Texas racing officials refused to retreat Tuesday from a plan to allow a hotly contested new way to gamble at horse racetracks statewide, prompting the commission’s new chairman to ask the staff for a plan to shut down the agency.
After two hours of testimony from those in the horse industry, the nine-member Texas Racing Commission voted 4-4 with one abstention to repeal rules that would allow historical racing, the replaying of already-run races on slot machinelike devices, at Texas tracks such as Lone Star Park in Grand Prairie.
The commissioners later unanimously agreed to republish the historical racing rules to gain more public input so they can take up the issue again in February.
Since the the motion to repeal the rules failed, new commission Chairman Rolando Pablos asked agency staffers to “prepare a plan for shutting down the agency,” anticipating a lack of funding from lawmakers that would require the agency to shut down.
Lt. Gov. Dan Patrick said Tuesday that he was disappointed in the Racing Commission’s vote.
But some horsemen said that they consider the vote a victory and don’t believe that the commission will truly close.
“Today was a political move,” said Wes Melcher of Dallas, who owns the Double Infinity Ranch in Sulphur Springs and said he was considering legal action of his own against lawmakers who are denying the commission funding.
But Pablos said the commission remains in peril.
“The Legislature has been very clear,” he said. “If the rules aren’t repealed, funding will not be forthcoming.”
The more-than-yearlong fight over this issue reached the point 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. During that time, Texas tracks could not allow live betting or live races because there was no state agency to regulate them.
After Gov. Greg Abbott named two new members to the racing commission last month, including Pablos, state budget writers extended funding for the commission for 90 more days. Some state officials have said more funding won’t be allocated if the rules stay in place.
Last week, Robert Schmidt, a Fort Worth orthopedic surgeon, resigned as chairman — after declining to put the issue of historical racing on Tuesday’s agenda, saying it was more appropriate to come up in February — and was replaced by Pablos.
Other commissioners wanted to give the industry more time to try to find a solution. “Why not give the industry two months to try to do something?” Commissioner Ronald F. Ederer asked.
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 the machines should be made by the Legislature, not the commission.
The commission didn’t appeal the ruling; horse tracks in Texas did. The issue could go to court next month.
“This industry has literally spent in excess of a million dollars to defend this in court,” said Andrea Young, president and chief operating officer of the Sam Houston Race Park. “This legal case is a lifeline for the industry — a star of hope to follow.”
More than a dozen people from the horse racing industry asked the commission to give them more time before voting on repealing the rules.
“Repealing the rules today is not in the best interest of an industry in crisis,” said Marsha Rountree, executive director of the Texas Horsemen’s Partnership. “Until someone comes up with a better idea, this is the best one we have.
“It’s time to move forward and not go backward into an industry that doesn’t have any hope.”
Jan Haynes, president of the Texas Thoroughbred Horsemen’s Benevolent and Protective Association, said the industry is in survival mode and the rules allowing historical racing were one of the few things offering hope.
“There is no Plan B,” she said. “We are at the point where it will take some sort of gaming revenue” to help the industry survive.
Mary Ruyle, executive director for the Texas Thoroughbred Association, said she has watched the horse racing industry dwindle and falter through the years.
“Historical racing is what is best for Texas and it’s worth fighting for,” she said.
Schmidt said the horsemen now have more time to talk to lawmakers, to try to reach a compromise.
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.
When the Legislature went to work in January, some lawmakers upset about the move to allow historical racing threatened to dissolve the commission completely.
State Sen. Jane Nelson, R-Flower Mound, chairwoman of the Senate Budget Committee, described the commission as “an agency that has gone rogue” and filed a budget defunding the agency.
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 on a 4-3 vote 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.
The next day, lawmakers reached a temporary agreement, letting the commission transfer some unappropriated funds to pay for administrative costs, which let Texas tracks reopen for business.
In early November, Abbott appointed new members to the commission — Pablos, who previously served on the commission and as chairman from 2008 to 2011, and Margaret Martin of Boerne — to replace two members whose terms had expired.
Shortly after that, funding for 90 more days was granted, carrying the tracks through late February.
Patrick released a statement Tuesday saying he was disappointed in the commission.
“It was my hope that today would be the beginning to finding a solution to resolving this issue for the long term benefit of the equine industry in Texas,” the statement read. “Instead, irresponsible members of the industry have politicized this issue.”
Asked for a comment on Tuesday’s action, Nelson’s staff referred to a letter sent to all senators last month, saying her position hasn’t changed.
“I want horse racing to continue in Texas, and I am sympathetic to the industry’s plight,” Nelson, whose district includes part of Tarrant County, wrote in the letter. “However, there should be no path to an expansion of gambling in this state that bypasses the Legislature.”
Racing Commissioner Gloria Hicks said despite statements to the contrary, the commission did not “go rogue” but only made a decision after studying the issue and getting legal opinions that the agency had the authority to decide on historical racing.
With requests from state officials to reject historical racing in order to continue funding for the agency, Hicks said, “I feel like I have been bullied.
“They withdrew our funding. … They are withholding it, wanting their way with the vote,” she said. “I’m so disappointed. I’ve never seen this happen in my lifetime.
“I feel that something is wrong in the whole process.”