Texas Students Active In Black Market As Legislature Folds

kansas texas tech basketball(Michael C. Johnson-USA TODAY Sports)

In Lubbock, Texas, the Texas Tech Red Raiders men’s basketball team is having one of its best college basketball seasons to date. In a few days the Kansas Jayhawks will come to town, the Big 12 juggernaut that’s captured 14 straight conference titles, but the Red Raiders may stand in the way of 15. Lubbockites are as excited to bet on their Red Raiders as they are to watch Saturday’s game. This is, however, despite the current status of sports betting in Texas. It’s not legal, but it’s not difficult — at all — for Lubbock residents to find a way to place a wager.

Standing in line early Saturday afternoon to get into Texas Tech students’ favorite bar, Chimy’s Cerveceria, it took only three sips of a margarita before overhearing students boast about their recent sports betting endeavors. One student who had hit a five-team parlay on NBA games the night before vowed to buy his crew the first round of shots with his newfound wealth, saying he’d put the rest on Texas Tech -5.5 later that night. It was still seven hours before the big game would tip off.

chimys texas techChimy’s

Lubbock, also known as “Hub City” for being one of the biggest cities in the region, is just north of the Permian Basin, where Friday Night Lights was inspired, and 124 miles south of Amarillo – maybe you’ve heard of Amarillo Slim?

Despite the area’s cultural conservatism and being located on the buckle of the Bible Belt, Lubbock is ironically a hub for sports betting.

Due to the nature of black-market gambling, it’s difficult to find numbers on just how many bookmakers operate here and how much action takes place in the Hub City, but the American Gaming Association estimates that up to $150 billion is gambled annually across the country, much of that exchanged in jurisdictions where sports wagering is not legal, like Texas.  Last year, Americans wagered an estimated $10 billion on the NCAA men’s college basketball tournament, making it the second largest betting event in the U.S. behind only the Super Bowl. But only three percent of it was wagered legally.

There’s probably not a five billion dollar sports gambling ring in Lubbock like the one busted in the Dallas Fort-Worth area in 2013, but, with students and residents alike eager to wager on their Red Raiders this March, you can bet that the city’s bookies will keep busy.

Betting isn’t new in Lubbock, but it’s changed

Over 20 years ago Sports Illustrated reported on the sports betting market in Lubbock. Then-sergeant of the Texas Department of Public Safety, Tom McDonald, said he could name 58 illegal bookmakers in Lubbock County alone, saying “Nearly every bookmaker in this town got his start as a student at Texas Tech.”

A student at the time told SI that he knew of at least 200 students who have contacted bookies or made bets through him.

That was 24 years ago, when Lubbock had around 190,000 residents and Texas Tech only had 24,000 students. There are now over 38,000 students enrolled at Texas Tech, and Lubbock is projected to have a population of 327,424 by 2020.

Not only has the region seen rapid growth since SI’s 1995 report, but the way in which sports betting takes place has changed even more dramatically.

Bookmakers used to be glued to a chair and telephone for most of their weekends, answering calls and writing their clients’ bets down in an actual notebook.

The notebook and calculator have been replaced by websites, even for the local guys.

“Taking bets used to be a pain in the ass,” a long-time local bookmaker who spoke freely on the condition of anonymity, told RotoGrinders. “Today it’s easy. I send money to a country in Central America and put my players on a site. The site does all the work in terms of keeping track of the numbers. The only real work I have to do is set people up with a username and password and then meet people to collect or pay up.”

What he is referring to is a “pay-per-head” site (or PPH), where bookmakers pay anywhere from $10-$20, depending on the service, for each player who places a bet that week, hence pay-per-head. So, if there are 10 players betting that week, the bookie will pay $100-200 to the PPH company hosting the site. None of the money wagered actually gets transferred through the website. Instead, the bookmaker and the bettors meet and exchange cash on their own time.

It’s not difficult to imagine how much more sports betting is taking place in a city that has grown over 33 percent, a school that has grown by 50 percent, and in an industry that has seen major changes in technology and barriers of entry. Though, our imagination may not be big enough.

“It wasn’t difficult to get started [in bookmaking]. I was in a fraternity at Tech and knew a lot of guys who wanted to bet through the bookie I had,” a former student said. “I didn’t actually know what kind of site I was betting on or how my bookie had the website, so I Googled around and came across an ad for a ‘pay-per-head site.’ Instead of sending all my friends his way I figured I might as well make the money on the side.”

With his fraternity brothers placing bets typically in the $10 to $50 range, occasionally more, he said he didn’t make a killing, but it did help with his fraternity dues and made for good beer money on the weekend.

