RACETRACKS ARE NOT THE ONLY COMPANIES DISCRIMINATED AGAINST IN TEXAS

Earlier this year (February 9 and 13), Horse Racing Business ran two posts on the unfavorable state government-imposed environment for racetracks in Texas (click here for reference.)   For example, Texas prohibits wagering via the Internet/telephone and pari-mutuel wagering on historical races.

Given Texas’ well-deserved reputation for fostering business and entrepreneurship, I thought the forgoing bans were uncharacteristic for the Lone Star state.  I changed my mind when I read about Wal-Mart’s current lawsuit against the Texas Alcoholic Beverage Commission.

Texas has a 1995 law that restricts hard alcohol (excludes beer and wine) sales to stand-alone stores owned by private companies holding state-issued liquor licenses.  Further, under a 1977 Texas law, a private company cannot own more than five store permits, with the huge exception that the principal owner can buy additional permits from a “first-degree” blood relative.  In other words, closely related family members can own an unlimited number of permits and stores.

In Texas, public companies (defined as firms with more than 35 stockholders) like Wal-Mart are confined to selling beer and wine.  Texas is the sole state to permit private companies to sell hard alcohol but not public companies.

In addition to Wal-Mart’s lawsuit, the corporation has joined Kroger and a number of other public companies and groups in seeking legislative relief.

The view here is that, while Texas generally offers a “can do” climate for doing business, the state nonetheless has laws and attitudes that are remnants of an insular culture intended to protect small business from the “predatory” Wal-Mart’s of the world.  The same lingering culture explains the legislature’s paternalistic stance towards its citizenry when it comes to such putative temptations as advanced deposit wagering and betting on historical races.

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