Everything is bigger in Texas

Introduction

Sports betting is currently one of the fastest growing industries across the United States. New York, with its population of 19.4 million people, generates more tax dollars than most other US states? Texas, with its population of 29 million people, is one of eleven states that hasn’t legalized sports betting; however, Texas is positioned to enter the industry and become a major player in the market. It is a matter of time before Texas joins the 38 other states and the District of Columbia in legalizing gaming and sports betting. As such, multiple billionaires, gaming tycoons, and Indian tribes are preparing for the emerging Texas gaming market to explode. The Choctaw Nation of Oklahoma– the third largest Indian Nation in the United States – is a tribe that has taken various steps to prepare for the inevitable legalization of sports betting in Texas. Analyzing the current state of political affairs in Texas as it pertains to gaming is important in understanding what the Texas market will look like in the future. Additionally, a deeper inquiry into the Choctaw tribe’s partnerships and preparations, in anticipation of the legalization of gaming and sports betting in Texas, can assist in predicting the potential influence tribal gaming will have in the Lone Star State.

Texas’ Contentious History with Legalized Gaming

Historically, the Texas legislature has been hesitant to legalize statewide casino games. Texas’ approach to gambling and sports betting has been shaped by a conservative cultural and religious view and the impact that legalizing such activity can have on the public. Factors such as conservative and religious groups advocating against legalized gaming, fears of rampant gambling addiction, and the unknown impact that legalized gaming can have on Texans have all contributed to the current state of affairs. In addition to Texas’ conservative and religious views potentially being a wall in the path of legalizing Class III gaming and sports betting, Texas is one of few states that has a budget surplus. The fact that Texas’ economy is booming from a myriad of different sources has made the argument of economic development less compelling to lawmakers.

Currently, Texas authorizes charitable bingo and a state lottery – Class II games. Tribes located in Texas are able to operate casinos and offer Class II games, under the jurisdiction of the Federal Indian Gaming Regulation Act (IGRA). Class III games – such as blackjack, slots, and sports betting to name a few – are not authorized under IGRA unless there is a tribal state compact in place to that effect. There is no such compact, neither does Texas permit Class III games so tribes are limited to offering Class I and Class II games, such as traditional Indian games with low cash prizes and other bingo-like games. This may all change with the upcoming 89th legislative session.

The 89th Texas legislative session – how will it impact gaming?

The 89th legislative session in Texas will be pivotal to the future of gaming and sports betting in the state. The 88th legislative session, wherein multiple bills were proposed to legalize casino resorts and sports betting, proved that many lawmakers are primed for this year’s legislative session to open the floodgates and usher in the era of casino gaming and sports betting in Texas. During the 88th legislative session, a bill that would have legalized Class III gaming and sports betting passed the House of Representatives but failed to gather enough votes in the Texas Senate. Recently, public support and statements made by the Texas Governor, Greg Abbot in support of legalized gaming indicate that the 89th legislative session could finally bring legalized gaming to Texas. Although traditional public policy concerns are still held by many Texans, the balance is tilting in favor of legalizing sports betting and Class III gaming due to fears of an unregulated gambling market and the potential positive economic impact that legalizing gaming can bring to Texas. There is a large and un-met appetite for casino games and sports betting in the Lone Star state – geolocation specialists GeoComply reported 1.48 million attempts to access legal online sportsbooks in November 2024 alone – an appetite that is not being satiated by Bingo and low prize cash games.

Individuals in favor of legalizing Class III gaming point to economic growth, consumer freedom, increase in tourism and hospitality, and regulating an illegal market that is only growing. The Texas Senate Joint Resolution 16 is a bill proposed for the 89th legislative session that seeks to expand gaming in Texas by legalizing casino gaming and sports betting. This bill argues that the legalization of Class III gaming will bring economic development, job growth, tax relief, funding for education, and public safety programs. As good as that may sound, legalizing sports betting and casino games is still an uphill battle. The reason for this is found in Texas’ Constitution which expressly bans Class III games and sports betting. An amendment to Texas’s Constitution would be needed – and is in fact being proposed – to be able to legalize gaming in the state. Texas Senate Joint Resolution 16 would need a two-thirds majority vote in both the Texas House of Representatives and the Texas Senate. Should the bill get the required votes, it would then be placed on the election ballot and voters would be able to have the bill adopted with a simple majority. Failure to legalize sports betting and Class III gaming during this legislative session would push back the timeline to legalize gaming until 2027, as Texas holds legislative sessions on odd numbered years only. This would be only a temporary setback as it seems inevitable that Texas will join the majority of states in legalizing sports betting and Class III gaming and many commercial gaming operators and private parties are working with this outcome in mind.

Commercial and private parties

Tilman Fertitta, owner of the Houston Rockets, Jerry Jones, owner of the Dallas Cowboys, Mark Cuban, owner of the Dallas Mavericks, and many other highly influential and financially successful individuals and corporations have been very vocal in their assertion that the 89th legislative session should legalize gaming and sports betting. By contributing to political campaigns and developing partnerships with established brands, many in the Texas community are levying their positions to be first in line should Texas legalize Class III gaming and sports betting. Commercial gaming and sports betting operators are ready to tap into the Texas market, but they are not the only ones that can benefit should the 89th legislative session finally legalize Class III gaming, including sports betting.

