The clock is ticking on the Texas horse racing industry.
With just weeks to go until funding runs out to keep open the Texas Racing Commission, which regulates horse tracks in the state including Lone Star Park in Grand Prairie, state lawmakers must soon sign off on more money for the agency.
If they don’t, the commission and Texas’ horse tracks will shut down for the second time this year.
“It’s just a waiting game right now,” said John Jamison, a third-generation horseman who is director of facilities and track superintendent at Lone Star Park, where the weekend has been busy with live racing and simulcast betting on Breeders’ Cup races in Kentucky. “Everybody is holding their breath, collectively praying for the result that the commission will be funded so they can go ahead and plan their lives.”
This is the result of a continuing feud over historical racing, a controversial new form of gambling that replays past races on slot machinelike devices, between the Racing Commission and conservative Republican lawmakers who have long opposed an expansion of gambling in this state.
The more-than-yearlong fight reached such a fevered pitch this year that Texas lawmakers missed a key deadline to sign off on funding for the agency.
As a result, the commission closed for a day in early September. and during that time Texas tracks could not allow live betting or live races because there was no state agency to regulate them.
“When the tracks shut down, it opened up everybody’s eyes,” Jamison said. “We lost hundreds of thousands of dollars that day … [at tracks] throughout the state.
“It put fear in everybody.”
For now, everything seems to be going smoothly at Texas tracks, as the fall American quarter horse races prepare to wrap up Nov. 14 and the commission has enough funding to stay open through November.
Behind the scenes, state budget writers again appear to be deadlocked over the issue.
Observers say negotiations are going on behind the scenes to find a funding solution. Lawmakers aren’t publicly talking about it.
And no one is exactly sure what to expect.
“We don’t expect that it will close again,” said Robert Elrod, a spokesman for the Texas Racing Commission. “But that is the worst-case scenario.”
Heart of the problem
At issue is historical, or instant, racing, which 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 year, some lawmakers asked the commission not to approve rules allowing historical racing and then sued and threatened to stop funding or dissolve the agency after commissioners went against their wishes.
Supporters say historical racing is needed to help struggling Texas tracks compete with out-of-state operations that offer casinos, bigger crowds and bigger purses. Opponents fear that the machines could bring a form of casino-style gambling.
An Austin judge stopped the historical racing process, agreeing with a lawsuit filed by bingo groups in Travis County, saying decisions on these machines should be made by the Legislature, not the commission.
The commission said it won’t appeal the ruling; a coalition of racetracks has filed a motion to appeal. The first round of briefs is due Dec. 1.
When the Legislature went back to work in January, some lawmakers upset about the move to allow historical racing threatened to defund the Racing Commission or dissolve it completely.
Ultimately, the Legislature agreed to fund the agency — but stipulated that all central administrative funding such as salaries must be approved by the Legislative Budget Board. In turn, commission officials appeared to be on the verge of repealing the rules that allow the machines.
Then, in late August, the commission decided not to repeal the rules.
Days later, House and Senate budget writers couldn’t reach a funding agreement by Aug. 31, effectively shutting down the commission and preventing tracks from hosting races or allowing simulcast betting.
Lawmakers couldn’t agree on how long to extend the funding. Some wanted it for 90 days; others wanted to give full funding for two years until lawmakers are back in session.
The next day, lawmakers reached a temporary agreement, letting the commission transfer $186,000 of its unappropriated funds to pay for current administrative costs — which let Texas tracks reopen for business — until Nov. 30.
Texas budget writers know that the next deadline for funding is coming up and are working behind the scenes to find a solution, people close to negotiations say.
Some had hoped that Gov. Greg Abbott would replace as many as three racing commissioners whose terms have expired, giving the agency a new voice. No new appointments have been made.
The chairman of the state House Appropriations Chairman, Rep. John Otto, initially supported full funding for the commission. He said his earlier statement on the issue still stands.
“My primary concern is for the people at risk of losing their jobs while we work toward resolution,” Otto, R-Dayton, said Sept. 2. “It is shortsighted to risk the state’s full authority over this industry and create job uncertainty by withholding certain administrative funds.”
In the Senate, Finance Committee Chairwoman Jane Nelson, R-Flower Mound, supported the shorter funding extension.
“We are carefully reviewing our options, and I am hopeful that a decision will be reached very soon,” Nelson, whose district includes part of Tarrant County, said in a statement. “The agency is funded through [November] and we are mindful of that timeline.”
Lt. Gov. Dan Patrick, whose office indicated there’s no new information to provide now, has said the state isn’t trying to hurt the Texas racing industry.
“Any disagreement with the commission that resulted in this stalemate was never about ending horse and dog racing in Texas,” he said in a September statement. “It was about making sure the appointed commissioners follow the law as directed by the legislature and a state district judge.”
In the middle
As the funding debate continues, caught in the middle is a slumping 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 Texas economy and create 36,000 jobs.
“People are scared,” Jamison said. “They don’t want to move their families, but they have very little to do with the outcome.
“Their lives are in the hands of someone else,” he said. “That’s hard to deal with as well.”
Some in the horse industry have begun a public awareness campaign, asking supporters to contact state leaders and sign a petition asking them to save Texas horse racing. Late last week, the petition had nearly 3,000 signatures.
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.
This year, lawmakers 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 budget board.
That $1.5 million is what has been at issue.
The Racing Commission has again submitted a request to receive the full $1.5 million, Elrod said.
The request is supported by many in the industry, including officials at Lone Star Park.
“A fully funded regulatory body is necessary for the survival and stability of the Texas horse racing and agricultural industries,” said a letter signed by John Elliot, CEO of Global Gaming Solutions, which owns Lone Star Park and is owned by the Chickasaw Nation, and Scott Wells, president and general manager of Lone Star.
“It is no secret that the Texas horse racing industry is struggling for survival.”
State Rep. Kyle J. Kacal, R-College Station, has reached out to state leaders, also asking them to “fully restore” the commission’s funding.
“It is my understanding that if the commission is not fully funded soon, there may not be much of a commission left to regulate the horse racing industry,” Kacal wrote in a letter dated Oct. 20.
Kacal said he understands that some lawmakers have a problem with the historical racing rules, but he noted that “not one of my colleagues filed a bill in the recent session to make [those terminals] illegal in Texas.”
If there’s no change, and negotiations don’t appear close to being successful, the Racing Commission will likely start developing a shutdown strategy closer to Nov. 30, Elrod said.
The next commission meeting is scheduled for Dec. 15 in Austin.