87th LegislatureTaxes & SpendingBipartisan Set of State Lawmakers Introduce Sports Wagering Legislation

Under the proposed laws, the state would require a $500,000 application fee for a sports wagering operator license.
March 4, 2021
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A McAllen Democrat and a Houston Republican are working together to advance legislation to expand sports betting in the Lone Star State.

Sen. Chuy Hinojosa (D-McAllen) introduced Senate Bill (SB) 736 and Senate Joint Resolution (SJR) 39 while Rep. Dan Huberty (R-Houston) introduced House Bill (HB) 2070 and House Joint Resolution (HJR) 97

Hinojosa’s proposal and Huberty’s are not identical but have some key components in common.

“A legal, regulated sports wagering market will help to deter unlawful sports wagering and provide for more regulatory and law enforcement oversight over sports wagering, while generating revenue to this state,” the bills read.

However, the texts stipulate that “participation in a lawful and licensed sports-wagering industry is a privilege and not a right[.]”

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Huberty and Hinojosa propose granting interactive sports betting permits for a $500,000 fee, refundable only in the event that the application is denied and after all expenses associated with processing the application are deducted.

An application fee for a retail permit — a license to run a location where sports betting is offered — would be $50,000, while the application fee for a service provider permit would be $25,000.

Fees for license renewal would be $100,000 for interactive sports betting permits, $25,000 for retail permits, and $10,000 for service provider permits.

Additionally, sports betting could only be offered on a retail basis at designated sports facilities, a term defined in the bill as those which are the “primary host of a Major League Baseball, National Basketball Association, National Football League, Major League Soccer, or National Hockey League professional sports franchise in this state and that has seating capacity of at least 5,000 people” in addition to Class 1 racetracks.

The texts create a new chapter in the Occupations Code, to be dubbed the Texas Sports and Entertainment Recovery Act, to govern a sports wagering industry in this state.

The definitions of “sports wagering” provided in the bills are broad, but they exclude bets placed on greyhound races, horse races, and virtual games like fantasy football. Gambling on youth sports would also remain unlawful.

The bills also create two tiers of sports wagers, one that includes bets placed after an event has commenced and one that includes all other bets.

Sports wagering in Texas would be overseen by the Department of Licensing and Regulation, as well as the Comptroller of Public Accounts, which would both be required to audit the sports wagering operators.

Texans would have to be at least 21 years old to bet on sports, and sports wagering operators could not target advertisements to consumers under 21.

The bills include a 10 percent tax on the adjusted gross revenue of sports wagering operators, which would be due monthly, but prohibit the levying of any other taxes connected to sports betting.

In the legislature, members sometimes must file what is called “enabling legislation,” which is usually a joint resolution that proposes a constitutional amendment to allow whatever policy the lawmaker is trying to enact.

HJR 97 and SJR 39 are enabling pieces of legislation. They would ask voters to approve a constitutional amendment that authorizes the legislature to legalize sports wagering.

In January, Rep. Harold Dutton Jr. (D-Houston) introduced HB 1121 and HJR 68, which are similar but more concise than Hinojosa’s and Huberty’s proposals.

Dutton’s bill would require only one license, a sports betting operation permit, for a fee of $250,000. The renewal fee would be $200,000, and the monthly tax would be 6.25 percent as opposed to 10 percent.

Gambling legislation has an uphill battle during the 87th Legislature. Lt. Gov. Dan Patrick, who presides over the Texas Senate, has not been receptive, and lawmakers have expressed mixed viewpoints this year on loosening the state’s gambling laws.

In the event that sports wagering laws were enacted, Texas would become the 21st state to have legalized sports betting. In the meantime, Texans who have a gambling itch may have to stick to scratching lottery tickets.

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Hayden Sparks

Hayden Sparks is a reporter for The Texan. He has coached high school competitive speech and debate and has also been involved in community theater and politics. A native Texan, Hayden served as a delegate at the Republican Party of Texas Convention in 2016. He is on track to receive a bachelor’s degree in psychology from Liberty University. In his free time, Hayden is known to take walks around the neighborhood while listening to random music on Spotify.