Andrea Young, the president and chief operating officer of the Sam Houston Race Park, is trying to talk Texas legislators into calling a popular vote on whether to allow video lottery terminals — known as VLTS or, more commonly, as slot machines — at racetracks and on Indian reservations in Texas. Like other gaming interests, the Win for Texas group representing the tracks is telling lawmakers that it would be an easy source of non-tax revenue for an uncomfortably tight state budget. And, they argue, Texans are gambling already — they're just not doing it here. Young sat for an interview to talk about expanded gaming in Texas. An abridged transcript, full audio, and selected video clips follow.
TT: What's your proposal?
Young: Well, our proposal and the legislation that's been introduced authorizes slot machines at the 13 existing horse and dog tracks as well as the three Indian reservations in Texas.
TT: Why is this a good idea? What's the policy pitch on this?
Audio: Andrea Young
Young: Well, I think the policy pitch is, one, you have an industry today, the horse racing industry and the dog racing industry in Texas that made significant investment based on a certain contract with the state and an economic picture in all the states around us. And as that picture has changed in all the states around us, we're now on an unlevel playing field. So what we're asking is to level that playing field. Furthermore, beyond that, we're talking about a significant new revenue stream for the state, both in this biennium and in future biennia. We're talking about, at full implementation, a full $1 billion a year to the state. We're talking about tens of thousands of new and permanent jobs, new construction jobs, so this is a real economic development opportunity for the state of Texas as well.
TT: Is the idea here that the tracks that aren't up and operating would open because the slots are available?
Young: The legislation as its introduced does call for the tracks to be up and running within two years.
TT: Why not casinos?
Young: We're kind of focused on what the racetracks need, and what the surrounding states have done. We know that they have slot machines in those states, that that's helped.
As long as it's a level playing field, that's what's most important to us. That said, there's maybe a misperception sometimes that what we would do at the racetracks is different than what a quote-unquote freestanding casino might do. The truth is, particularly where the Class 1 horse tracks are located — Grand Prairie, Houston, San Antonio — it's all about market potential. If it was our intention to just slam a bunch of slot machines into Sam Houston Race Park's existing grandstand, I think that would be warranted. But what we have in our plans to develop are first-class facilities, hotels, lifestyle destination types of amenities.
TT: So it would look like a casino? It would look like Vegas without the poker tables?
Young: Absolutely. In fact, we're not the first state to be having this discussion. There are 38 states now in the country that have this type of gaming, and we could take you around to Pennsylvania, Florida, places all over the country that have done this, where you walk in and if I put a blindfold on you, you wouldn't know if you were in Las Vegas or a local regional casino like we're talking about here.
TT: Then why not do the last step — do this and also allow all of the other table games?
Young: You know, really, that's ultimately going to come down as a policy decision for the Legislature. The reality is that about 85 percent of revenues in a regional casino come from slot machines, so our proposal reflects getting the most that you can for the state while still kind of limiting what some might perceive as a grand expansion.
TT: What's different this session?
Young: One, there's a structural deficit in the state and what we're proposing is not the panacea, but it is part of a solution that can be generated to deal with that structural deficit. Beyond that, as the markets around us in Texas have matured, 40 percent of Texans have been to a casino or a racetrack in the last three years, and we don't have any of them here in Texas with the exception of a couple of racetracks. I think that tells you that people are already participating. I live in Houston. You can't drive more than 10 minutes without seeing a billboard for Lake Charles, La. So I think folks in Texas are either gaming already or they recognize it's happening. So let's stop exporting that money, and bring it back home.
TT: You talked about a "contract" that the state has. Describe that a little bit.
Young: That agreement to operate parimutuel at the racetracks was pretensed under the idea that that was the playing field across the country. In the 20 years since then, Lousiana, Oklahoma and New Mexico have all authorized slot machines at their racetracks. What they do is take a portion of that money and that revenue stream and allocate it to purses, so what they've done is essentially hijack our product. All of the good horses, the good trainers, the good owners have now left the state of Texas and are now doing business in those states.
TT: Your legislation has the same predicate, that some of the money goes to purses? You have to keep running the horses?
Young: Absolutely. And without a doubt, overnight, we'd be talking about the most successful horse-racing industry in the country.
TT: Legislatively, do you think it will play this time?
Young: I think the chances are good. We have to keep pushing for this, because it's what our industry needs. We need a chance and an opportunity to level the playing field with those states around us. We're optimistic. We have a fiscal note from the comptroller that says there's almost half a billion dollars there for this biennium as well as what we would bring in in the future. I'm not sure of another revenue proposal that doesn't involve new taxes like that out there.
TT: Does perceived or real animus between the tracks and the casinos set back your efforts?
Young: I don't think it does, as long as we're honest and forthright about what we're trying to accomplish. We're trying to level the playing field. We're trying to stay in the lane that we know. And we're committed to building the best facilities that the markets demand. So to the extent that there's a will for more, that's really a policy decision for the Legislature. We're going to stay and talk about the things that we know best.
TT: If this were approved, how fast would you be up?
Young: If we were approved, we would be up and running at Sam Houston, for example, within eight months. Some folks might be able to make it up a little bit sooner than that, some a little bit later, but based on what we've seen happen in other states, we're very confident that we can deliver quickly.
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