| TO: | Honorable John Carona, Chair, Senate Committee on Business & Commerce |
| FROM: | Ursula Parks, Director, Legislative Budget Board |
| IN RE: | SJR64 by Carona (Proposing a constitutional amendment providing immediate additional revenue for the state budget by creating the Texas Gaming Commission, and authorizing and regulating the operation of casino games and slot machines by a limited number of licensed operators and certain Indian tribes.), As Introduced |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2014 | ($219,993) |
| 2015 | ($48,044,710) |
| 2016 | ($31,612,710) |
| 2017 | ($14,616,710) |
| 2018 | ($10,049,710) |
| Fiscal Year | Probable Savings/(Cost) from General Revenue Fund 1 |
Probable Revenue Gain/(Loss) from General Revenue Fund - Compulsive Gambling Program 1 |
Probable Revenue Gain/(Loss) from General Revenue Fund - Texas Gaming Commission for Gambling Offenses 1 |
Probable Revenue Gain/(Loss) from General Revenue Fund - Bingo 1 |
|---|---|---|---|---|
| 2014 | ($219,993) | $0 | $0 | $0 |
| 2015 | ($72,710) | $5,594,000 | $5,594,000 | ($7,171,000) |
| 2016 | ($72,710) | $14,453,000 | $14,453,000 | ($7,319,000) |
| 2017 | ($72,710) | $23,268,000 | $23,268,000 | ($7,484,000) |
| 2018 | ($72,710) | $25,808,000 | $25,808,000 | ($7,715,000) |
| Fiscal Year | Probable Revenue Gain/(Loss) from Foundation School Fund 193 |
Probable Revenue Gain/(Loss) from Property Tax Relief Fund 304 |
Probable Savings/(Cost) from Texas Casino & Slot Gaming Fund |
Probable Revenue Gain/(Loss) from Texas Casino & Slot Gaming Fund |
|---|---|---|---|---|
| 2014 | $0 | $0 | ($33,375,808) | $265,000,000 |
| 2015 | ($51,989,000) | $89,511,000 | ($33,375,808) | $305,000,000 |
| 2016 | ($53,127,000) | $340,390,000 | ($33,375,808) | $0 |
| 2017 | ($53,596,000) | $555,382,000 | ($33,375,808) | $0 |
| 2018 | ($53,878,000) | $637,042,000 | ($33,375,808) | $0 |
| Fiscal Year | Probable Revenue Gain/(Loss) from GR-Dedicated Equine Development Fund |
Probable Revenue Gain/(Loss) from GR-Dedicated - Performance Horse Development Fund |
Probable Revenue Gain/(Loss) from GR-Dedicated - Canine Development Fund |
Probable Savings/(Cost) from Texas Racing Comm Acct 597 |
|---|---|---|---|---|
| 2014 | $0 | $0 | $0 | ($3,485,040) |
| 2015 | $74,917,000 | $9,365,000 | $16,418,000 | ($5,057,836) |
| 2016 | $114,623,000 | $14,328,000 | $25,120,000 | ($6,047,567) |
| 2017 | $175,372,000 | $21,922,000 | $38,434,000 | ($6,649,073) |
| 2018 | $178,880,000 | $22,360,000 | $39,203,000 | ($6,744,665) |
| Fiscal Year | Probable Revenue Gain/(Loss) from Texas Racing Comm Acct 597 |
Probable Revenue Gain/(Loss) from Municipal & County Governments |
Change in Number of State Employees from FY 2013 |
|---|---|---|---|
| 2014 | $3,485,040 | $0 | 304.5 |
| 2015 | $5,057,836 | $22,378,000 | 317.9 |
| 2016 | $6,047,567 | $58,172,000 | 328.1 |
| 2017 | $6,649,073 | $93,072,000 | 333.3 |
| 2018 | $6,744,665 | $103,233,000 | 334.2 |
The amendment is self-enacting. The fiscal impact calculated below is based on the estimated number of gaming machines, the average ratio of gaming revenue from tables to machines, the assumed ramp-up time required for slot establishments and casinos, average play per gaming machine in other large states based on recent data from the American Gaming Association, and the impact on the traditional lottery and bingo.
Because of the time necessary to establish rules and regulations, develop infrastructure, and acquire operating systems, the only revenue expected in fiscal 2014 is from application fees. All slot establishments and casinos allowed by the resolution are assumed to apply for a license, although based on experience in other states, the full complement of licenses will not occur in one year.
Indian casino operations will provide gaming competition to state revenues. This fiscal note analysis does not assume a (necessary) compact between the Indian tribes and the state and, therefore, no remittance of gaming tax revenue to the state. As a hypothetical example, a 5 percent state tax on Indian casino operations would increase state revenues by about $25 million per year at full implementation, assuming the necessary compact and subsequent remittances.
Because of competition among gaming options for a limited number of gaming dollars, the Texas lottery and bingo operations would lose a portion of their revenues if commercial casinos and slot establishments operate within the state.
Revenues in the Texas Casino and Slot Gaming Fund that exceed the amounts needed for commission administration are to be transferred to Property Tax Relief Fund 0304. However the amounts that would be deposited to the new fund beyond the application fees, and the amounts needed for administration, cannot be determined. Therefore, the distribution of revenue between the new fund and Fund 0304, presented in the table below, could, in fact, be different, and it could be expected that some or much of the new fund's deposits will ultimately flow to Fund 0304.
This legislation would do one or more of the following: create or recreate a dedicated account in the General Revenue Fund, create or recreate a special or trust fund either with or outside of the Treasury, or create a dedicated revenue source. The fund, account, or revenue dedication included in this bill would be subject to funds consolidation review by the current Legislature.
This analysis assumes the new Gaming Commission will be structured similiar to the Lottery
Commission. Therefore, 276.5 additional Full-Time Equivalents (FTEs) will be required and administrative costs of $33,375,808 per year to the new Casino & Slot Gaming Fund.
The Texas Racing Commission estimates the need for additional FTE's and related expenses of $3.5 million in FY14 increasing to $6.7 million in FY18 mainly for regulation of additional racetracks and live racing dates. Any increase in costs would be offset by additional revenue.
The Texas Department of Agriculture estimates the need for 1 additional FTE and related expenses of $111,072 in FY14 and $72,710 each year thereafter to administer a program to promote the equine industry.
The cost for publication of the resolution is $108,921
| Source Agencies: | 302 Office of the Attorney General, 304 Comptroller of Public Accounts, 476 Racing Commission, 551 Department of Agriculture
|
| LBB Staff: | UP, RB, SD, ED
|