Selling lottery could force expansion of Texas gaming
By Brandi Grissom / Austin Bureau
El Paso Times
AUSTIN -- Texas would have to expand gambling to see the multibillion-dollar profits Gov. Rick Perry promised last year when he proposed selling the state lottery, according to a report an Austin watchdog group plans to release today.
Texans for Public Justice, which monitors money in politics, obtained Texas Lottery sales projections by three private companies compiled for Perry from 2006 through 2007.
The Public Justice report indicates that to generate the $14 billion or more Perry said the lottery would yield, Texas would have to allow more gambling and more-addictive games.
"If Texans oppose such a gambling expansion, then these documents suggest what they should play with the Texas Lottery games is Texas Hold 'Em," the report concludes.
An expansion of gambling in Texas, though, would be good news for the Tigua tribe in El Paso, which has been trying for years to reopen Speaking Rock Casino.
"It would be perfect for us," Tigua Gov. Frank Paiz said.
Last year, Perry said selling the lottery could net as much as $14 billion, which could be invested in cancer research, education and health insurance. The state, he said, would generate some $1.3 billion a year in interest from the sale.
Perry spokesman Robert Black said the companies' projections that Texas would need to allow more games to get that price was nothing more than speculation.
"Nobody knows exactly what the lottery is worth," he said.
Lawmakers panned Perry's idea last year, but two Senate committees continue to study its feasibility.
Asked whether Perry would support more gaming in Texas if it meant a bigger price for the lottery, spokesman Black said, "He does not think there is an appetite in the state for an expansion of gambling."
But he added that Perry believed a private company would more efficiently operate the lottery, which brings in about $1 billion annually.
"All of those questions will have to be answered through the Legislature," Black said.
According to Texans for Public Justice's report, investment companies UBS and Lehman Brothers estimated the lottery could be worth as much as $24 billion, but only if sales expanded significantly.
The projections assumed Texas could meet sales in states such as Maryland, Georgia and Virginia, which offer games, like keno, that are prohibited here.
Gordon Graves, an Austin investor who once partnered with the Tiguas in gaming operations at Speaking Rock and is the largest stockholder in the gaming company Aces Wired, said he submitted ideas to expand distribution of lottery tickets using technology such as cell phones and the Internet.
"I tried to provide them with as much information as I could on the pros and cons" of selling the lottery, Graves said.
Private interests like UBS, Lehman Brothers and Aces Wired have much to gain from a potential sale of the lottery, and they could gain even more if gambling is expanded, said Lauren Reinlie, project director for Texans for Public Justice. Public justice obtained the projections by making a request for public records.
That, she said, could also explain why the companies have made large political investments in Texas.
Graves has given more than $100,000 to Perry since 2000. And, according to the report, the companies spent thousands to hire lobbyists who were once Perry's top advisers.
"Privatization of the lottery would directly help a lot of these electronic gaming companies," Reinlie said.
The Tiguas have been pushing lawmakers to expand gaming in Texas since then-Attorney General John Cornyn shut down Speaking Rock in 2002.
Now the tribe is facing another court action by current Texas Attorney General Greg Abbott for allegedly operating illegal slot-machine-style games.
Making those types of games legal is one way the companies suggested Texas could increase the price for the lottery.
"That would be something that would solve all our problems," Tigua Gov. Paiz said.
State lawmakers, though, have rejected gaming expansion plans, including a proposal last year that would have allowed limited games on the Tigua reservation. Conservative legislators worry about gambling addicts and the poor who might fritter away their limited resources hoping to hit it big at slot machines.
Teresa Craig, who lives in Lower Valley, said she had mixed feelings about allowing more gambling in Texas. On one hand, more money for cancer research, education and health care is good, she said. But she also worried about the ugly side of gambling.
"A lot of good can come from it," Craig said, "if it is handled properly."
Brandi Grissom may be reached at email@example.com; 512-479-6606.