The Sports Betting Alliance, BetMGM, Caesar’s, Boyd Gaming, and Las Vegas Sands are examples of commercial casino and sports betting operators that are located outside of Texas. They too are ready for Texas and have the infrastructure to immediately join the gaming industry once gaming is legalized. The Las Vegas Sands has acquired prime real estate near Dallas, Texas, betting that the 89th legislative session could legalize Class III gaming but limit it to locations tagged “destination resorts”. The Las Vegas Sands has spent upwards of US$12 million dollars in lobbying efforts during the past two legislative sessions, and the company is not alone. The message of these companies is clear, Texas will legalize sports betting and Class III gaming, and we want to be ahead of the curve when it does. The message is being received by many, including the Choctaw Nation.

The Choctaw Nation

The Choctaw Nation – representing tribal interests – is also making the necessary preparations to become a major player in Texas gaming. If the upcoming 89th legislative session legalizes Class 3 gaming, including sports betting, at the state level, then the federally recognized Indian tribes will also be able to offer the same on tribal lands, subject to IGRA and compact negotiations with the state of Texas. There are currently three federally recognized tribes in Texas that have built and operate casinos. The Kickapoo Traditional tribe operates the Kickapoo Lucky Eagle Casino, the Tigua Indians tribe operates the Speaking Rock Casino, and Alabama-Coushatta tribe operates the Naskila casino. The potential legalization of Class III gaming will certainly expand the current landscape of Texas casinos, both commercially and in tribes. However, the potential legalization of sports betting in Texas is creating an interest in the neighboring Choctaw Nation tribe of Oklahoma.

The Choctaw Nation is encouraged by claims that Texans spend an estimated US$6 billion annually on illegal and unregulated sports betting activities. Additionally, Eilers & Krejcik Gaming predict that once Texas legalizes sports betting and establishes a legal framework for it, the state could generate more than US$360 million in direct tax revenue each year. Other reports state that if the 2025 legislative session legalizes sports betting, Texas could become the largest market in the United States with up to US$32 billion in annual betting. As the third largest Indian tribe in the United States, owning multiple casino establishments across Oklahoma, the Choctaw Nation is alive to the opportunity and is taking the steps to become a major commercial player in Texas.

Choctaw Casinos and Resorts is the brand of the Choctaw Nation, and they have partnered with the following Texas sports team, stadiums, and events: Texas Rangers, Dallas Mavericks, Dallas Stars, Choctaw Stadium – home of the Arlington Renegades, and they will be the official partner of the Dallas Open beginning February 2025. In 2024, the Choctaw nation partnered with Kambi Group and were able to secure a turnkey sportsbook platform for both online and retail sports betting. The expertise that the Choctaw Nation has developed in gaming while operating in Oklahoma has prepared the tribe to compete for a sportsbook license should Texas legalize sports betting.

One of the many casinos operated by the Choctaw tribe in Oklahoma is just 90 miles north of Dallas, Texas, and as such the Choctaw brand is readily recognizable to the many Texans who make the short trip to game at its facility. The Choctaw tribe already offers Class III gaming in Oklahoma, which includes house-banked games such as blackjack, slots, etc. so will start with an operational advantage over the three tribes with casinos in Texas. These will be further disadvantaged even if the 89th legislative session legalizes Class III gaming as they will required a tribal state compact to offer Class III games on tribal lands under IGRA. By contrast the Choctaw Nation seems set to enter the Texas gaming market as a commercial operator, so will not be held back by compact negotiations. It is thus in prime position to secure a gaming license when Texas legalizes casino and sports betting. It will be interesting to see if the Choctaw Nation uses its influence and potential market share to help the current Texas tribes expand into the sports betting and Class III gaming world. On the other hand, the Choctaw Nation, as a commercial operator, may view the tribes as competitors and attempt to safeguard their interests instead.

Conclusion

Funds generated via casino gaming and now sports betting are proving to be an opportunity for many tribes across the United States to fund housing, medical, social services, education, and overall improve tribal life. The small tribal bingo halls of yesteryear have opened the metaphorical door to tribes becoming major players in casino gaming and now sports betting. Sports betting is no longer knocking at the door, it is kicking it down. The Choctaw Nation is in prime position to take a slice of the pie once Texas legalizes sports betting. If predictions and indicators are correct, Texas will become a leading market in the world of sports betting.

The partnerships secured by the Choctaw Nation, in addition to the infrastructure they possess places them in an enviable position once sports betting is allowed. By taking advantage of Oklahoma’s gaming laws and opening casinos close to the Texas and Oklahoma border, the Choctaw Nation is a name that Texans are familiar with. Emerging markets are often accompanied by innovation and new ideas. Sports betting is no different and is providing tribes, commercial operators, and states an opportunity to not just work together but thrive. The Choctaw Nation grabbed this opportunity and thrived in Oklahoma. There is a way to go before the legislative pathway is clear, but a bet against the Choctaw Nation as they prepare to not just enter but dominate the sports betting industry in the emerging Texas market is a bad bet.