‘Legalized’ gambling brings heat
By Gregg Wendorf
Advance News Journal
What a difference a year makes in the high-stakes world of municipal gambling, known in many circles as the place where “grannie goes the first week of every month to blow her entire Social Security check.” If grannie can’t make it, gramps will show up in her staid. End game never changes: the house wins.
Take the small city of Elsa, located in the RGV’s Delta Area, just adjacent to its sister city, Edcouch.
A year ago, the smaller city, Elsa, had captured the interest of the state gambling online news platform — playtexas. com — which published a feature story on its move into the gaming industry.
The headline to that Sept. 30, 2022 piece was headlined: “South Texas Town of Elsa Could Provide Model to Legal Statewide Gambling.”
In the lead paragraph, an astute reader might have already sensed a problem: “While Texas law enforcement has cracked down on eight-liner game rooms, the small South Texas town of Elsa (pop. 7,200) just passed a series of ordinances to allow them.”
In other words, the small city was going to butt heads with the state and see who would come out the winner, but the path to victory wouldn’t prove easy. Even playtexas.com had to admit that in the second paragraph to that Sept. 30, 2022 story: “Attempts over the last decade to legalize Texas casinos have all failed. That has contributed to eight-liner game rooms popping up all over The Lone Star State. Consequently, Texas authorities have stepped up raids on businesses that house these slot machines.”
So, already the gaming site is telling its readers that legalized gambling isn’t a good option in the Lone Star State, and in fact, raids by law enforcement are on the rise.
The Raids Begin
Indeed, according to Hidalgo County Sheriff “Eddie” Guerra last month, in a story published in this newspaper, the major problem with these so-called casinos (8-liner or some variation) popping up were the number of complaints flowing into his department and Crimestoppers.
Upset adult children at a loss as to what to do were calling for help because their aging parent had gotten hooked on the gaming machines, addicted, and into them went next week’s grocery money and the rent money; and now the adult kids barely getting by had to make up the difference.
At least that’s what caused the raids initially conducted by the Sheriff's Office. The FBI then raided city offices and homes belonging to some city employees, as well as public servants. Based on a lot of money reportedly flowing around these “casinos,” or “gaming rooms,” and local politics (it takes a city commission majority willing to vote "yes" to pass these new pro-gaming ordinances) caught up in the mix, it might be relatively easy for some to speculate on what the feds are in search of as they now begin searching through business records, city meetings, city contracts, etc.
The story at playtexas.com had changed in its Nov. 2, 2023 issue vs. its previous description of Elsa’s potential future in the gaming industry just a year before.
In the most recent issue, the story that carried the headline about the fed raids in Elsa, also mentioned the search warrant served at city hall: “For a South Texas town of around 7,000 residents, Elsa has made a name for itself in the statewide discussion around eight-liner game rooms. And despite the saying that all publicity is good publicity, its most recent publicity is not all that good.
“The raids came from a federal investigation into money laundering. The city and Hidalgo County Sheriff’s Office said they will cooperate with federal agents as the investigation continues.”
According to the Elsa city attorney, though, quoted in last year’s playtexas.com, the steep permitting price ($50K) was needed to screen investors.
“We don’t want anything to do with these illegal operations,” he said. “We’re asking such a steep price because we want operators to know that we intend to do this right.”
It Will Be Okay
So how did the Edcouch-Elsa city officials get into this mess?
Well, each had a trade attorney telling them that there was a way to circumvent state anti-gambling laws.
In the case of Elsa, it had the Texas Game Room Owner’s Association (TGROA) on its side, drafting the language it would use to draft its pro-casinos ordinance. Edcouch had another attorney working its own angle.
Both cities were excited last year about its gambling prospects. In fact, the Elsa city attorney told playtexas.com that Elsa wasn’t “interested in small-scale operations with five or 10 machines. These licenses will be for big 50- to 100-machine rooms.”
All applicants wanting to open up shop in Elsa would have to pay the city a one-time fee of $50,000, which wasn’t transferable. If denied a permit, the money wouldn’t be refunded.
Then, there was the question talked about in some cities that said the price to get a permit for the gambling machines that lined the casinos was about $50,000, per machine, but that was just the gossip.
How much that would mean, and has meant, for Elsa’s city coffers hasn’t yet been made clear, but in nearby Lyford (Willacy County), apparently, county officials are going to let the six casino(s) open there continue operating.
It busted one for illegal activity. Actually, Homeland Security made the bust, and so far, the case seems to be centered around an alleged attempt to launder and/or hide money and to commit identity fraud.
Meanwhile, the rest remain open. In a town decimated by the closure of the cotton gin factory, and the decline of the cotton industry as a whole, tax revenue is down. Now, though, thanks to the casino money, the town has enough money to fix some of its roads.
Go figure. Ironically, if you open up that same online page today at playtexas.com, with the entertaining 2022 story about Elsa’s plans to go up against the state, there is another news link on the same page now, toward the right top of the page, which reads: “Federal agents raid Elsa game rooms, serve search warrant on city hall.”
Meanwhile, all that gambling equipment for which some operators spent a load of dough remains frozen.
At playtexas.com, which is a go-to place for state gambling news and information, the site ended its Nov. 2, 2023 story with this observation: “Of course, these rooms remain illegal at the state level. In theory, Elsa hoped these actions would create conditions where its room owners operated legitimately and could avoid state or federal attention. That, regrettably, did not happen in practice. It’s hard to fly under the radar when the feds suspect your gambling business is engaging in money laundering.”
The Rio Grande Valley, never boring.