Burnt Orange Report

If You Must Gamble, Place Your Bets Here

By Jim Dallas

Galveston officials are apoplectic over proposals coming out of the legislature to permit video slots at racetracks -- not because islanders are concerned about the morality of gambling (although a few, e.g. Shrub Kempner, are), but because local developer Tilman Fertitta has made a convincing argument that the legislation would steer tourists away from Galveston:

Along with “sin” taxes on cigarettes and lap dances, there’s a plan to put slot machines in horse- and dog-racing tracks across Texas as a way to help pump money into the school system lost by cutting property taxes.

Gulf Greyhound officials say it’s only logical that horse- and dog-tracks get first crack at the next phase of gambling in the state since those institutions already have gaming licenses.

“We’re 100 percent for it,” said Charles Fenwick, director of marketing for Gulf Greyhound Park. “It’s a great thing for not only Galveston County, but for the rest of the state in terms of generating additional revenue for education. It seems like the next evolutionary step for gaming in Texas.”

But the plan is causing such island heavyweights as developer Tilman Fertitta, state Rep. Craig Eiland and Mayor Roger “Bo” Quiroga some alarm.

A plan that excludes Galveston from gaming would cripple the island’s ability to retain its tourist destination status, they said.

“It would be totally unfair to Galveston,” said Fertitta in an earlier interview. “Why should they bail out horse and dog tracks that haven’t been able to make money? Why should we reward their failure?”

Gulf Greyhound Park opened in 1992.

Fenwick said in that 12 years, the track has shown solid progress. He disagreed with Fertitta’s position that this plan is a bailout for horse and dog tracks.

“Gulf Greyhound Park is one of the most successful greyhound operations ever in Texas,” he said. “We’ve already proven to the state that we’ve run extremely sound operations.”

The idea of having a facility with 4,000 slot machines, twice as many as Caesar’s Palace, is worth backing, said company officials.

Both pro- and anti- gambling activists have a convincing argument. Fertitta is probably correct insofar as La Marque would probably upstage Galveston as the Sin Capital of Coastal Texas; although at least a few cents of every dollar spent in La Marque will find its way into the Island economy (although that may not be able to offset lost tourism bucks).

State rep. Craig Eiland (D - Galveston) joined other representatives to push an amendment to get Galveston some special rights for gambling in the school finance bill, although the idea doesn't seem to be going anywhere (Rep. Kent Grusendorf (R - Arlington) nixed it in committee).

Why post a local story like this (other than indulge in rah-rah-ing for the homeboys)? Because what's going on in Galveston provides a clear example of one of the many problems with the current gambling proposal in the school finance bill.

Permitting gambling in some places, but not others, is going to (and right ought to) unleash a torrent of "me too"-ism from cities and counties left out of the rain.

From an economic perspective, it's a huge market distortion -- after-tax proceeds are going to flow to some communities, at the expense of others -- and it's tempting to argue that limited gambling totally undermines the rest of the school finance bill, because the long-term consequence of this policy is that it will promote inequality across school districts. Accordingly, I feel that either the state ought to legalize gambling everywhere, or it ought to just forget about it entirely.