Everything’s Bigger In Texas … Including Lost Money From No Legalized Sports Betting

Gambling could be big business in Texas. Now there is an idea of just how big.

Dave Forman, the senior director of research at the American Gaming Association, said Texas could be generating $1.3 billion off legalized sports betting every year. That’s billion, with a B.

Sports betting is illegal in the state. The last failed attempt to legalize Texas sports betting was in 2021.

It was then that multiple bills were proposed in the Texas Legislature, but none ever saw the light of day. It is likely to become an issue in the 2023 state elections.

“Texans are certainly gambling today,” Forman said in a report by the Beaumont Enterprise.

“They’re just doing so with illegal offshore operators or bookies who have no regulatory oversight, skip out on taxes and do not offer any protections for the consumers, wagers or games.”

Regulated sportsbooks in the United States differ from offshore (or unregulated) sportsbooks because they can guarantee secured deposits, ensure proper withdrawals and also promote responsible gambling measures.

But how did the AGA get $1.3 billion?

Forman doesn’t exactly say how he arrived at that figure, but PlayTexas has done a little math and can make an educated guess where the number came from.

Texas ranks second in the United States with approximately 29 million citizens. California, the biggest state by population, does not sanction legal sports wagering.

However, New York does, and it recently joined the legalized sports betting wave in the US. New York’s population of 19 million makes it a good sample size for potential sports gambling revenue for Texas.

The latest numbers from New York recently showed NY online sports betting operators collecting $428 million in handle for the week of March 14-20 alone (March Madness).

You read that right, $428 million in one week. 

Overall, the total tax revenue from sports betting in New York is $153.3 million for this calendar year, and that’s at a 51 percent tax rate. It’s unlikely Texas’s would be that high.

Project the numbers forward — since we’re through a third of the year — and New York could be looking at a total of $600 million in revenue for 2022 when it’s over.

And that’s with 10 million fewer people than Texas and at an extremely high tax rate.

The battle for legal sports betting in Texas

We know you have heard this before. The big figure in legalizing gambling in Texas is Miriam Adelson, the widow of former Las Vegas Sands CEO Sheldon Adelson.

She’s created a PAC (Political Action Committee) that has begun to lobby multiple politicians with an eye on gambling legalization. Adelson was looking to get the measure placed on a ballot for Texans to approve.

A recent poll commissioned by the Dallas Morning News showed 43 percent in favor of allowing sports betting, 31 percent ambivalent and 26 percent opposed.

Thirty-two states and the District of Columbia currently have legalized sports betting, 18 allow it online.

Dallas Mavericks owner Mark Cuban said in 2021 that he wants legal sports betting in Texas.

It’s not just Cuban and the Mavs, either.

Other Texas sports teams have said they’ll be at a competitive disadvantage without legal sports betting in Texas.

The momentum to finally bring Texas online sports betting is building. Is it enough to push the state legislature and bureaucrats is a separate question.

It is estimated that Texans already spend $2.5 billion on gambling operations in other states.

What do other states do with gambling revenue?

Let’s look at the neighboring states and what they do with their lottery proceeds. In Louisiana, which allows sports betting in certain parishes, $207.5 million of lottery revenue in 2021 went to the state treasury fund for public education.

A study by the Tulsa World in 2019 showed that the Oklahoma lottery made an average contribution of $66.4 million to the state, which was far below original projections but still a healthy chunk of the state’s education budget.

In New Mexico, an annual report posted from 2017 showed that from 1996 to 2017, the state sent $738.7 million to public education.

The Texas Lottery is approaching its 30th anniversary. Then-Gov. Ann Richards bought the first ticket on May 29, 1992. The Texas Lottery has contributed $28.5 billion to the Foundation School Fund.

The lottery is the only form of legalized gambling in Texas.

Would Texas really get billions in sports gambling revenue?

Statistical projections never quite work out. Forman of the AGA notes the potential of the Texas market, but if — and when — Texas approves online sports betting, a big portion of the bettors will stay with their local bookmakers or unregulated sites. That’s money that Texas will never see.

The exact numbers spent there are unknown — hence the term unregulated. But the New York numbers are key in understanding just how much Texas might be missing out on.