The Texas attorney general's office has dropped efforts to make the state lottery commission reimburse it for $176,000 paid to a Las Vegas law firm hired by the state to draft a bill to legalize video slot machines.
The move, made formal in a letter dated Monday from Assistant Attorney General Barry McBee, came after a watchdog organization sued, claiming the state overstepped its authority by agreeing to pay the firm as much as $250,000 for legal advice.
"They blinked," Russ Verney, head of the Dallas office of Judicial Watch, told the Fort Worth Star-Telegram. "It looks like there won't be any lottery money going to those lawyers in Las Vegas."
The firm of Lionel, Sawyer and Collins, which represents some of Nevada's best-known casinos, drafted a bill that would have legalized video slot machines at Texas racetracks and Indian reservations. The money was to be used to help reduce local property taxes and fund Texas public schools.
The bill was defeated during a special legislative session last year but could resurface during the 140-day regular session that started Tuesday. Gov. Rick Perry has declared overhauling the school-finance system, declared unconstitutional last year by a state district judge, a legislative emergency.
In his lawsuit, filed in Austin, Verney says neither the lottery commission nor the attorney general has the legal authority to hire out-of-state law firms to draft legislation for lawmakers' consideration.
The Texas Constitution gives such authority solely to the Legislature, he said, not to executive-branch agencies.
In court documents filed Monday, the attorney general's office asked the lawsuit be dismissed on grounds that Verney has no standing to file it. Verney claims standing as a taxpayer; the attorney general's office argues the lottery is financed by ticket buyers, not taxes, and that the law firm was ostensibly to be paid with lottery money.
Verney said he wants the lawsuit heard on its merits, though it appears that the firm will get no lottery money.
Some lawmakers have questioned the propriety of hiring the firm in December 2003 and state Comptroller Carole Keeton Strayhorn has refusing to reimburse the attorney general's office the $176,373 it paid to the firm in the spring.
The attorney general's office had wanted the lottery commission to repay the legal fees.
Strayhorn has also said she will not pay the additional $185,293 that the firm has billed the state -- nearly $113,000 more than the state agreed to pay.
Attorney general spokeswoman Angela Hale said the attorney general's office has no plans to ask Strayhorn to pay the firm any more money.
The Texas attorney general's office has dropped efforts to make the state lottery commission reimburse it for $176,000 paid to a Las Vegas law firm hired by the state to draft a bill to legalize video slot machines. 
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