Including legalization efforts

US Supreme Court ruling favoring Texas tribal casinos could change the state's gaming landscape, experts say

Speaking Rock entertainment center in El Paso, managed by the Tigua Indians.
2022-06-23
Reading time 3:49 min

A U.S. Supreme Court ruling last week that favored tribal casinos in Texas could potentially have other ramifications for the state’s gaming landscape, a jurisdiction where giant Las Vegas Sands has been unsuccessfully attempting to legalize commercial casinos since the mid-2000s.

The decision, which favored the Tigua Indians of El Paso -formally known as the Ysleta del Sur Pueblo-, was deemed a victory for the Native American tribe in its decades-long legal fight with the state over the use of electronic bingo games on tribal land. The ruling allows the tribe to operate bingo at their El Paso entertainment center.

According to the Texas Tribune, the move is also expected to benefit the Alabama-Coushatta Tribe of Texas, north of Houston, which has also been fighting with state officials for years now over bingo operations at its reservation, located north of Houston. While the ruling doesn’t expand the kinds of games the tribes can offer on their lands, it reaffirms their autonomy to regulate gambling activities that aren’t prohibited in Texas, regardless of the state’s rules.

In a research note written shortly after the Supreme Court decision was announced, and retrieved by The Nevada Independent, Truist Securities gaming analyst Barry Jonas said the ruling would have “wider implications across the industry.” According to him, the decision “could further discussions around the eventual legalization of (commercial casinos) in Texas.”

While he doesn’t foresee an immediate change in the Texas gaming landscape, B2 Global Managing Partner Brendan Bussman said it may, however, “start to force the conversation as locations near El Paso and Houston offer a regulated gaming experience to customers in those parts of the state,” according to the source cited above.

Texas gaming proponents have long called for the state to take action on potential tax dollars being lost to casinos in bordering states, including Oklahoma, Louisiana, and New Mexico. For instance, any Texas casino legalization would have repercussions for casino operators in Louisiana, which include Penn National Gaming, Caesars Entertainment, and Boyd Gaming.

For years now, Las Vegas Sands has supported and campaigned in favor of a Texas gaming expansion. But in 2021, lawmakers rejected a company-backed casino proposal, although this has not ended the giant’s efforts: in February, the business launched a $2 million political action committee -the Texas Sands PAC- to, once again, support an effort toward legalization.

Las Vegas Sands Senior Vice President Andy Abboud, who has overseen the legislative effort to legalize casinos in the state, told The Nevada Independent that the Supreme Court ruling “gives the existing tribes certainty” concerning their gaming operations. He also confirmed Sands has met with tribes, with the exception of the Kickapoos, which host bingo-based games operations at a casino in Eagle Pass, but is covered under a different federal law.


Robert Goldstein's (pictured above) Sands has been pushing for legalization

“They are strong supporters of our initiative,” Abboud told The Independent, confirming Sands will work with the Legislature next year to put a casino referendum on the ballot. “The Kickapoos are not opposed, just worried about the impact.”

Last week’s 5-4 ruling saw a Supreme Court opinion authored by Justice Neil Gorsuch, who emphasized that the ruling doesn’t mean tribes can offer any games they choose in their lands. The Restoration Act, passed by Congress in 1987 to extend federal recognition to the two tribes, includes a provision that prevents them from offering gambling prohibited in Texas. They are the only tribes in the US barred by a state government from offering gambling on their land.

Still, the victory is a significant one. “After being under the previous interpretations of this law for so long, this is a sea change for the tribes, because the Supreme Court has said that that interpretation was incorrect,” Ben Kappelman, a lawyer with the firm Dorsey & Whitney who has handled cases in the past regarding federal American Indian law, told the Texas Standard after the ruling. He also said the decision could open the door for the tribes to initiate negotiations with the state that could result in the tribes expanding their offerings to Class III gaming.


Justice Neil Gorsuch, author of the Supreme Court opinion

For Bussman, the Supreme Court decision, which rejected Texas’ argument that its laws on bingo prohibit the games offered by the tribes, adds “an extra element” to the conversation on legalization efforts. “It’s a complex topic that spans sports betting to casino gaming that has been debated for 20 years and is likely far from over,” he told The Nevada Independent.

So far, the ruling has already begun making waves. In a statement last week, National Indian Gaming Commission Chairman Sequoyah Simermeyer said the ruling recognized “the importance of Indian gaming’s long-standing regulatory framework.” The decision establishes the NIGC as the regulator for the tribe’s bingo operations, instead of Texas, cutting the state out of monetary amounts they could have claimed.

Gaming provider AGS was also quick to praise the ruling. In a statement last Thursday, CEO David Lopez congratulated its Native American business partners “on their well-deserved win.” The Las Vegas-based firm leases electronic bingo games to the Alabama-Coushatta tribe, and said it would stand by the tribal operator “as they look to exercise their rights.”

AGS, and other gaming equipment providers, could see growth opportunities going forward as the two tribal casinos are now more likely to expand their casino floors following the favorable ruling. It’s no surprise then that Roth Capital analyst Edward Engel has now rated AGS a “buy” with a 12-month price target of $11, more than double where the stock currently trades.

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