Don't bet on Texas gambling expansion

4 April 2011

AUSTIN, Texas -- The phrase, "all hat, no cattle" depicts someone who is big on talk but little on substance.

The term also best describes the prospects for gaming expansion in Texas.

Gambling proponents have put forward a multitude of ideas over the past decade. But they have nothing to show for their efforts.

The 2011 Texas Legislature is no different. Last week, lawmakers considered 17 gaming proposals, everything from building eight Las Vegas-style hotel-casinos to adding slot machines at racetracks.

Dozens of gambling proponents spoke in favor of the activity. Opponents told legislators gaming was not the remedy to solve the state's projected $27 billion budget shortfall.

In end, gaming expansion will fail. Again.

"While Texas approved a lottery in 1992, it has not been the panacea for public education as promised," said Union Gaming Group principal Bill Lerner. "Various gaming expansion attempts have been foiled by the reality of this experience."

Visions of a Venetian Houston, MGM Grand Dallas or Caesars San Antonio give analysts and investors dreams of revenue projections surpassing most regional markets. With 25.1 million residents, Texas is the second-most populous state behind California, according to figures from the U.S. Census Bureau.

In addition to the state lottery, Texas has several dog- and horse-racing tracks. One Indian tribe, the Kickapoo Traditional Tribe of Texas, operates two small casinos in remote southern Texas.

State residents itching for a gambling fix can head north to Oklahoma's booming Indian casino market, east to Louisiana's riverboat properties, or to Las Vegas.

While many in the investment community believe Texas casinos are untapped oil gushers, conservative Gov. Rick Perry and influential Republican state Sen. John Carona of Dallas have said candidly gaming that will not pass in this session of the Legislature.

The onerous process to change the Texas constitution -- a two-thirds majority vote in the Legislature plus passage of a statewide voter referendum -- also makes affirmation of a gaming bill unlikely.

Slot machine manufacturers, looking at potential sales revenues from Texas casinos, are understandably disappointed by the lack of action.

Houston-based Landry's Inc., which owns the Golden Nugget casinos in Las Vegas and Laughlin, also sees opportunity in its home state.

Landry's CEO Tilman Fertitta told The Associated Press he could have a Golden Nugget casino open in Galveston "within a matter of weeks" if gaming was approved. Fertitta cited the "billions of dollars" in tax revenue gaming could provide to state and local governments.

Among those not disappointed is Pinnacle Entertainment CEO Anthony Sanfilippo.

The Las Vegas-based regional casino operator has three riverboat properties in Louisiana, including its flagship L'Auberge du Lac Casino Resort in Lake Charles.

Houston, which has 6 million residents, is the primary feeder market for Lake Charles. The cities are roughly 145 miles apart, about a 2½-hour drive along Interstate 10.

Sanfilippo said Pinnacle monitors any state that looks to expand gaming. Texas drew much closer scrutiny. Besides the Houston-Lake Charles connection, eastern Texas provides customers to Pinnacle's Bossier City, La., casino. The Dallas-Fort Worth area is a feeder market to New Orleans.

"Our sense is that the momentum or interest just isn't there," Sanfilippo said.

Even if Texas legalizes gaming, Sanfilippo believes Pinnacle has an established and loyal customer base from the state.

"There is really nothing to say until we understand what form or fashion of gaming is legalized in Texas," Sanfilippo said. "Slots at a racetrack are much different than full casinos."

Macquarie Securities gaming analyst Chad Beynon said Pinnacle is safe from Texas encroachment.

"The risk from increased competition due to legalization of gaming in Texas is still years away," Beynon said. "The recent press around this is no different than what we've heard over the last 10 years."

Related Links
Texan Online Gambling
Union Gaming Group Gaming Vendor Information
L'Auberge Casino Resort Lake Charles Details


Copyright GamingWire. All rights reserved.
Featured Vendors
AmericanChecked
Casino City Press
AmericanChecked
Background checks for the gaming industry with key & non-key packages & fingerprinting solutions
Casino City Press
A leading publisher and distributor of casino and gaming business data and market research reports.
Shenzhen ZhengYuanTai Technology Co., Ltd.
Rymax Marketing Services, Inc.
Shenzhen ZhengYuanTai Technology Co., Ltd.
14 years experienced gaming display manufacturer: open frame, curved, and halo monitors
Rymax Marketing Services, Inc.
Leader in creating award winning player & employee loyalty programs & events proven to increase ROI
Texas Slots & Gaming
Sunkist Graphics, Inc.
Texas Slots & Gaming
Wholesale gaming reimagined. Texas Slots & Gaming is your sustainable gaming partner.
Sunkist Graphics, Inc.
Specializing in the creation of best-of-breed gaming graphics - slot glass, sign faces, and more
Casino Network
Talisman Group Creators of EZ Baccarat
Casino Network
20+ years experience selling refurbished slot machines, parts & glass for all major brands
Talisman Group Creators of EZ Baccarat
With over 800 tables in 150+ casinos, EZ Baccarat is the number one brand in baccarat.
Regulatory Management Counselors, PC
Betson Imperial Parts & Service
Regulatory Management Counselors, PC
Over 45 years of experience serving the legal and regulatory needs of casino industry clients
Betson Imperial Parts & Service
Your one stop shop for all your gaming and OEM needs!
Players Pal
TribalHub
Players Pal
Revolutionize the way you connect with your casino players with the Players Pal mobile app
TribalHub
25th Annual TribalNet Conference Sept 16-19, 2024 Westgate Las Vegas
Oklahoma Indian Gaming Association (OIGA) Conference
Dable Advisory & Consulting Services
Oklahoma Indian Gaming Association (OIGA) Conference
The biggest little show in Indian gaming! Save the date: August 12-14, 2024 Oklahoma City
Dable Advisory & Consulting Services
Advisory & consulting services services for Indigenous entrepreneurs, businesses & organizations
Slot Machines Unlimited
Imagine This
Slot Machines Unlimited
Exporter of IGT, Williams, AVP, Trimline, Aristocrat, Konami, Bally, & parts over 20 yrs experience
Imagine This
Imagine This #1 Source for Player Gifts. Over $50 million in stock ready to ship! Let us serve you!
Top One Tech Limited
Casino Schedule Ease
Top One Tech Limited
Global Touch solution partner of choice, 10+ years OEM manufacturing, 100,000+ units application
Casino Schedule Ease
Full Featured & customizable for the complex scheduling needs of table games & other casino depts


Your Guide to 14,944 Gaming Industry Suppliers