Second Thought: Wednesday, February 16, 2005
Losing Bet

Stop the legislative roulette on school funding and let gamblers pay.


Every few years, the Texas Legislature gets involved in a big game that they never win. Itís the school finance reform game, where the lawmakers try to figure out how to fund schools in a fair and equitable way. But as politics often go, these solutions never pan out, and, in the end, everyone feels like theyíve been screwed.
The rich school districts donít like paying ďRobin HoodĒ money to the poor districts, the poor districts donít feel like theyíre getting enough money, property owners are mad about their taxes going up, businesses feel that they are being pinched. Everyone wants good schools; few want to pay the cost.
So the challenge for the legislature is to find some way to levy taxes without having taxpayers feel like they are losing out. Here is an idea that might work: Texas should get into the sports gambling business.
Before the morality people get all crazy about raising money from football-crazy Texans, letís consider some numbers. In the past decade, sports gambling has exploded around the country. No one knows for sure how much is wagered legally and illegally, but those in the know put the figure at between $100 and $300 billion. The legal Las Vegas sports gambling takes in about $2 billion a year; the new offshore online bookmaking businesses take in about $35 billion.
What has happened is that sports gambling is no longer a vice run by mobsters. Betting on the Super Bowl is now just a mouse click away. Offices have their betting pools. For many people, sports gambling has lost that immoral and illegal image.
Many states are exploring the possibility of getting into sports betting: Minnesota, New Jersey, Delaware, New York, and Maryland are all looking into taking advantage of sports gaming to bring in new tax money. For almost two decades, Oregon has had a pro sports lottery that raises money for schools.
Some legislators want to put video lottery terminals, a type of slot machine, at horse tracks to raise extra money to reduce school property taxes. Texas needs $1.2 billion to replace the Robin Hood payments and another $3 billion to finance other growing school needs.
Could a sports gambling plan raise that kind of money? Not in the beginning, but the business is growing.
England has legal sports betting and made $500 million in taxes off it last year. Offshore gambling has grown to 500 businesses in foreign countries ó where sports gambling is legal and online bets make up the bulk of the business ó bringing in about $1.5 billion in profits. What is happening is not unlike Prohibition in the 1920s. The feds outlawed alcohol, but people just kept drinking anyway. Eventually, over time, government decided to tax the booze and make some money from it.
A basic start would be to have a pro football lottery every year. Bettors could pick between 3 and 14 games each week, with winnings based upon the number of games wagered on. Maybe throw in a four-digit random-number lottery to increase the payoffs to millions of dollars.
Once Texas sees that a sports lottery is a moneymaker, the state can expand the business to all the major sports. Terminals can be set up where lottery tickets are now sold, allowing bettors to scan the video screen to see which games they want to bet on. The state can use the standard betting line that is published in daily newspapers. Throw a surcharge on all the bets and put a tax on winnings.
Major pro sports groups have always opposed such betting on the grounds that it will cause games to be fixed. This argument may have worked 50 years ago, but pro athletes make too much money now to be influenced by some guy spending five bucks on a sports lottery ticket in Texas. Sports gambling is now so watched and regulated that the possibility of a fix involving highly paid pro athletes is no longer much of a factor.
There are some caveats: Donít allow any betting on amateur or minor-league sports, especially college teams, since the unpaid ó or underpaid ó athletes are the ones most likely to be tempted to fix games. Put a limit on the amount of money that any bettor can make on an individual wager. And put this before voters so they can decide if they want to make sports betting legal.
Sports gambling will work in Texas because this state loves its sports, especially football. There might be some legal issues to work out, but with so many states looking to get into sports gambling, laws will be changing sooner rather than later.

More information: Itís all about finding taxes people can stomach. If pro sports teams want taxpayers to foot the bill for new stadiums and arenas, the state might as well use pro sports to get some of the money back. And if the Dallas Cowboys continue to stink, you can bet against them. Or for them. Either way, the state gets its money and the schools win.

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