Las Vegas Sands Wants To Build Casinos In Texas. It's Asking For Your Help To Get That Legalized

Texas has some of the strictest laws in the U.S. against gambling, but that isn’t deterring integrated resort developer Las Vegas Sands Corp. from making an aggressive play to introduce resort-style casinos into the Lone Star State. 

The firm has brought in a hefty lineup of casino lobbyists for this year’s Texas legislative session and is spending millions of dollars on television and radio advertisements to mobilize public opinion and place pressure on state legislators.

That’s in addition to bills that have been introduced in the Texas House and Senate, which would let Texans vote on amending the state constitution to introduce four new resort-style casinos in Houston, Dallas-Fort Worth, Austin and San Antonio.

Sands building in Texas could be mutually beneficial: Casinos can create jobs, feed significant tax revenue into state coffers and draw tourists and convention-goers to a region. And if Sands gets gambling legalization passed, it could tap into a market with major profit potential.

“Texas is the last big apple on the tree. And Texas is probably the last place you're going to find in the United States where Sands could have the opportunity to build that kind of facility,” University of Texas Rio Grande Valley professor of political science Clyde Barrow said.

As it stands, Texas law does not allow for casinos. The only exception applies to the state’s three federally recognized Native American tribes — the Kickapoo, Alabama-Coushatta and Tigua — which all have casino properties in remote parts of the state along the borders.

Even those are restricted and constantly under fire. Because the Alabama-Coushatta and Tigua tribes signed land settlement agreements prior to the Indian Gaming Regulatory Act of 1988, the state has repeatedly argued that their casino operations are illegal. Only the Kickapoo tribe is authorized under IGRA to operate a casino, and that facility can only operate limited Class II games.

Las Vegas Sands Corp. is one of the largest casino developers in the world. The company caused a stir in early March when it announced that it was selling its Las Vegas properties, The Venetian Resort and the Sands Expo and Convention Center, for $6.25B, and retaining only its resort properties in Singapore and Macao.

The company’s interest in Texas became clear last year, when it started to hire several lobbyists who are deeply connected at the Capitol, including senior staffers to legislative leaders. By the end of January, a few weeks after the Texas Legislature entered session, the number of Las Vegas Sands lobbyists had grown to more than 50 people.

Those lobbyists are working to gather political support for two identical bipartisan bills that have been introduced to the legislature. House Joint Resolution 133 and Senate Joint Resolution 49 were introduced on March 9 and would ask voters to approve four destination resorts in Texas’ four largest cities. 

Each of those resorts would require a minimum investment: $2B for metropolitan areas with more than 5 million people (Houston and Dallas-Fort Worth) and $1B for metropolitan areas with populations between 2 million and 5 million (Austin and San Antonio). 

To accompany its lobbying efforts, Las Vegas Sands Corp. launched a television and radio advertising blitz last week through a newly formed body called the Texas Destination Resort Alliance. The organization is spending millions of dollars to “engage and inform Texans on the benefits of bringing world-class destination resorts to Texas,” according to a press release.

In order to change the Texas constitution, a bill needs to win the approval of two-thirds of each house of the state legislature. That’s in addition to gaining the majority of votes in a statewide referendum, where the public can vote on the issue. 

The odds of winning the ballot are high, as public opinion polls for the last decade have shown that an overwhelming majority of Texans support the introduction of Las Vegas-style casino gambling in the state, Barrow said.

An online survey conducted by the University of Houston Hobby School of Public Affairs found that as of January, 70% of Texans support legalizing and taxing casino gambling. Texans also tend to flock to casinos in neighboring states like Louisiana, Oklahoma and New Mexico, taking billions of dollars with them. 

The bigger challenge is convincing lawmakers. The Republican Party controls Texas’ state government and has historically been adamantly opposed to any form of expanded gaming. According to Barrow, that opposition is primarily based on moral grounds, because the party draws such a large base of support from evangelical Protestants. 

“We know the simple majority of voters will say yes. What’s highly unlikely is two-thirds of either house will vote to put this on the ballot,” Barrow said.

The two main arguments for expanding gambling in Texas relate to job creation and state revenue. Aside from creating thousands of new jobs across four metros, the taxation implications are significant: under the proposed bills, the state would impose a 25% tax on slot machines and a 10% tax on table games. 

“We've certainly seen the state under revenue pressures because of the pandemic and Covid as well. And I think that's exactly why Sands is here now, because this is the opportunity,” Barrow said.

There are much-touted benefits of bringing a destination resort into a city, especially for the tourism and convention sector, but also for the broader commercial real estate market. 

Casinos are big draws for conventions, giving local tourism organizations a more competitive edge in securing national or international events.

“It's very clear that increasingly, conventioneers look to whether or not there's a casino when they're selecting locations for where they want to hold their conference. So a casino gives you an added attraction, in terms of competing in that market,” Barrow said.

Supporters of expanded gambling say that a casino’s influence could also potentially spill over into retail, entertainment, hotel and multifamily development in the local area.

But Barrow cautioned that often, the studies and reports commissioned by casino developers over-inflate the positive economic impact of a future facility. His concern is that the proposed legislation does not contain any mitigation measures to counter the negative social and environmental impacts of the four casino resorts.

“Realistically, the legislation may have a legislator's name on it, but it was written by Sands. So it was written to maximize their benefit,” Barrow said.

Colliers International Las Vegas Executive Managing Director Mike Mixer said that Las Vegas Sands Corp. is essentially flush with cash after selling its Las Vegas properties. Texas’ anticipated growth and business-friendly environment, along with the public’s enthusiasm for casinos, is driving the company’s major efforts to embed itself in Texas in the long term, and Sands is positioning itself to control the growth of any newly legalized gambling sector. 

“They probably have done enough homework to see that if it gets to that point where folks have a vote, it might pass,” said Mixer, who leads Colliers' Resort & Gaming and Hotel Services Group. “Then they'd be in the driver's seat, given how much equity and how much cash they have now to build something new in a growth market.”

The minimum investment rules in the proposed bills significantly limit the pool of operators that could take advantage of the revised law. 

“If you talk about a minimum investment of $2B, you're talking about very few companies in the world who could compete in that market. Sands is one. MGM, Genting and Wynn. That's probably about it,” Barrow said.

Mixer said the difficulty in building large casinos also shrinks the pool of developers. Casino projects can require an average of between 20 and 30 acres in a central location, excluding a golf course and other facilities, and can take around two years to build, he said.

“Just the logistics of acquiring a site and providing all the massive amounts of utilities that are necessary, and infrastructure for a property of that caliber … it eliminates most of the developers that are traditionally developing in any major city,” Mixer said.

Still, having Sands so involved could be the impetus needed to make large casinos in Texas a reality. 

Barrow said the main thing the Texas push for legal gambling has lacked in the past is a big casino player like Sands, which is willing to make a long-term commitment to the state and push the issue during every legislative session. In his opinion, it’s the beginning of a decade-long political campaign.

“I've talked to executives in some of the big casino companies over the years, and their answer to me is always that they just see it as a hopeless cause,” Barrow said. “But if somebody like Sands starts to put some holes in the dam, they're going to show up.”