Texans and Oklahomans will both be taking their best swings at legalizing sports betting this year. Texas will feature at least two bills, one legalizing casinos and retail sports betting and the other online-only sports betting. Oklahoma, for their part, has already put forth legislation that would legalize both retail and online sports betting.
Will either state reach the finish line this year? If so, in the tradition of the Red River rivalry, which state will pass legal sports betting first?
The bitter truth, at the point of this writing, is that the Sooners may pass legal sports betting…well…uhm…sooner than the Longhorns.
Both states have a history of coming up short on sports betting
In Texas, because of the state’s biennial legislative structure, sports betting legislation has had only one incarnation prior to 2023. That occurred last session, in 2021, when multiple sports betting bills were filed. None got further than a committee hearing as the legislature spent its energy on COVID recovery and the Winter Storm that knocked out the state’s electrical grid.
Across the border in Oklahoma where the legislature meets annually, sports betting legislation first hit the ballot in 2018 in the form of pool betting. That bill didn’t pass. The Oklahoma legislature tried again in 2020 and 2022 with the same results.
While both states were busy coming up short, their neighbors–Arkansas, Louisiana, New Mexico, Colorado and Kansas–all passed sports betting legislation in some form, siphoning gaming revenue away from Texas and Oklahoma in the process.
Texans and Oklahomans face different obstacles to passage
In Texas the main opposition to sports betting comes from the state’s stalwart social conservatives.
Religious groups in particular see the specter of gambling and its deleterious effects on society. Further, the Texas Republican Party has baked anti-gambling language right into the party platform for years. Overall, the state, with its clear conservative majorities in both houses of the legislature, form the major roadblock to passage of gaming legislation.
This sizable opposition is doubly significant as passing any gaming legislation would require a constitutional amendment and a two-thirds-majority vote in both Republican-majority houses.
The lawmaker who, in the minds of many, has become the head of the anti-gambling spear is Lieutenant Governor Dan Patrick. As Lieutenant Governor, Patrick oversees the State Senate. He manages the formation of senate committees, chairs key fiscal committees himself, mediates debate in the main chamber and influences the overall direction of the senate in the few short months they convene.
In Oklahoma, the main opposition comes from the 30+ tribes that operate nearly all the state’s casinos and bring in over $1.5 billion in tax revenue every year. They have a complicated and somewhat combative relationship with state lawmakers, but mainly with Governor Kevin Stitt.
The 33 tribes in Oklahoma operate more than 140 casinos under a model compact that they negotiated with the state in 2004 and which renews every 15 years. This compact allows various gaming types agreed upon in the state’s Tribal Gaming Act.
Oklahoma’s governor has lost favor with tribes
In 2020, Gov. Stitt attempted to negotiate new compacts for two tribes (the Comanche and Otoe-Missouria), allowing them exclusive rights to offer “event wagering,” another way of saying “sports betting.” He made these new compacts under the false assumption that the preexisting model compact did not automatically renew in 2020.
Stitt’s compacts and the allowance for event wagering ultimately fell apart, eroding trust between Stitt and the tribes. For one, Oklahoma Attorney General Mike Hunter argued that new forms of gambling–such as event wagering–could not be negotiated into new compacts by the governor without first being added into the Tribal Gaming Act.
More importantly though, House and Senate leaders argued–and the Oklahoma Supreme Court ultimately upheld–that Gov. Stitt had “overstepped his authority” in granting new compacts and ignoring the fact that the model compact did indeed contain language suggesting its automatic renewal. As a result, the two compacts were not recognized and legal sports betting died.
In 2022, Rep. Ken Luttrell filed HB-3008, which would have amended the Tribal Gaming Act to authorize only retail sports betting at tribal casinos at a 10% tax rate to the tribes. This legislation did not stack up with the tribes or voters. First, both the tribes and Oklahoma bettors had no interest in retail-only sports betting, and, second, the tribes thought the 10% rate was too steep. HB-3008 did make it out of the House Budget Committee, but it died on the House floor.
What arguments could win the day in both states?
In Texas, arguing for the increased revenue will not be enough. For one, Texas has run a substantial budget surplus in the past two legislative sessions, so the need for new money just isn’t there. Further, stalwart anti-gaming lawmakers have made the argument that they have no interest in relying on gambling for revenue.
In an interview with PlayTexas, Sen. Carol Alvarado, who has sponsored casino and retail sports betting legislation for years now, echoed this point. In her mind, Texans could be won over by the idea of luxury resort-style casinos. Playing on Texas pride, Alvarado has pressed the issue that Texas could set a new standard for luxury tourism and world-class entertainment if it were to legalize casinos. This, she believes, could be an argument that crosses the aisle and unites lawmakers.
Cara Gustafson, spokesperson for the Sports Betting Alliance, offered her thoughts on the subject to PlayTexas as well. She indicated that lawmakers need to be educated on the perils of the illegal market already firmly established in Texas. Convincing them that regulating the market protects Texans from shady offshore operators can gain some traction with those lawmakers agnostic to expanding legal sports betting.
These arguments hold water, but they’re not cut and dry and will ultimately entail lengthy discussions in a relatively short legislative session.
Across the border, Oklahoma’s path is more direct. Rep. Luttrell, who again sponsored this session’s sports betting legislation (HB-1027), has effectively adjusted the two key concerns from his failed 2022 bill. HB-1027 features both retail and online sports betting and a lower tax rate built around a sliding scale. In its current form, tribes would pay the following tax rates:
- First $5 million in monthly net revenue – 4%
- Next $5 million in monthly net revenue – 5%
- Above $10 million in monthly net revenue – 6%
Gov. Stitt’s influence will also play a major role in the outcome. Whether tribes come to the table still comes down to trust. They currently have sole ownership of gambling in the state, and that would conceivably extended to include sports betting.
In a recent radio interview with The Franchise, an Oklahoma sports radio show, Stitt stated that the tribes aren’t the only ones who should have a say in legalizing sports betting. He was appealing to pro and college sports teams who have opinions on the topic.
How that statement will sit with the tribes is yet to be seen.
The Sooners may get the best of this Red River rivalry
Gov. Stitt’s fraught relationship with the major tribes is still outstanding, and time will tell if Rep. Luttrell’s new legislation is enough for them to overlook the past.
House Bill 1027, which would allow tribes to add sports betting to existing tribal compacts, passed the Oklahoma House and is on its way to Senate committee, while in Texas, House Bill 1942, authorizing online-only sports betting, awaits consideration on the House floor. It’s companion bill in the Senate, however, has seen no movement in committee.
At the moment, the odds seem slightly better for Oklahoma than for Texas getting two-thirds of both houses to pass casino and/or sports betting legislation.
