Politics & Government

Wagering on Texas horse racing off — for now

The question for much of Monday was whether racetracks statewide, such as Lone Star Park in Grand Prairie, would have to shut down.
The question for much of Monday was whether racetracks statewide, such as Lone Star Park in Grand Prairie, would have to shut down. Star-Telegram

Horse races will be televised at Texas’ race tracks today, but no bets will be taken until state officials can hammer out a funding deal for the agency that oversees the tracks.

Lone Star Park in Grand Prairie was letting horse racing fans inside, but greeting each with a strict warning: “No betting or cashing tickets.”

This is because House and budget leaders so far have not been able to agree on how much funding for salaries and rent to give the Texas Racing Commission after leaders of the agency went against the wishes of some conservative lawmakers last week to allow a controversial form of gambling.

House leadership signed off on a plan to give the commission the full $1.5 million sought over the next two years for the administrative funding.

Senate leaders presented a temporary alternative, to give the commission the ability to transfer about $185,000 from funds already appropriated to cover these costs for three months, which is what the commission’s executive director sought in a mid-afternoon letter sent to lawmakers.

Late Monday night, the commission sent out a letter saying that “at this time, the agency must cease operations” and rescind authorization for “all import simulcast wagering, live racing and exporting of the live signal” as of midnight.

The agency is closed today and racetracks are allowed to open. But they can’t allow any betting until state leaders sign off on a funding plan.

“Lone Star Park’s racing and simulcast operations will be closed until further notice,” according to a statement from Scott Wells, president and general manager of Lone Star Park.

He noted that banquet events, the Bar & Book and the training facility will remain open.

“We hope this matter will be resolved quickly so we can resume hiring the 600-plus additional personnel needed for our fall season which is scheduled to begin on Sept. 18,” Wells said.

This is the latest development in a yearlong fight between the commission and lawmakers who asked the agency to not approve the rules that could allow historical racing in the first place, and then sued and threatened to defund or dissolve the agency if commissioners did.

Historical racing 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.

Commissioners refused to withdraw their approval for historical racing, saying it could be the very thing needed to revive their waning industry.

Watching from the sidelines is what many describe as a fading racing industry made up of thousands of Texans who work as veterinarians, jockeys, grooms, breeders and more. State estimates show they contribute $5.5 billion to the state economy and create 36,000 jobs.

“After an entire summer with the cloud of a shutdown hanging over the industry’s head, I am bewildered that certain members of the Texas Senate appear to have blocked the release of essential funds to the Texas Racing Commission,” Sam Houston Race Park President Andrea B. Young said. “We believe that this result is irresponsible.

“We will continue to examine our legal options. We plan to continue our fight for all the hardworking Texans that make up the Texas Horse industry.”

At Lone Star Park, the next live racing season for American Quarter Horses is scheduled to run Sept. 18-Nov. 14. Simulcast races are played at the track on a daily basis.

A grim Monday

Racing commission employees were uncertain much of Monday whether they would have a job to return to, just as racetrack officials didn’t know whether they could open Tuesday.

State lawmakers earlier this year appropriated $15.4 million for the commission over the next two years but stipulated that about $1.5 million in administrative funding, particularly for rent and salaries, must be approved by the Legislative Budget Board.

If payroll clerks don’t get paid, for instance, they can’t work and issue paychecks to other workers. That means the agency would close.

And tracks would close as well because there would be no regulators to make sure races are run properly.

The mood was grim Monday at the racing commission, where workers on the verge of losing salaries and insurance packed up their belongings and prepared to shut the agency down in case the funding didn’t come through.

Executive Director Chuck Trout sent the budget board a letter Monday, “in light of the uncertainty related” to the agency’s funding, asking if the commission could just allocate funding for the first quarter of the 2016 fiscal year.

These funds “are essential to the continued operations of the commission,” the letter stated.

“Without the funding, the agency will cease all operations, including oversight of both live racing and simulcast wagering at the end of the day” Monday, Trout wrote.

If that happened, costs would remain to pay rent, final paychecks, wrap up investigations, reclaim firearms and other equipment, complete pending Open Records requests and more.

A yearlong fight

Supporters have long said 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.

Historical racing, also known as instant racing, has long been an issue in Texas, where lawmakers reject 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.

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

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.

After considering a plan to repeal the rules allowing historical racing, commissioners last week decided to leave the rules in place.

A ‘rogue’ commission

When lawmakers went back to work this year, Nelson, whose district includes part of Tarrant County, said the racing commission had “gone rogue” and filed a budget that stripped funding from the commission.

She has said the commission went beyond its authority in approving an expansion of gambling in Texas.

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.

There was confusion Monday, when the two chambers approved different versions of relief for the commission.

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

Straus recused himself from the racing discussions because his family is involved in horse racing. Some say Texas Gov. Greg Abbott may have to sign off on a compromise.

Nelson said in a letter to Otto late Monday that the Senate budget board members unanimously agreed to not approve administrative funding “at this time.”

The proposal to allow the transfer of the money, she said, was “to allow the governor, if he chooses, time to replace three members of the Commission whose terms have already expired.”

“Serious doubts have been raised about the leadership of this agency, which exceeded its authority and violated the Texas Constitution by approving Las Vegas-style slot machines known as historical racing last year.”

Self-made crisis?

Some say Monday’s funding limbo situation was of the racing commission’s own creation.

Racing Commissioners earlier this summer took steps to repeal historical racing rules, in an effort to appease lawmakers. But that changed last week, when they voted to keep the rules allowing the controversial form of gambling.

“The Texas horse racing industry, [through] the TRC, is in some sense holding a gun to its own head with the threat to shoot” if funds weren’t allocated, said Mark P. Jones, a political science professor at Rice University in Houston. “In the end, this is a crisis entirely of the Texas racing industry’s own making.”

Anna Tinsley: 817-390-7610, @annatinsley

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