Slot machine-like devices at Texas racetracks?

07/16/2014 4:25 PM

07/16/2014 4:27 PM

For some, it’s about the survival of horse racetracks locally and throughout the state.

For others, it’s about stopping the spread of casino-style gambling across Texas.

Either way, the next step in this heated showdown comes Thursday as people on both sides prepare to weigh in on a controversial proposal to allow “historical racing” — the replaying of already-run races in an animated fashion on slot machine-like devices.

Supporters say this form of instant racing is needed to help struggling Texas racetracks compete with out-of-state tracks that boast casinos, bigger crowds and bigger purses. Detractors say the machines look and act much like slot machines, essentially bringing a form of casino-style gambling to Texas.

“This would expand gambling in Texas without question,” said Rodger Weems, chair of the Arlington-based Stop Predatory Gambling Texas. “They can call them instant racing all they want, but they are slot machines.”

Those who support the effort disagree, saying it is just another form of already legal parimutuel wagering.

“This is really, really needed. Our industry in Texas is at a severe competitive disadvantage and this will put us on a level playing field,” said Bruce Bennett, an Austin attorney who represents Lone Star Park, a horse racing track in Grand Prairie. “It’s an evolution in the way you make a parimutuel wager on a horse race.”

The issue came before the commission last month, proposed by the industry, and members decided to let Texans weigh in on the issue. A 30-day public comment period continues until July 27, and the issue could come before the commission for a vote as soon as Aug. 12.

The commission is holding an informal hearing to gather feedback on this topic at 10:30 a.m. Thursday in the John H. Reagan Building, Room JHR 120, 105 W. 15th St., in Austin.

Commissioners will not attend the hearing. Staff will gather the public comment submitted at this meeting — as well as opinions sent through mail, fax and email — and present it to commissioners before their meeting next month, said Robert Elrod, public information officer for the commission.

Slot machines?

For years, gambling advocates have unsuccessfully asked state lawmakers to let them add slot machines or casino gambling at racetracks statewide, something they said was needed to keep Texas competitive with other states that offer the same games of chance.

Earlier this month, the commission received a petition from a number of people who race and breed horses in Texas, asking for rule changes to allow historical race wagering, or instant racing.

This electronic racing, which would be displayed on machines similar in size and appearance to slot machines, would randomly replay races that have already been held but stripped of any information — such as horse names, dates, location — that could identify which race it was.

“These proposed rules are an obvious attempt to legalize slot machines in Texas using the backdoor to circumvent the Legislature,” according to a letter Weems and other opponents sent to the commission. “The Commission does not have the authority to authorize these electronic gambling machines without legislative approval.”

Supporters say these terminals are not slot machines because players could review horse racing data and bet on a particular outcome.

Bennett has compared this change to the evolution of the book industry.

First there were hardbacks, then paperbacks. Now, people can read books on electronic devices such as Kindles and iPads.

“The book is still a book, even though I can read it on my Kindle or iPad. And a horse race is still a horse race, even though it’s recorded and displayed on a terminal screen,” he has said.

Any expansion of Texas gambling would require approval from two-thirds of lawmakers in both chambers of the legislature — as well as from Texans.

Commission officials say they have looked into the issue and a rule change to allow instant gaming isn’t an expansion of gambling.

“We feel [the commission] does have authority because it’s another form of parimutuel wagering,” Elrod said. “It’s another way to bet on horse racing.”

But that doesn’t mean the commission will approve the request.

It could be on an agenda as soon as Aug. 12 — or it might not come up again.

A struggling industry

Those in the racetrack industry say the ability to add these machines to tracks statewide could save their struggling industry.

A sampling of data shows that in 2005, the total handle on live horse races in Texas was more than $360 million. That number dropped last year to $130 million.

And the average purses thoroughbreds can win have dropped as well, from $25.1 million in 2005 to $14.5 million last year, according to information provided by horsemen supporting the proposal.

Supporters of the proposal also say that jobs tied to the racing industry are dropping as well, from 12,147 employees at horse and greyhound tracks in 2005 to 5,961 last year.

“Texas races and breeders have been at a distinct disadvantage with surrounding states that can boost their purses [from gaming machines],” said Mary Ruyle, executive director of the Texas Thoroughbred Association. “We are limited from purses earned and by persons wagering at the racetracks.”

“This is a great way to stay within parimutuel parameters … and offer our patrons another opportunity to wager,” she said. “We feel this would be very beneficial in getting purses back up to where they need to be … and drawing some people who have gone out of state back home.”

Other states

Arkansas and Kentucky have approved these machines and officials there say the new games have helped improve their bottom line.

But state officials in some other states, including Nebraska and Maryland, have said the machines are different from parimutuel wagering.

And the Wyoming Supreme Court ruled in 2006 that with these machines, “we are not dealing with a new technology here, we are dealing with a slot machine that attempts to mimic traditional parimutuel wagering.”

“The similarities between Texas’ and Wyoming’s situations are clear, with one major exception: in Texas, gambling expansion is expressly forbidden by the Texas constitution, except when approved by constitutional amendment,” according to the letter by Weems and other opponents. “This proposal to add slot-like machines to racetracks is nothing but a poke in the eye to the people of Texas and their constitution.”

Bennett, with Lone Star Park, said that’s just not the case.

“This is a new and entertaining way to make a wager on a race that has already been run,” he said.

As for the claims that the machines aren’t legal, “that’s wrong.”

“It’s a parimutuel wager on a horse race, which is already allowed, and it will be made at the horse track,” Bennett said. “There’s no expansion of gambling at the state. It’s the same kind of wager that’s being made every day. It’s just on a race that has already been run.”

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