Texas horse tracks are back in business

Texas horse racetracks can reopen for simulcast betting and live racing as of today, according to the Texas Racing Commission.

The commission sent an email letter this morning to Texas racetrack operators saying it had received authorization from the Legislative Budget Board to issue operating funds for the tracks for the next three months.

“This letter reinstates the authorization for all import simulcast wagering, live racing, and exporting of the live signal effective September 2, 2015,” said the letter signed by Lila Smith, the commission’s director of pari-mutuel.

State budget writers broke a days-long stalemate Tuesday and agreed to sign off on a plan giving the state racing commission — the agency that has bucked the wishes of some conservative lawmakers in trying to bring a controversial new form of gambling to the state — full administrative funding for 90 days.

The breakthrough came after the commission shut down at midnight Monday, leaving racetracks statewide, including Lone Star Park in Grand Prairie, unable to run simulcast betting or live racing because lawmakers couldn’t agree on a funding plan before the beginning of the new fiscal year, which started Tuesday.

This was the latest development in a yearlong fight between the commission and lawmakers over “historical racing,” which involves replaying previously run races on devices with sounds and symbols similar to those used by slot machines.

In announcing the deal to let the tracks reopen for at least the next 90 days, Lt. Gov. Dan Patrick spelled out that lawmakers never wanted to shut down horse racing in the state.

“Any disagreement with the commission that resulted in this stalemate was never about ending horse and dog racing in Texas,” the Houston Republican said in a statement. “Instead, it was about making sure the appointed commissioners follow the law as directed by the legislature and a state district judge.”

The hangup was over how long the extension would last. Some lawmakers preferred 75 days, some 90 and others wanted to let the dollars flow for the full two years until lawmakers are back in session.

Earlier in the day, people showed up at Lone Star Park, greeted by a letter from the Texas Racing Commission that was taped to the door stating there would be no simulcast betting or live racing after midnight Monday because state officials couldn’t hammer out a funding deal for the agency.

“I think this is awful,” Al Bothun of Pflugerville said. “There’s no reason to go in. What the hell? Go in just to eat and drink?

“Why?”

He joined a small crowd of gamblers at the Grand Prairie track who showed up to place bets on simulcast races. They were told the horse races would still be televised but they were also given new ground rules: “No betting or cashing tickets.”

At the time, officials at the local track said they hoped lawmakers could soon reach an agreement.

“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,” according to a statement from Scott Wells, president and general manager of Lone Star Park.

Some conservative lawmakers asked the agency last year to not approve rule changes to allow historical racing — and then sued and threatened to defund or dissolve the agency if commissioners did.

Commissioners appeared to be on track to revoking those rules earlier this summer, then last week refused to withdraw their approval for historical racing, saying it could be the very thing needed to revive their waning industry.

“I think this is foolish,” said Arthur George, a Grand Prairie man at Lone Star Park, before the late funding agreement Tuesday. “This shouldn’t interrupt the simulcast bettors.”

There were less than a dozen people watching the televised races Tuesday morning, with several calculating whether they would have won or lost money had they been able to bet.

“I think this is ridiculous,” said Ken Martin, a frequent visitor from Dallas. “I don’t know all the facts, but I do know that it’s costing the state money and it’s taking away from my entertainment.”

Legislative moves

Horse racing fans aren’t the only ones who lost a day at the tracks.

As the ongoing debate over funding has continued, caught in the middle was what many describe as a slumping racing industry made up of thousands of Texans who work as veterinarians, jockeys, grooms, breeders and more. State estimates show that they contribute $5.5 billion to the Texas economy and create 36,000 jobs.

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.

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.

That $1.5 million is what has been at issue.

Without this money, payroll clerks can’t work and issue paychecks to other workers. Rent can’t be paid. Because of all that, the agency closed which means tracks would close as well because there there’s no regulators to make sure races are run properly.

There have been three main budget board negotiators: state Sen. Jane Nelson, a Flower Mound Republican who heads the Senate Finance Committee; Lt. Gov. Dan Patrick; and state Rep. John Otto, R-Dayton, who heads the House Appropriations Committee. House Speaker Joe Straus recused himself from the racing discussions because his family is involved in horse racing.

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

At the same time, Senate leaders presented a temporary alternative, to give the commission the ability to transfer $186,000 from funds already appropriated to cover these costs for three months.

The new agreement allows the commission to remain open for the next three months, if Gov. Greg Abbott signs off on it.

“Hopefully during this time the agency can re-consider its current course,” Nelson said.

Officials said simulcast betting could begin as soon as the governor gives his approval to the plan.

Texas Agriculture Commissioner Sid Miller weighed in on the stalemate late Tuesday, saying that withholding the commission’s funding could irreparably damage the state’s already fragile horse industry.

Without racing, Miller said in a statement, “Upwards of 100,000 Texans who work directly or indirectly in the racing industry would lose their jobs, and I’m just not OK with that. These folks will be forced to move to other states and will further strain the equine industry in our state.”

Historical racing

At the heart of the entire budget fight is historical racing, something supporters have long said would help struggling Texas tracks compete with out-of-state venues that offer casinos and bigger purses. Opponents fear that 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 those associated with 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, unsuccessfully sued, saying commissioners didn’t have the authority to allow the machines. A second lawsuit, filed by bingo groups in Travis County found more success. An Austin judge agreed, saying such decisions should be left to lawmakers.

Commission officials said they don’t have the money to appeal. A coalition of racetracks said it will, though.

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.

Staff writer John Gravois contributed to this report.

This story was originally published September 1, 2015 at 4:28 PM with the headline "Texas horse tracks are back in business."