State officials approve historical racing in Texas

08/29/2014 12:44 PM

08/29/2014 6:58 PM

A controversial plan to allow historical racing at dog and horse racetracks statewide successfully crossed the finish line Friday, despite pending legal action.

On a 7-1 vote, the state’s Racing Commission gave the checkered flag to a rule change that will allow historical racing — the replaying of already-run races on slot machine-like devices — at Texas tracks, including Lone Star Park in Grand Prairie.

Supporters have said this is needed to help struggling Texas racetracks compete with out-of-state tracks that offer casinos, bigger crowds and bigger purses. Opponents say these machines look and act much like slot machines, essentially bringing a form of casino-style gambling to this state.

“I think it’s going to help our racetrack and help our horsemen compete with neighboring states,” Grand Prairie Mayor Ron Jensen said. “The number of horsemen who compete at our track has dwindled because they can’t compete with [other out-of-state tracks] that have casinos.

“This won’t have as big an impact as casinos, but we think it will help and help us make sure we can keep Lone Star Park operating,” he said. “We are really excited to see what the future holds for us.”

Friday’s vote came shortly after a court hearing in Fort Worth, where 48th District Court Judge David Evans decided not to issue a temporary restraining order to prevent the commission from voting on the plan, as requested by state Rep. Matt Krause, R-Fort Worth.

Evans did set a Sept. 10 hearing to consider whether to approve a temporary injunction to prevent the rule change from going into effect. Krause maintains that commissioners are treading on the legislature’s turf and don’t have the authority to allow this type of gambling.

“I’m disappointed that the Racing Commission … went ahead and adopted a rule that many of us believe is outside the bounds of their authority,” Krause said. “Hopefully we will have a good result in court in a couple of days … and get the rule repealed.”

This issue has been before the commission for months, prompting more than 13,000 people to send in their thoughts about allowing the practice.

Court hearing

Evans heard the case Friday morning after 342nd District Judge Wade Birdwell — brother of state Sen. Brian Birdwell, R-Granbury — recused himself from the case.

Krause’s legal action was two-fold. He sought a temporary restraining order to prevent the commissioners from voting and he filed a lawsuit against the individual commissioners.

Evans chose not to issue the temporary restraining order after representatives from the Texas Attorney General’s office told him the new rules wouldn’t go into effect until 20 days after they were published in the Texas Register.

He scheduled the Sept. 10 hearing to consider whether to issue an injunction that could stop the rule from going into effect.

“I’m looking forward to a full hearing on the merits of the case,” Krause said. “I’m still hopeful we will have the remedy we seek issued.”

Lone Star Park officials will likely decide whether to intervene in the case in the coming days, said Ralph Duggins, a Fort Worth attorney who attended Friday’s hearing.

Several attorneys attended the hearing, including Brian Newby, a former chief of staff to Texas Gov. Rick Perry who started a law firm with state Sen. Wendy Davis, D-Fort Worth, several years ago.

One of the attorneys representing Krause in court was Tony McDonald, general counsel to the anti-tax, limited-government Empower Texans group run by Michael Quinn Sullivan.

Commission meeting

Shortly after the ruling in Fort Worth, commissioners took up the issue during their monthly meeting in Austin.

Facing a crowded room, they heard from people on both sides of the issue and ultimately decided to change the rules to allow historical racing at tracks in Texas.

“It appears the Texas horse business has gone over a precipice,” said Robert Schmidt, a local orthopedic surgeon who heads the commission. “They are in a severe downward spiral.

“The horsemen are competing on an unfair playing field,” he said. “They can’t function in a reasonable way anymore.”

Schmidt and six other commissioners approved the rule change. The one opposing vote came from a representative of the Texas Public Safety Commission. A representative from the state comptroller’s office abstained from voting.

The rule change allows games known as instant racing machines which have the look and feel of video lottery terminals — a variation of slot machines — at racetracks statewide.

The games would be displayed on machines similar in size and appearance to slot machines, using sounds and symbols traditionally found on slot machines, and would randomly replay races that have already been held.

Unlike slots in traditional casinos, the payoffs of racing machines is tied to historical race results. No information such as horse names, dates and tracks is included that could help players identify the winners in advance.

The rule change doesn’t mean that racetrack officials can immediately begin adding these machines to their facilities.

But each racetrack may submit to the Racing Commission a request to add the machines and commissioners will consider them on a case-by-case basis. It’s not likely that any machines will be approved and up and running before next year, officials say.

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

“I feel very confident in the commission’s position and the commission's authority,” he said. “The question was a policy issue. Should the commission do this? The majority of the commission decided this was something we should do now.”

‘Over the top’

Friday’s action was good news to officials at racetracks statewide.

“The Texas Racing Commission exercised its constitutional authority and has thrown a lifeline to the Texas horse industry,” said Andrea Young, president and COO of the Sam Houston Race Park. “This move will help grow purses and will slow the stampede of Texas horses and horsemen out of our state.”

“We are absolutely thrilled, over the top, about the vote,” said Val Clark, executive director of the Elgin-based Texas Quarter Horse Association.

In some states, lawmakers agree that allowing racing machines is an extension of pari-mutuel wagering, and not an expansion of casino gambling.

The horse racing industry in Kentucky has reported that it has been a big moneymaker, with more than $30 million being wagered on instant racing in May alone at just two tracks.

Lone Star Park at Grand Prairie is expected to be among the tracks asking the Railroad Commission to instal historical racing terminals on their property.

“I think it’s no secret that the Texas horsemen are in grave need of something that will help generate purse monies that can sustain their livelihood … and stop the departure of horsemen to other states,” said John Elliot, CEO of Global Gaming Solutions, which owns Lone Star, and is owned by The Chicasaw Nation.

“When the Texas Racing Commission authorizes the implementation of these terminals, I think we will consider it,” he said. “We are watching with others to see how this goes forward.”

Time to regroup

For years, gambling advocates have unsuccessfully asked Texas lawmakers to allow slot machines or casino gambling at racetracks statewide, something they believe is needed to keep Texas competitive with other states that allow gambling.

The commission received a petition this year from those who race and breed horses in Texas, asking for rule changes to allow historical race wagering.

State Rep. Dan Flynn, R-Van, sent a letter to Texas Attorney General Greg Abbott asking whether the commission has the authority to allow the machines at racetracks.

Individual lawmakers as well as the Texas Senate Caucus and others have asked the commission not to move forward with the proposal, saying that the proposed rules would expand gambling in Texas.

Opponents say it’s clear that historical racing would expand casino-style gambling in Texas. They say that if it looks and plays like a slot machine, it’s effectively a slot machine regardless of whether a pari-mutuel system determines the payoff.

“This is something we were against,” said Rob Kohler, a consultant with the Austin-based Christian Life Commission of the Baptist General Convention of Texas “There’s one person who can fix this and that’s the governor. This commission was appointed by Gov. Perry.

“We will have to regroup and see where we go from here.”

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