State Rep. Dan Huberty presented his bill to bring sports betting to Texas on Wednesday night, promoting the potential revenue stream it could create as a source to help pay for special education in the Lone Star State.
In a public hearing before the State Affairs Committee, Huberty outlined the key aspects of HB 2070, which would both decriminalize and legalize sports wagering in Texas. He framed legalization as a way the state could receive up to $180 million in revenue in the next two-year budget cycle that would go toward special education, a cause he championed as part of his landmark HB 3 bill that passed in 2019 with unanimous approval in both statehouses.
“We had a really productive session with a lot of great opportunities for negotiations as we go forward,” Huberty told Sports Handle via text. “And I am optimistic about the future about both of these pieces of legislation after seeing the level of interest from the committee.”
Huberty’s sports betting bill is connected to HJR 97, which would have the voters decide to legalize sports wagering via constitutional amendment in November. He noted that Arizona, Louisiana, New Mexico, and Arkansas all either have sports betting or recently legalized it, and in the case of Louisiana, approved it via constitutional amendment.
Huberty’s bill would allow mobile wagering with no in-person registration provision; professional teams to become licensed operators, which is currently legal only in Illinois, Virginia, and Washington D.C.; and tax operators at 10% of adjusted gross revenue.
A largely receptive committee
A former member of the State Affairs Committee, Huberty found a largely receptive group to his presentation. He opened by citing the billions of dollars that were “flowing out of the state for gambling” and lightheartedly asked for a show of hands from members who have placed a legal bet either in Las Vegas or in other legal jurisdictions.
In addition to the 26 states plus Puerto Rico and the District of Columbia that have legalized sports betting, Huberty pointed out another 15 states are in the planning stages of legalization because they recognize it as a potential source of revenue. He then turned his attention to the revenue going toward HB 3, which carried spending needs of $11.5 billion and needs to be funded going forward.
“We said what we were going to do during the interim was come up with a plan and an idea through a variety of revenue sources,” Huberty explained about funding. “And this is not a tax increase … and I don’t know what political spectrum you’re on and it doesn’t make a difference, but we have to figure out a way to continue to pay for this as we go forward.
“… This bill creates an opportunity to do two things. It will legalize and protect the citizens of Texas related to what is already happening in Texas. I am not asking to do anything other than why don’t we regulate it. Why don’t we get the revenue? Why don’t we take that revenue, put it into the system and put it into our general revenue fund? But more importantly, the substitute does one important thing. … A percentage of this money will go to special education very specifically and the rest will go to the general revenue fund.”
Huberty said his bill included “the best provisions from other states” to create strict regulatory oversight, and it is backed by The Sports Betting Alliance, which consists of multiple Texas-based professional teams and sportsbook operators that are already operating in legal jurisdictions.
Teams and industry voice support for bill
TODAY, the House State Affairs Committee will hear #HB2070 by Rep @DanHuberty which would legalize sports betting in TX. As the committee prepares to hear the bill, politely encourage your legislator to support the bill! Submit your comment: https://t.co/XQ7UBX1ezT. pic.twitter.com/hbDj9FqGtQ
— Sports Betting Alliance (@SBAllianceUS) April 14, 2021
Texas Rangers co-owner, president, and Chief Operating Officer Neil Leibman was the first to testify in support of the bill, pointing out how professional sports drives billions of dollars worth of economic activity in Texas. He added the teams in the state across the five major professional sports leagues helped draft the bill and the potential regulatory framework to “help protect the integrity of the game.”
Leibman also pointed out money flowing from Texas to neighboring states creates an on-field competitive disadvantage because teams in states with legalized sports wagering are “creating additional dollars for sports teams to go out and secure the best and highest quality players for their teams.”
Houston Rockets CEO Tad Brown, speaking on behalf of team owner Tilman Fertitta — who also owns Golden Nugget Casino — voiced support for the bill to keep sports wagering revenue in the state while echoing Leibman’s comments on being able to secure additional revenue streams through deals with operators.
In between the pair, Penn National Gaming Senior Vice President Eric Schippers stressed the importance of the availability of mobile sports wagering to counteract the offshore market — PNG’s Barstool Sportsbook is accepting such bets in Pennsylvania, Illinois, and Michigan and expects to be operational in 10 states by the end of the year.
PNG also operates Sam Houston Racetrack, one of three Class I tracks that would be eligible to obtain a sports wagering license. Schippers said legalized sports wagering would be able to provide a “meaningful shot in the arm to the Texas racing industry and to provide an important new revenue stream to the state.”
Attorney Scott Ward, who serves as public counsel for Orrick, Herrington, and Sutcliffe on behalf of operators BetMGM, FanDuel, and DraftKings, stressed the importance of protecting consumers from offshore betting with an emphasis on limiting the potential of any underage gambling through identification and geolocation technology.
Ward also touched on the importance of allowing college sports betting in Texas, estimating that “30 to 50 percent of illegal bets” would be placed via offshore accounts if a college ban was in place, and that it would lead to people placing bets on pro teams because they were already there to make college wagers.
During questioning from Rep. Sam Harless, Ward said an additional source of revenue would come via advertising from the operators, with the attorney estimating that to be in the “hundreds of millions of dollars.” Upon entering a new state, operators usually saturate markets with radio and TV ads offering promotional play to entice new bettors.
Huberty open to negotiations and amendments
Rep. Donna Howard observed there was no mention of any of the state’s professional women’s sports teams in Huberty’s bill, specifically offering him an amendment to include the WNBA’s Dallas Wings, which he said he would accept.
One area that could provide a greater challenge in terms of negotiations is the inclusion of the Kickapoo Traditional Tribe of Texas, which operates Class II gaming at a casino in Eagle Pass. Rep. Richmond Pena Raymond inquired about the tribe’s omission and whether Huberty would be willing to include it via compact, which would require federal negotiations to allow Class III gaming.
Huberty responded to Pena that he would be “happy to work with this entire committee,” adding that “my goal is very simple — I would like the opportunity for us to pass this out of this committee and then as we get to the floor and working with you and others … to get something to our constituents that we have a constitutional amendment to be able to say that we want to do this and then create the enabling legislation.”
That took on added importance later during the hearing when Jennifer Hughes, a lobbyist for the tribe, said the Kickapoo Tribe “respectfully opposes HB 2070 as it is currently written.” Hughes said the tribe does not oppose the policy to add sports wagering but that the tribe “should not be left out of negotiations.”
Hughes added statewide sports betting is likely to reduce business at the Eagle Pass casino but also saw “an increased revenue stream from operating sports wagering and fantasy sports would help the tribe provide for its members as IGRA (the Indian Gaming Regulatory Act) intends.”
Hughes concluded that HB 2070 was “a potential opportunity for the tribe, an exciting one, but it only works if it has the right language in it that adheres to the Indian Gaming Regulatory Act.” She added the tribe has “amendment language” that meets those standards to offer sports wagering and fantasy sports on its reservation with rules adopted by the tribe and regulated by federally approved gaming ordinances.