Some Say Gambling is Just the Ticket to Help Galveston Recover

Galveston County Daily News, April 23, 2008
by Laura Elder

GALVESTON — Hurricane Ike’s storm surge had hardly receded before conspiracy theorists were circulating rumors that Landry’s Restaurants CEO Tilman Fertitta was snapping up ravaged properties dirt cheap with designs to bring casino gambling to the island.

“They’re just rumors,” said Fertitta, an island native accustomed to shrugging off wild tales about himself, including a tenacious myth that his Hotel on the seawall is wired and ready for slots if Texas legalizes casino gambling.

Such scuttlebutt intensified in early 2005 when Landry’s acquired landmark Las Vegas hotel and casino the Golden Nugget for $295 million.

Nugget of Truth

What’s true is this: Hurricane Ike, which flooded thousands of homes and businesses Sept. 13, has revived efforts by a group of business owners to legalize limited casino gambling. They argue a few casinos would help the battered island recover from the most catastrophic storm in more than a century.

Their push has renewed an old fight about money, morality and the wisdom of bringing a neon, Vegas lifestyle to a small barrier island.

Last month, The Strand Merchants Association, which represents retailers and restaurants in the historic downtown, sent a letter to Mayor Lyda Ann Thomas, the city council and City Manager Steve LeBlanc, urging they pursue casino gambling as a means to recover from the hurricane and win back tourists.

City Dealt Other Hands

But talking about gambling, which in the past has divided the city, is politically dicey.

Thomas declined Thursday to discuss it, saying there were more immediate priorities.

“The city is dealing with so many concerns — economic concerns, citizen concerns — that I would rather not discuss casino gambling,” she said.

The Strand, a tourist destination lined with 19th century buildings, was particularly hard hit by storm surge. Some buildings on that famed street took in 12 feet of floodwater, wiping out quaint stores, gift shops, ice cream parlors and candy shops.

“Casino gambling would provide jobs, middle-income housing needs, increased tax base and a plan for beach restoration funding,” Allen Flores, president of the merchants association, wrote in the Oct. 24 letter to city officials. Flores and relatives own several Strand clubs and stores, including The Lounge and clothing shop Yaga. He said a couple of casinos — one downtown, perhaps, and another on Seawall Boulevard — would draw enough visitors to allow businesses to survive or at least give them incentive to rebuild.

‘Loose Laws’

Casino gambling has its problems, but the problems already exist here because of loose laws allowing so-called game rooms to operate video slot machines throughout the county, Flores said.

The machines are legal to operate as amusements, but law officers say some are paying winners in cash, which is illegal. There’s plenty of evidence supporting that claim.

Allen contends legalized gambling would help do away with such parlors and the crime associated with them.

Betting the island’s storm recovery on casinos is a long shot. Making casino gambling in Texas legal would call for a constitutional amendment, requiring two-thirds of the Legislature to pass

Casino gambling comes up every session, and every session gets killed in committee.

But 11 News has learned state lawmakers are preparing a bill to authorize casino gaming. But if the legislature passes anything, gaming would then be up for a public vote.

Yet the issue lives on as millions of dollars are being spent by lobbyists to legalize some form of gambling in Texas, and money pours in from gambling states to prevent the slots from ever spinning, lawmakers say.

More than 300 lobbyists registered with the Texas Ethics Commission listed gambling among their efforts this year, according to a commission database.

But at the same time, there’s plenty for both the state’s major parties to loathe about gambling — it undermines family values, it preys on the poor, it’s spiritually immoral, it’s socially unjust.

The fight likely will flare up again when the 81st legislative session convenes Jan. 13.

“It has come up every legislative session, but nobody has seen sufficient movement in vote counts to encourage folks that it realistically might get enough to pass,” said A.R. “Babe” Schwartz, a former state senator who works for Landry’s Restaurants on gambling.

Protecting An Investment

Landry’s hasn’t pushed for casino gambling, and won’t push this year, both Fertitta and Schwartz say. Schwartz is out to protect Landry’s interest when the inevitable bill surfaces each session to allow video gambling at horse and dog tracks, including La Marque’s Gulf Greyhound Park.

In Galveston County, Fertitta-controlled companies have invested more than $150 million and operate restaurants, hotels and the city’s convention center. Landry’s also owns the Kemah Boardwalk, a 40-acre entertainment complex. Landry’s lobbyists are paid to ensure that if gambling is passed, slot machines wouldn’t be limited to racetracks.

‘Full-Blown Casinos’

For gambling to work in Texas and benefit the economy, legislation would have to be written to attract large, “full-blown” casinos that cost as much as $300 million, Fertitta said.

Casinos are why Las Vegas is one of the fastest growing U.S. cities, he said.

“A major casino like the Golden Nugget creates about 3,000 jobs; in Galveston and in Texas, that’s pretty damn good,” Fertitta said. “So, from an economic standpoint, it would be great; it just needs to be first class.”

No Jackpot?

But Harris L. “Shrub” Kempner Jr., of an old-guard island family, has long spoken out against gambling and disagrees that it would be good for the economy. Kempner said he doesn’t have a moral stake in the issue. He’s more worried about social and economic harm of gambling, he said.

In Las Vegas, casinos were built miles from neighborhoods. On a small island, that’s impossible, Kemper said.

Also, casinos are no friends to small business, he said.

“I not only think gambling wouldn’t help, but it’s destructive,” Kempner said. “Small businesses always seem to think they’ll be helped by casinos, when in fact they would be clobbered by casinos.”

Casinos typically operate clothing stores and restaurants as loss leaders to keep people inside and gambling, Kempner said.

“They want people to come into casinos and stay in casinos,” Kempner said. “Any small business not inside the casino itself tends to be negatively impacted, particularly when they first come to a community.”

Would they come?

Should gambling proponents beat the odds and overcome strong opposition among fiscal conservatives, social conservatives and social-justice liberals, there would be a national economic slump with which to contend.

As consumers tighten their grip on disposable income, casino companies have been cutting costs, delaying projects or searching for more capital, according to reports.

Flores, who is working to generate grass-roots support for gambling, said he didn’t expect casinos to sprout overnight.

The effort to lure casinos would encourage many small businesses, undecided about returning after the hand Ike dealt them, to rebuild.

“It would put hope in the merchants’ minds that there’s an instant plan,” Flores said. “Now, more than ever, we need something big.”