Texas Stands to Gain Big from Sports Betting Legalization

Article by : Charles Perrin Dec 2, 2024

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A recent study by Eilers & Krejcik estimates that legalizing sports betting in Texas could generate over $360 million in annual tax revenue and create more than 8,000 jobs once the market matures. Currently, sports betting is illegal in Texas, but the report highlights the state’s untapped potential. It projects that Texas could reach $32.1 billion in total betting volume (handle) once the market matures, a 43% increase from earlier estimates, largely driven by the rapid growth in markets like Ohio and Maryland.

The study forecasts $3.7 billion in gross gaming revenue (GGR) for the state, with Texas potentially becoming one of the largest digital betting markets in the U.S. In the first year after legalization, Texas could see $24 billion in handle and $2.4 billion in GGR, with these numbers rising to $30 billion and $3.5 billion by Year 3.

Legalizing sports betting would also create significant job opportunities, with nearly 900 direct jobs expected in the first few years and an additional 7,700 jobs in related industries, bringing the total to over 8,000 new positions. The state could see more than $2.6 billion in annual economic output, in addition to $24.3 million in non-gaming tax revenue.

The report also suggests that Texas could become a hub for major sports betting operators, such as FanDuel or DraftKings, creating up to 8,500 jobs and generating $643 million in income annually.

Despite the potential economic benefits, the study notes that political challenges make legalization unlikely in the near future. Texas remains one of the few states yet to legalize sports betting, with 41 states, Washington D.C., and Puerto Rico already on board.

Prominent Texans, including Dallas Cowboys executive Charlotte Jones and Texas Rangers co-owner Neil Leibman, have voiced strong support for legalization, arguing that it would protect consumers, reduce illegal betting, and provide significant revenue for state priorities like education and property tax relief.

“Major legislative changes are always a waiting game in the Texas legislature. This is especially true when it comes to gambling, which has both moral and economic impacts on the state,” says Professor Brandon Rottinghaus, an expert in Texas politics at the University of Houston. “Patient is a virtue, especially in the politics of the Texas legislature. Sorting out the politics that would smooth the way for gambling is a lengthy process because key players are not invested, and other members are unsure or divided.”

Rottinghaus also notes that “Business leaders’ voices always carry some weight in Texas, but this is an issue that is going to require a full court press for it to be successful. That means many voices and a lot of investing in informing members and the public about the virtues of expanded gaming.”

While several attempts have been made to amend the constitution to add destination gaming resorts, “they have not gotten much traction because of the political hurdles in front of them,” Rottinghaus explains. “If anything is to pass, it will likely be a very small step towards expanded gaming, likely a large feasibility study and possibly including a modest number of licenses or online sports betting. Whatever happens, it will be baby steps towards expanded gambling in Texas.”

“Money can move the needle in the legislature, but it has to be resonant with the politics in the state. At this point, even a significant influx of money won’t make much happen this session,” Rottinghaus warns.

He concludes that “Expanded gaming is in Texas’ future, the only question is when. There is significant public and legislative support for these bills with just a few key holdouts. The biggest objections are about negative externalities – increased addiction or crime issues – but the legislation can be written to address these to placate legislator concerns.”