Local News

Betting Against the odds: How Your Money Supports a Derelict Industry

IrvingWeekly Staff

| Published

March 14, 2009

For the first in a series of publications in which I plan to highlight the risk that gambling poses to Texas and your tax dollars, I would like to focus on the current finding structure of the pari-mutuel betting industry. We use this system in Texas where horse and greyhound racing has been legal since 1987. Pari-mutuel wagering is a system in which all bets are pooled together, taxes and fees are removed, and odds are calculated by distributing that pool among all the bets placed. Since its implementation, this industry has never gained the footing Texans were originally foretold it would. The simulcast (broadcast races) tax collections have been in steady decline for the last five years and, believe it or not, the state has not collected taxes from the live racing industry in nearly a decade.

How is this possible?

The state set a minimum revenue threshold of $100 million on these businesses, none of which have profited over that mount since 2000. Actually, if you added all the revenues from the racetracks in Texas together, they do not raise that much money. As such, many are looking to raise their income any way they can. Racetrack operators and thoroughbred breeders across Texas are calling to have the authority to add video lottery terminals (VLTs, or, slot machines) to their establishments to increase their patronage, despite the fact the downward trend is expected to continue. In 2008, the gambling interest lobby spent $1.7 million on political campaign contributions to legislatively advance their agenda, slyly disguised with names like “Texans for Economic Development.” Legislation has been filed by both Texas house and senate members to give racetrack operators this authority.

So, the racing industry is now asking for more of your money... by using your money? Remember that these businesses do not pay taxes on their pari-mutuel income, and yet the money being used by racetrack associations to lobby their agenda comes from the tickets you purchase at their establishments, not from the collective pool or the breakage (the amount leftover after a winning payoff). That in itself is another fallacy they promote. They boast how much they have for their campaigns as if people donated that money freely. Again, that is not the whole story. This money is deducted upfront and you must opt out of paying it. You do not opt in. Allowing VLTs will not raise their pari-mutuel income and force racetrack operators to pay taxes—it will only advance their ability to introduce more risk into an already struggling economy.

Arguments for this endeavor, of course, are that Texans are spending their money across state lines, and Texas should be collecting that income. However, studies have indicated that for every dollar spent on gaming, another three is incurred at state expense for social programs and misplaced revenue. Meaning that the money generated by the gaming industry would be revenue that could have potentially been collected by the state from sales taxes on goods (which might even be considered acceptable if the state was collecting substantial taxes from the racing industry- but, alas, it is not).

Ultimately, there is clearly a reason Texas racing establishments are in sharp decline. Now is not a time the state should lay at stake the economic base and character of our local communities. In times like these, do you really want the state to be betting your money against the odds? Please contact me with any questions or concerns at (972) 401-8825 or by e-mail at linda.harper_brown@house.state.tx.us.