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Lawsuit acuses Texas of misusing lottery funds

Texas LotteryTexas Lottery: Lawsuit acuses Texas of misusing lottery funds

A lawsuit filed by a watchdog group seeks to block the State of Texas from making more payments to a Las Vegas law firm hired a year ago to draft legislation to legalize video slot machines.

The lawsuit, filed Tuesday by Russ Verney of the national watchdog group Judicial Watch, contends that the state exceeded its authority when it agreed to spend lottery proceeds to pay the firm.

The Texas attorney general's office hired the law firm Lionel, Sawyers and Collins to develop legislation that would effectively legalize a form of casino gambling.

"We believe that it is an abuse of the public trust to allow government officials to use lottery funds that are supposed to go to public education as their own private piggy bank," Verney, who heads Judicial Watch's southwestern regional office in Dallas, told the Fort Worth Star-Telegram for a story in Wednesday's editions.

Officials with the attorney general's office and the Texas Lottery Commission said they could not comment until they had reviewed the lawsuit.

Republican Gov. Rick Perry and his staff were trying to draft a package of legislation to overhaul the state's property-tax-reliant school finance system. Legalizing video slot machines was a key component of the plan because they could bring the state more than $1 billion over a two-year budget cycle.

The proposed legislation, which lawmakers ultimately rejected during a special legislative session in the spring, envisioned allowing as many as 40,000 video slots at Texas' racetracks and Indian reservations.

Any change in state law would have to be in harmony with federal laws governing American Indian tribes and gaming. That was when the state's lawyers decided they needed outside help, according to the state auditor's office.

Lottery Commissioner James Cox, who worked in Las Vegas during the 1970s and 1980s, recommended that the state contact the law firm. Because none of the firm's lawyers who would be working on the Texas project was licensed to practice in the state, the attorney general's office hired the firm on behalf of the lottery commission.

Cox has defended the decision to hire the firm, which represents gambling venues such as the MGM Mirage, Aladdin Gaming and the Horseshoe Hotel and Casino.

The state first agreed to pay the firm $100,000. The fee ceiling was later raised to $250,000, and the firm's bills to the state have topped $350,000.

To date, the firm has been paid $176,373 from the attorney general's account. However, because of controversy raised by lawmakers when the arrangement first came to light last spring, no additional checks to the firm have been cut.

State Comptroller Carole Keeton Strayhorn has refused to reimburse the attorney general's account with money from the lottery commission.

AP

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