Texas Bill Would Allow Pro Teams To Be Licensed Sportsbook Operators

A bill filed Tuesday in Texas would give professional sports teams the opportunity to be licensed sports betting operators provided voters approve a constitutional amendment to legalize sports wagering in the state in November.

If passed, H.B. 2070 filed by Republican Rep. Dan Huberty would decriminalize sports wagering and legalize it effective Jan. 1, 2022. The House Joint Resolution (H.J.R. 97) for a constitutional amendment tied to the bill would be on the ballot in November, allowing voters to choose for or against the resolution worded: “The constitutional amendment authorizing the legislature to legalize sports wagering in this state.”

Passage of a joint resolution in Texas requires a two-thirds majority in both the House (100 of 150 members) and Senate (21 of 31 members), and cannot be vetoed by the governor.

Huberty represents Harris County as part of the 127th district, which includes a small section of Houston. He is the third legislator to file a sports betting bill this year as Texas navigates a potential path to legalization.

Democratic Rep. Harold Dutton, whose 142nd district includes the downtown Houston area — home to the city’s five professional sports teams — and is in close proximity to Huberty’s, filed H.B. 1121 in January that would make Texas the second digital-only state for sports wagering, following in Tennessee‘s footprint.

Prior to that, Democratic Rep. Joe Deshotel filed H.B. 477, which would legalize Class III gaming, which includes sports wagering.

Teams as licensed sports wagering operators still novelty

Huberty’s proposal to allow professional sports teams to be licensed operators or host a sportsbook at their arena is still a new concept for sports betting in the United States. Just three jurisdictions — Illinois, Virginia, and Washington, D.C. — currently have such rules in place, and only the NFL’s Washington Football Team has an operator license, obtaining approval in Virginia since its team headquarters are located there.

With 13 professional sports teams in Texas spanning MLB, MLS, NBA, NFL, NHL, NWSL, and WNBA, there would be ample opportunity for sportsbooks to team up with franchises. All but two of those potential retail partnerships would be located in either Dallas or Houston, with Austin and San Antonio the other cities.

Huberty’s bill would also permit leagues to “enter a commercial agreement with a sports wagering operator under which the sports governing body may share in the amount wager or revenues derived from sports wagering on the sports governing body’s sporting events.” This means conceivably the Dallas Cowboys could obtain a sports wagering operator license, and the NFL could enter an agreement with the Cowboys for a portion of that handle or revenue from wagers on NFL games played.

And the Cowboys, alongside four other Texas-based pro teams, are seeking such an opportunity. An official for “America’s Team” told the Dallas Morning News in a statement two weeks ago that they were supportive of Huberty’s effort.

“Unregulated and illegal sports gambling is already taking place in the State of Texas,” Charlotte Jones, the Dallas Cowboys’ executive vice president and chief brand officer, told the DMN, according to a statement released by the Sports Betting Alliance. “Legalized sports betting would regulate the industry and generate hundreds of millions of dollars of new revenue for the state which will help fund critical programs without raising taxes.”

H.B. 2070 does not require operators to use official league data to settle wagers and can use any data source to settle a tier one or pre-game wager, but a “sports governing body may notify the commission that it desires sports wagering operators to use official league data to settle tier two sports wagers,” which covers in-game bets placed.

If a sports governing body does not “notify the commission of its desire to supply official league data, a sports wagering operator may use any data source for determining the result of a tier two wager on a professional sporting event of the league governed by the sports governing body.”

No second online skin

Huberty’s bill also would allow sports wagering at the state’s three Class 1 horse racetracks — Sam Houston Race Park in northwest Houston, Retama Park in Selma near San Antonio, and Lone Star Park in Grand Prairie west of Dallas — and greyhound racetracks.

Retama Park has the closest pre-existing ties to sports wagering since it is managed by Penn National Gaming, which entered a 20-year strategic partnership with Capital Rivers Casino on Monday to potentially enter New York via second online skin pending legislative approval to expand sports wagering.

That deal also allowed Rush Street Interactive reciprocal rights to potentially enter Texas through similar second-skin access. Huberty’s bill, however, does not appear to offer the opportunity for each licensee to launch two (or more) online sportsbook brands. “The interactive sports wagering operator shall only be permitted to hold out its sports wagering platform to the public under one brand,” the bill reads.

But the bill also states an interactive sports wagering permit can be granted in which a sports wagering brand “may be different from the brand offered by a retail permit holder.”

Key differences versus Dutton’s bill

In terms of potential available licenses, Huberty’s bill dwarfs Dutton’s proposal, which caps the number at five. The Republican state representative also proposes a 10% tax on adjusted gross revenue, higher than Dutton’s 6.25% — which would be the lowest in the nation.

Huberty’s bill, in contrast to Dutton’s, does not prohibiting wagering on state college teams. That could be a crucial factor in football-mad Texas, which accounts for 12 of the 127 teams playing football at the FBS level and 24 teams participating in Division I basketball — which concludes its championship seasons with March Madness, a.k.a, the NCAA tournament.

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