Texas’s Tidy Finances Could Weigh on Casino Efforts
Posted on: January 17, 2021, 04:25h.
Last updated on: January 17, 2021, 04:25h.
In the domestic casino industry, Texas is the golden goose. For operators yearning to develop gaming properties in the Lone Star State problematic is the state’s sturdy fiscal position.
Like so many states, Texas is facing some budgetary issues stemming from the coronavirus pandemic. However, that situation isn’t nearly as severe as it is in other states and a newly issued rosy economic forecast could remove the impetus for lawmakers to rush into gaming and cannabis legislation in 2021, according to Texas Tribune Executive Editor Ross Ramsey.
“Some of the folks promoting casinos and marijuana sales in Texas were hoping the recession triggered by the pandemic would open legislative minds to the possibility of new ways to raise money without angering taxpayers,” writes Ramsey.
In most cases, politicians love to get their hands on new revenue sources, but there’s a credible question as to whether Texas even needs the cash that would be provided by casinos and marijuana. Last week, Comptroller Glenn Hegar released the Biennial Revenue Estimate (BRE), which shows the state will have $112.5 billion for general purpose spending for the 2022-23 biennium.
The revenue estimate represents a 0.4 percent decrease from funds available for the 2020-21 biennium,” according to Hegar. “This decline is a direct result of the COVID-19 pandemic, which caused revenue collections to fall well short of what was expected when the Legislature approved the 2020-21 budget; the ending 2020-21 balance will be close to a negative $1 billion.”
That $1 billion represents a scant percentage of the $250 billion budget in the second-largest state.
Some Momentum for the Idea
Last year, Las Vegas Sands (LVS) spent millions supporting Republican legislators in Texas. The Venetian operator is also said to be preparing a massive lobbying blitz with the hopes of bringing a high end integrated resort to Texas.
LVS scion Sheldon Adelson reportedly viewed Texas a plum untapped market in the US gaming scene. He passed away last week, but interim Chairman and CEO Rob Goldstein and CFO Patrick Dumont, Adelson’s son-in-law, share many of their late boss’s visions for expansion.
State-level gaming expansion often revolves around two factors. First, there’s a state’s need for more revenue. Think New York’s recent signals that online sports wagering is on the table or Illinois signing off on more casinos, recreational marijuana and sports betting in nearly simultaneous fashion.
The other argument is losing revenue to other states. Some estimates say Texans plunk down $5 billion in other casino-rich states. Despite the fact Oklahoma is home to some of the largest tribal gaming venues in the US and Louisiana is the fifth-largest domestic gaming market, Lone Star State policymakers have long been unmoved by gaming dollars fleeing to another state.
Impetus Needed, But it may not Arrive
As Texas Tribune’s Ramsey points out, politicians in the state have a history of being reactive when it comes to gaming. Legalization of bingo, a lottery and pari-mutuel facilities was born out of necessity, not foresight.
The other wild card that could crimp casino efforts in Texas is California. Since December, Charles Schwab, Digital Realty, Hewlett Packard Enterprise and Oracle are among the companies saying they’re shifting headquarters to Texas from the Golden State.
Those moves mean more Texas will collect more corporate taxes and the influx of employees brings opportunities for the state to generate more property and sales tax revenue. There’s no personal income tax in the state.
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Published at Mon, 18 Jan 2021 00:25:18 +0000