Cole Watson, a graduate from Texas Tech University, placed a 200-to-1 bet on Texas Tech to win the 2018-19 NCAA Tournament before the season started with a local bookie who set him up on a similar site.

“The site has everything that Vegas does. I can bet on player props, futures, or normal spreads and totals,” he said, adding with a laugh, “I think the site even has snooker, whatever that is.”

More than sports

Lubbock isn’t just known for its sports betting. While Texas does have a lottery along with legal horse racing and dog racing in Dallas and San Antonio, there’s still a way for residents, in the Bible Belt and all, to find their card fix. Remember, these are the same towns Amarillo Slim – who was beaten and robbed in Amarillo while trying to collect an unpaid gambling debt in 2009– and Doyle Brunson used to ‘round’ looking for gambling action.

Sitting on 19th street, Gin Mill Card Club, “Lubbock’s Premier Legal Poker Club” and a “proud member of the Lubbock Chamber of Commerce,” is less than two miles away from student dorms.

“It’s a cardroom where the proprietors are taking advantage of the social gaming exception in the penal code,” said Texas Tech law professor Wesley Cochran.

Cochran teaches Sports Law and Gaming and Racing Law at the university’s law school.

“For years the legislature made it okay to gamble within a social setting,” Cochran said. “What these card rooms are counting on is you don’t have to have it at a house. You just pay to join, and that’s where the cardroom owners get their money instead of the house taking a cut.”

Open from 6 p.m. to 2 a.m. Monday thru Thursday, and until 4 a.m. on the weekends, The Gin Mill Card Club markets itself as a “private social club made up of members with like interests in poker, sports watching, and other similar social activities.”

Cochran became interested gaming law after teaching Native American Law, now American Indian Law, in the mid ‘90s when gaming law became very important for tribes, and as jurisdictions like Mississippi made radical legislative changes, opening up an expansive gaming industry in the state.

Texas State Capitol buildingTexas State Capitol building

He thinks that unanswered questions left since the Supreme Court struck down the Professional and Amateur Sports Protect Act (PASPA) in May 2018 make it an especially exciting time to teach sports and gaming law courses. Since the high court struck the federal ban on full-fledged sports wagering outside Nevada, seven states plus Washington, D.C. have legalized sports betting. New Jersey’s first legal sportsbook opened in mid-June 2018. By the end of the year, 10 brick-and-mortar and 11 online sportsbooks took a combined $1.25 billion in wagers.

“There are a lot of things going on,” Cochran said. “States are asking themselves: now that the faucet has been turned on, how do we manage the flow of water? Do we manage it this way or that way?”

However each state answers these questions, Cochran thinks it’s important for a regulated sports betting and gambling market to exist.

“There’s no consumer protection in the black market, so I think it’s important for the protection of the citizens of the state, for the legislature to provide some measure for the anti-black market.”

Mixed feelings, comfort levels

Austin Nokeo, a first-year medical student at Texas Tech and avid basketball fan, said he doesn’t bet on games but does play DFS and looks forward to playing in March madness pools with friends.

“I don’t bother betting through the offshore sites or with a bookie, but I would probably place some bets if I could access FanDuel or DraftKings’ Sportsbooks here.”

A recent graduate from Texas Tech, Conor Phillips, says he does it all.

“I bet almost every day. I have three offshore accounts and a local bookie so I can shop around for the best lines…some will open up lines before others and I like to bet early before the line moves. When it comes to big events like a golf major and March Madness, I always try to get a pool together with some friends.”

Asked if he would bet with regulated sites if they were to open up in Texas, Phillips said absolutely, but that he would keep his local bookie around.

“I don’t like the hassle of the deposits and withdraws on the offshore sites. It will make it so much easier if it were regulated, but I trust my local book, so I’d still bet with him whenever he has better numbers.”

For the most part, people seem to trust their bookies in the area, but not all experiences are good ones.

While Watson was in school at Texas Tech he had a friend set him up with a local bookie who used a PPH website. He paid and collected a few times before he was asked to deposit in the bookie’s bank account because the bookie was on vacation. A couple of weeks later, Watson had built his account to $750 and asked to cash out, but never received a text or call back. It turned out the bookie had moved out of town without any intention of paying bettors he owed money to but continued to ask losing players to direct deposit for him.

“I trust the guy I use now, but I would definitely be more likely to bet through a regulated site just to make sure that doesn’t happen again,” Watson said.

