Texas briefly expanded gambling to online sales. One tribe reeled them back in

During the 2025 legislative session, heated debate in Austin illustrated how politically savvy one Texas Native American tribe had become.

The debate centered on a decision by the Texas Lottery Commission to begin allowing tickets to be sold online and over cellphones.

The Kickapoo Traditional Tribe of Texas — and specifically its attorney Jason Nelson — pointed out something that drove much of the conversation, and the outcome.

Nelson had sent state lawmakers a letter that served as both a public admonishment and a lesson in gaming law.

The essence of that letter: Sure, the state could allow online gaming, but if it did, it would have to allow the tribes the right to do the same — ostensibly and inadvertently creating a pathway for tribes to create Las Vegas-style casinos across Texas.

Here’s why:

Federal policy as far back as the Nixon administration recognizes tribes as sovereign states and protects their right to economic development opportunities to enhance their self-sufficiency and self-determination.

If the state allowed lottery tickets to be sold online or on their phone, Nelson wrote, those players would have less incentive to visit a tribal casino — and, thus, undermine the tribe’s most essential means to fund basic services for its members.

“It needs to stop immediately,” Nelson wrote to the Senate State Affairs Committee.

And it pretty much did. Legislators passed a law that made online lottery sales illegal, effective Sept. 1, 2025.

State Sen. Bob Hall, who led the effort by Lt. Gov. Dan Patrick and others to stop the illegal lottery sales, said the concerns from the tribe had been appropriate.

Sen. Bob Hall, who led the effort to stop the illegal lottery sales, said the concerns from the tribe had been appropriate. “They are trying to protect what they have on federal land that’s been given to them by the federal government.”

Visual by Juan Figueroa | Dallas Morning News.

”This is the same concern I have heard from them since I came to the Legislature,” Hall said. “They are trying to protect what they have on federal land that’s been given to them by the federal government.”

Since the 1990s, the three tribes that operate casinos in Texas — the Alabama-Coushatta Tribe of Texas, the Kickapoo and the Ysleta del Sur Pueblo, or Tigua — have urged the state of Texas to come to the table to negotiate a tribal compact. The state has resisted.

Such compacts typically lead to an expansion of casino gambling, with tribes agreeing to pay the state a portion of gaming revenue. The lottery decision could have forced the state to begin that process.

”It would have been a possibility,’’ Hall said.

Federal tribal gaming law, which has been affirmed by the courts, has long established that a state is obligated to negotiate with tribes when it allows others — in this case the lottery — to provide gaming opportunities not afforded to the tribes.

In other states, similar scenarios have triggered such negotiations — and, ultimately, gaming expansion, tribal law experts say.

After the state of Idaho introduced a state-sanctioned lottery in the late 1980s, a federal district court judge ruled the state had to negotiate a compact with the tribes over sales of lottery tickets on their reservations. Idaho lawmakers in 1994 called on the state to proceed in good faith negotiations with the state’s Indian tribes over lottery games on their reservations.

If there is no gaming in the state, then the state doesn’t have to negotiate with the tribes, said Michalyn Steele, a federal Indian law professor at Brigham Young University in Utah.

But once a state has opened the door to gaming, federal law requires it to engage in good-faith compact negotiations with tribes to establish the parameters of tribal gaming, said Steele, who worked as a counselor to the assistant secretary of the Interior for Indian Affairs Larry Echo Hawk, who served from 2009 to 2012.

“It doesn’t mean all of it just comes flooding in,’’ Steele said. “Tribes are still subject to negotiating a compact.”

States also don’t regulate or tax tribal gaming, she said. “It is subject to federal regulation.”

In 2004, the state of Florida was motivated to come to the table to negotiate the parameters of a gaming compact with the Seminole Tribe after voters in one of its South Florida counties approved a state-sponsored initiative to allow slot machines at racetracks. At the time, tribal gaming casinos operated video lottery terminals that offered lower jackpots than those slot machines. As a result of the decision by voters to approve the state initiative, the state of Florida could not restrict or regulate those same slot machines on tribal reservations.

Often, states enter into compacts with tribes in order to try to raise revenue for education, infrastructure and other public services.

Since 2006, the first year of collections, Oklahoma tribes have paid over $2.6 billion in exclusivity fees, according to the Oklahoma Office of Management and Enterprise Services.

Texas has pointed to consecutive annual budget surpluses as a reason to rebuff requests from Texas tribes who want to initiate a compact to expand gaming.

There’s no immediate sign Texas tribes will be brought to the table, said Kathryn R. L. Rand and Steven Andrew Light, both professors at the University of Nevada, Las Vegas’ Indian Nations Gaming and Governance Program.

While “the law should be on their side,” Rand said, “maybe politics are more important.”

Last year, gaming opponents, political and otherwise, dodged a bullet with the lottery situation.

There is another potential pathway to bring casinos to Texas, one that has big-moneyed influence and sympathetic lawmakers that might be harder to stop.

Lawmakers in metro areas eager to provide casino licenses to commercial operators in their backyard — think Sands Corp. in Dallas-Fort Worth — likely will be more friendly to tribes, tribal gaming advocates said.

Perhaps then Texas Gov. Greg Abbott will come to the table, said Ben Kappelman, an attorney in Minneapolis, who is co-chair of the Indian and Alaska Native practice group at the law firm of Dorsey & Whitney.

States generally have a “sense of fairness,” Kappelman said.

“It’s one thing to tell tribes, ‘We don’t believe you’re entitled to do gaming because we’re only running a lottery,’ ” he said. “It’s another to say, ‘Yeah, we’re going to allow commercial gaming in a major metro area, but we’re still not going to enter into compact negotiations with you.’ ”

The Texas Lottery Commission’s decision to begin allowing tickets to be sold online or on phones sparked a debate during last year’s legislative session.

Visual by Smiley N. Pool | Dallas Morning News.

Abbott did not respond to calls and emails requesting comment, which were placed with his offices in Austin over several months beginning last spring. He also did not respond to written questions. Abbott has indicated publicly he would be open to discussions for a casino resort.

A North Texas 33-member committee of business leaders, elected officials and nonprofit leaders, which also includes a member of the Choctaw Nation, is expected to inform Abbott and Patrick how that could happen when the Legislature convenes in January.

The report, which has enlisted national economists and urban planners from the University of Texas at Dallas to examine the social and economic impacts of a destination casino resort in North Texas, is also expected to be released to the public early next year.

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