pieces of legislation on sports betting. Representative Jeff Leach brought forth House Bill 1942 and House Joint Resolution 102.

House Bill 1942 would authorize sports betting in Texas by providing an online-only format. Currently, as the bill stands there is no brick-and-mortar component to the legalization of sports betting. The bill includes a 10% tax on the adjusted gross gaming revenue. The bill also includes an initial application fee of $500 thousand.

The skins associated with the legislation are tethered to “sports entities.” The sporting entities include Texas professional sports teams and the PGA which holds multiple tournaments within the state. The sports entities can then contract with a designee to receive a permit on behalf of the entity. This means each team will partner with a sportsbook to provide sports betting for their fans.

House Joint Resolution seeks to amend Article III, Section 47 of the Texas state constitution. Rep. Leach believes this amendment is necessary to allow for the passage of sports betting in Texas. The language added would give the legislature the authority to regulate sports betting within the state. Given that this is a constitutional amendment, the people would vote to decide the fate of the amendment in a November vote.

During the public hearing, individuals representing groups that were either for or against the bill were given a chance to speak on the bill. Below I will summarize the main arguments that were made by each side of the debate.

FOR the Bill

The main argument that was brought for by the proponents of the bill is an argument that I have heard before when sports betting is being debated. The crux of the argument is something along the lines of “Texans are already betting on sports but they are doing it through illegal means. Let’s bring that money into the legal and regulated space.” This argument is very similar to others made when states debate legalizing other vices: other forms of gambling or marijuana.

Another argument for the bill focused on the revenue the state could generate from legalized sports betting. Connecting this argument to the previous one, Texas is currently receiving zero dollars in revenue because all the bets placed are through illegal means. A partner from Eilers & Krejcik Gaming, LLC brought forth some projections the state of Texas could see if it legalizes sports betting. The research shows that in five years the state would generate around $2.37 billion in gaming revenue. With that revenue, the state would be taking in around $180 million per year in taxes.

A final argument for the bill that was brought up by multiple individuals is the need to provide safety for those looking to place wagers. Sportsbooks go through intense safety procedures to ensure that their product is as fair as can be for the customers. However, with illegal offshore betting marketplaces, there is no guarantee of the safety or reliability of a wager being placed. Since the bettor is doing something illegal, they will find it hard to fight any legal fights they may have with the offshore book. Those for the bill want to regulate sports betting to ensure the safety of the customers.

AGAINST the Bill

One of the main arguments brought forth against the bill is the danger sports betting could pose to kids. While the betting age of the bill is set at 21, these groups pointed to statistics that showed younger audiences getting in on the sports betting craze however they could. They also stated they believed the ads for sports betting were specifically targeting children.

A rather important argument against the bill as it stood was made by a representative of the Kickapoo tribe. The tribe was left out of the bill and rather than opposing the bill outright, they want to amend the bill to include language that would allow them to have a slice of the pie. The wording is important as it has to conform with the Indian Gaming Regulatory Act (IGRA).

The other arguments against the bill could be summarized as going against traditional family values. They point to gambling addiction and its crippling nature on individuals. They also pointed to the stat showing gambling addiction has the highest rate of suicide among all forms of addiction.

Both bills were left pending in committee following the hearing. I will make sure to keep an eye on the progress of the bill as sports betting in Texas would be a major economic boost given the almost 30 million residents in the state of Texas.

Justin Mader is a recent graduate of the University of New Hampshire Franklin Pierce School of Law where he earned a J.D. and a Sports and Entertainment Law Certificate. He can be reached via Twitter: @maderlawand LinkedIn at https://www.linkedin.com/in/justin-mader-15a602119/.