Regulations in the legal market vary state to state, but are made, at least in principle, to ensure sports betting operators are accountable to bettors. They often entail large licensing fees and taxes, not immune to their own versions of cronyism, could help keep offshore sites and local bookmakers in business. Most recently, the Washington DC Council passed a sports betting bill that grants a monopoly to the same company that runs the city’s lottery. (The lawmaker who led the way on that legislation, D.C. Council member Jack Evans, is now under fire for pitching influence to legal and lobbying firms, per a Washington Post report.)

Cochran believes that states trying to pass sports betting legislation should look at Nevada’s blueprint when doing so.

“The reality is that a lot of legislatures don’t understand this,” Cochran said. “They look at sports betting and think there’s a big cash cow out there for us to get non-taxed revenue into the state. The reality is sportsbooks that operate in Vegas and other places don’t do so on a huge profit margin.”

Other bettors I talked to said it wouldn’t make a difference to them if regulated sports betting came to Texas.

A bettor by the name of Tyler said his bookie does it the old way – taking bets by phone and paper. He has bet with the guy for years, making phone calls to him every week during football season and forming somewhat of a friendship.

“I’ve never had any problems with my bookie. If I’m going to lose, I’d rather him take my money than a big business.”

When asked how much his bookie lets him bet and the most he’s won, Tyler wouldn’t say.

Cochran explained that a black market will exist for bookies even when sports betting becomes regulated.

“Some may not survive, but there will always be a black market. There will be some type of a cap on how much you can wager, and big high-rollers will stay in the black market to get the action they really want.”

Don’t bet with Texas

Over the years, there have been a number of bills introduced in the Texas legislature to regulate gambling, but very few, if any, have been taken seriously. Cochran isn’t aware of one making it out of committee.

For sports betting to become regulated in Texas, it faces more than a few hurdles. First, because the Texas Constitution prohibits gambling, if a bill were passed by two thirds of the legislators in both houses, a constitutional amendment would then have to be voted on by a majority of citizens in the state.

Cochran believes Texas is at least a decade away from regulating sports betting and that Texas’ social conservatism is the biggest impediment standing in the way of passing said legislation, but so are external forces such as lobbying from neighboring states.

“Just as Louisiana and Oklahoma have lobbied to prevent casino gambling in Texas, they will do the same thing when they beat Texas to the punch on sports betting,” Cochran said. “If people in the Dallas-Ft. Worth area can find a place to bet locally, why would they drive all the way to Thackerville, Oklahoma to the Winstar Casino?”

Dr. Matthew Huml from Texas Tech’s Department of Sports Management, echoed Cochran’s sentiments that the state’s social conservatism may be a major internal force that prevents Texas from passing legislation regulating sports betting anytime soon.

“My guess is Texas will be one of the last states to enact a state gambling law,” Huml said. “States that are in a hole financially will be more open to this, whereas Texas doesn’t have much of a financial issue.”

Despite the bearish forecast on legalized betting in Texas, Huml said he would set the Over/Under at three years before Texas passes legislation.

“Only because whatever states are going to pass a law will do so in the next three years, and the states that don’t, won’t.”

If Lubbock is the buckle of the Bible Belt, then the Texas legislature and gambling opponents are using every bit of its leather. The hunger for action exists and there’s plenty of options on the menu, as Texas Tech students have attested to for over 20 years.

With a wide range of outcomes in the state – maybe the widest in the entire country – smart money is on sports betting continuing to operate as it has for years.

Back on the hardwood, the No. 14 Red Raiders beat the Jayhawks 91-62 that Saturday evening, covering the spread by 23.5 points. Students and fans rejoiced on Broadway, the same street where the jaunty student told his friends about his five-team parlay hours before his university dealt the Jayhawks their biggest loss since November 18, 2014.

Somewhere, on Broadway, that student who hit the 5-leg parlay, and went all-in on Texas Tech -5.5, had occasion and the funds to buy his crew another round of shots.

About the Author

Matt Schmitto (schmitto)

Matt Schmitto is an Organic Strategy Lead for Better Collective. He was introduced to daily fantasy sports in 2012 and soon became a member at RotoGrinders. Seven years later, Schmitto joined RotoGrinders Network full time as a staff writer shortly after the Supreme Court overturned PASPA. He has since covered important stories in the sports betting and fantasy sports industries for sites like SportsHandle and USBets and has had roles as a sports betting editor and commercial content manager. He continues to play DFS and loves placing Futures bets at sportsbooks. His favorite DFS sites are DraftKings, Underdog Fantasy, and PrizePicks. Follow Schmitto on Twitter – @Matt_Schmitto