Battle over Texas racetrack money is in the homestretch

It’ll be down to the wire, but the Texas Racing Commission hopes to satisfy the concerns of state officials who could cut off funding to keep the agency — and racetracks statewide — open.

A yearlong political battle over efforts to expand gambling at the struggling racetracks is about to come to a head as the new budget year begins Sept. 1. Racing industry officials say that without state support, Lone Star Park at Grand Prairie and other tracks will have to shut down live and simulcast racing.

Racing commissioners angered conservative lawmakers last year by moving forward with plans to let Texas tracks use historical racing, the replaying of past races on slot-machine-like devices.

Lawmakers threatened to eliminate the commission’s budget but ultimately approved it. They did, however, require that some funding, including for salaries and rent, be approved by the 10-member Legislative Budget Board for the new fiscal year.

With just over two weeks until money runs out, Sen. Jane Nelson, R-Flower Mound, said the needed funding hasn’t been granted because it hadn’t been requested until recently.

On Thursday, she said it has been submitted.

“It will be reviewed by LBB staff, which will forward it to the board with a recommendation,” Nelson, who heads the Senate Finance Committee and is the subject of a complaint filed this week, said in a statement. “Ultimately, the decision on the agency’s administrative funding rests with the members of LBB.”

This week, the budget board sent racing officials an outline of what should be submitted, such as how much money is needed and how it will be used.

Racing officials are poised to repeal historical-racing rules Aug. 25, a move they hope will resolve the standoff with the state.

Hanging in the balance is a waning industry — made up of thousands of Texans who work as veterinarians, jockeys, grooms, breeders and more — that state estimates show contributes $5.5 billion to the state economy and creates 36,000 jobs.

A new investigation?

Amid the money talk, a complaint has been filed against Nelson, whose district includes part of Tarrant County.

“I believe the Texas Racing Commission is being bullied and power misappropriated from Sen. Nelson to the legislative budget board,” according to a complaint filed with the Texas Rangers’ Public Corruption Unit by Jan Haynes, president of the Texas Thoroughbred Association/Texas Horsemen’s Benevolent and Protective Association.

“Only the legislature can make laws. Not individuals or a state agency.”

Haynes asked the Rangers to “investigate recent actions of the Legislative Budget Board and Sen. Nelson.”

Texas Department of Public Safety spokesman Tom Vinger said Haynes’ complaint “was received and is under review.”

In her complaint, Haynes wrote: “I believe the horsemen and horsewomen of this state deserve to know the truth. I hope that someone will do the right thing before the industry I love is destroyed.”

A longtime issue

Historical racing, also known as instant racing, has long been an issue in Texas, where lawmakers have rejected requests to expand gambling.

It involves replaying races on devices with sounds and symbols similar to slot machines. Unlike slots in traditional casinos, the payoff is tied to past race results. The devices have no information that could help players identify the winners in advance, such as horse names, dates and tracks.

Supporters say historical racing would help struggling Texas tracks compete with out-of-state venues that offer casinos and bigger purses. Opponents fear the machines could bring a form of casino-style gambling to the state.

Last August, the commission approved historical racing at dog and horse tracks even though some lawmakers asked commissioners not to weigh in.

Rep. Matt Krause, R-Fort Worth, sought a restraining order to prevent the commission from voting. He also sued, unsuccessfully, saying commissioners lacked the authority to allow the machines.

A second lawsuit found more success. It was filed in Travis County by a coalition of charity bingo groups that said the machines might run them out of business. An Austin judge agreed, saying such decisions should be left to lawmakers.

Commission officials said they won’t appeal the ruling. A coalition of racetracks said it will.

A ‘rogue’ agency?

When lawmakers went back to work this year, Nelson filed a budget that stripped $15.4 million from the commission.

During a hearing, she said the Racing Commission is “an agency that has gone rogue, in my opinion.”

“The Legislature decides what funding level every agency should receive and whether each agency should continue to exist,” Nelson said this week. “Last session, the Racing Commission behaved as if it is above the Legislature. Its recent actions are not helping to change anyone’s mind on that point.”

The commission is funded by the industry it regulates. It collects millions a year in fees paid by racetracks and license holders such as owners, trainers and jockeys. That money is turned over to the state, which allocates it back to the commission.

The state budget that takes effect Sept. 1 includes funding for the agency, but it stipulates that the budget board must sign off on all central administrative funding.

“I am aware that some members of the Legislature have attempted to inappropriately tie this approval to the repeal of the historical racing rules,” Rep. Sarah Davis, R-West University Place, wrote in a June letter to the commission. “Such a tie does not exist and would be inappropriate.”

Nelson serves on the board, as does Lt. Gov. Dan Patrick, House Speaker Joe Straus, and a mix of House and Senate members.

Warnings

Just days ago, a Racing Commission official sent emails warning that the agency’s doors could close after Aug. 31.

If the funding doesn’t come, the agency can’t pay rent or employees “and will close at the end of the day on August 31, 2015,” Executive Director Chuck Trout wrote in a letter to an attorney representing tracks.

“If the agency closes, all racing will also stop.”

That also applies to races simulcast from other states, Trout wrote, because if the commission isn’t open, staffers can’t oversee or regulate the races.

This story was originally published August 13, 2015 at 2:52 PM with the headline "Battle over Texas racetrack money is in the homestretch."