TEXAS BUREAU

Even without casinos and sports betting, legal gambling in Texas rakes in billions

The Texas lottery along with horse and dog racing generate billions in economic activity.

John C. Moritz
Corpus Christi
Nearly $385 million was wagered on horse and dog racing in Texas in 2017.

AUSTIN – Just because Texas has long resisted Las Vegas-style casinos and is considered unlikely to be an early adopter of sports betting doesn't mean that there's no legal gambling going on with the borders of the Lone Star State.

In fact, according to figures available from state regulators, legal gambling inside Texas last year generated more revenues than the state's $4.5 billion craft beer industry and even the Dallas Cowboys.

"Let's face it. There's a lot of it (gambling) going on in Texas," said Todd Eilers, co-founder of Eilers & Krejcik, a California-based group that analyzes trends and opportunities in the gaming industry.

Eliers' group has been providing research for various firms interested in venturing into the sports betting business in light of the Supreme Court's ruling May 14 striking down the prohibition on the practice.

More:Supreme Court's ruling will likely bring gambling to more states, expert says

Nearly $385 million was wagered on horse and dog racing in Texas in 2017.

According to the firm's analysis, it's too early to tell how much would money would be wagered on sports in Texas, assuming it were legal. But Eilers said sports book operators in Texas could expect to see about $1.3 billion after all of the winners were paid.

That would be about nearly exactly how much the Texas lottery nets after operating expenses are met and all the winners are paid. The lottery profits are kept by the state and most of the money goes to public schools and veteran programs.

But the lottery players kick in a lot more. During the 12-month period ending Aug. 31, 2017, just under $5.1 billion was spent purchasing lottery tickets in Texas.

The other gambling venue legalized by the state are the horse and dog tracks. According to the Texas Racing Commission, nearly $383.5 million was spent betting on races at the state's seven racetracks.

While lottery tickets are sold in all regions of Texas, the tracks are spaced out. Houston, San Antonio and the Dallas-Fort Worth are home to the largest and busiest horse tracks. Two dog tracks are along the Texas Coast -- one in Corpus Christi and the other in La Marque, and a third is Rio Grande Valley.

More:Live dog races used to draw crowds to Corpus Christi Greyhound Race Track

Almost $5.1 billion was spent purchasing lottery tickets in Texas in 2017.

The racing commission does not keep figures on the amount of money won by bettors at the tracks. But the Texas Lottery Commission's unaudited tallies shows that for every $10 in ticket sales, nearly $7 is paid out in prize money.

Scratch games, which cost as little a $1 per ticket and as much as $50, paid a total in $2.75 billion last year. Numbers games like Lotto Texas and Powerball, while sometimes offering eye-popping jackpots reaching hundreds of millions of dollars, paid out less than $580 million.

Experts say the data from legal gambling inside the state coupled with studies of Texans visiting casinos outside its borders suggests a Texas-sized appetite for more wagering. For context, while Texans wagered almost $5.5 billion on lottery games and racing in 2017, the Dallas Cowboys, the nation's highest-valued sports franchise, reported revenues of $840 million last year. 

Ray Perryman, a longtime Texas economist who has analyzed the potential for expanded legal gambling in the state, said that while state leaders have so far resisted adding to the state's gaming footprint, there are financial benefits to taking the plunge.

"The estimates of overall U.S, revenues based on assumptions about which states are more likely to allow sports betting are in the multiple billions," Perryman said. "As one of the most populous states, Texas could be expected to capture a sizable portion of that market. The revenue would then translate into jobs and tax receipts, and there would be ripple effects through the economy."

State Rep. Eddie Lucio III, a Brownsville Democrat, said he's preparing legislation to introduce next year to take advantage of those potential jobs and tax revenues.

“When Texans utilize gaming in other states, they are paying for Louisiana public schools and New Mexico roads — it’s time to keep this revenue here at home,” he said.

But Rob Kohler, a veteran lobbyist who not only opposes gambling but is among the Texas lottery's harshest critics, said the cost of gambling that's already legal is too high for society to bear.

A December 2016 study by the University of Houston shows six in 10 lottery players earn incomes less than $75,000 and about half make less than $50,000.

"The $5 billion that's being wagered in Texas is concerning enough when you consider who is paying most of that money," Kohler said. "Legislators need to take a close look at at what playing the lottery means for some of these folks with low incomes."

John C. Moritz covers Texas government and politics for the USA Today Network in Austin. Contact him at John.Moritz@caller.com and follow him on Twitter @JohnnieMo.