State officials pulled the plug Thursday on historical racing — a controversial new way to gamble at horse tracks — before it ever began.
Texas Racing commissioners voted 5-4 to end instant racing in Texas, capping nearly two years of controversy that included lawsuits, restraining orders, funding concerns, a brief shutdown and feuds with conservative lawmakers.
This move is likely to trigger the release of state funds to continue funding the agency, which should keep Texas tracks open for live and simulcast races despite earlier worries they might have to close.
“This has been a long time coming,” said Rob Kohler, a consultant with the Austin-based Christian Life Commission of the Baptist General Convention of Texas. “We think this is the right thing to do.
“This is an issue for the Legislature to decide,” he said. “It’s an ill-fated attempt to circumvent them.”
Many in the horse industry were disappointed with the commission’s decision on historical racing, the replaying of already-run races on slot machine-like devices.
The vote “was brought about because of extreme pressure placed on commissioners by a small handful of Senate leaders with threats to shut down the agency if historical racing wasn’t repealed,” said Marsha Rountree, executive director of the Texas Horsemen’s Partnership.
“Real Texans will now suffer due to the continuing decline of the horse racing industry in Texas.
This is the latest development in a nearly two-year feud over historical racing between the commission and some Republican lawmakers who believed that the machines were an effort to expand gambling in Texas and who were ready to stop funding the agency.
Commissioners have supported allowing historical racing machines at Texas tracks since approving rules to allow that in 2014, but without state funding the agency would shut down, and horse tracks in Texas including Lone Star Park in Grand Prairie would have to stop all racing.
Texas tracks shut down briefly last year because of this funding squabble.
The issue was decided Thursday when Texas Comptroller Glenn Hegar’s appointee, who traditionally has abstained from weighing in on historical racing, cast the tie-breaking vote.
After Chairman Rolando Pablos encouraged the commission to repeal historical racing rules, Victoria North joined four other commissioners to do just that.
“It’s time to put this issue behind us and move on,” Hegar said. “My role on the board of the Racing Commission is to protect the state’s finances, and it’s not in the state’s best fiscal interest to have an agency whose status continues to be uncertain.”
Four commissioners, including Dr. Robert Schmidt, a Fort Worth orthopedic surgeon, voted to keep the rules in place, believing it was a way to help a slumping racing industry in which thousands of Texans who work as veterinarians, jockeys, grooms, breeders and more.
“To suggest this is a public policy dispute between [the] Racing Commission and Legislature is nonsense,” Schmidt said. “This is a political dispute involving out-of-state casino groups that are a very formidable lobby who made very significant contributions to those opposing historical racing.
“They succeeded in preserving their monopoly.”
Lt. Gov. Dan Patrick praised Thursday’s vote.
“With this issue now behind us, I look forward to sitting down with responsible members of the horse racing industry to discuss the future of horse racing in Texas,” he said in a prepared statement.
The commission, funded by the industry it regulates, collects millions a year in fees paid by racetracks and license holders. That money is turned over to the state, which allocates it back to the commission.
Last year, state budget writers put a special “rider” in the budget giving the Legislative Budget Board — an agency on which state budget writers and top state officials serve — the sole decision on whether to allocate funding for salaries and other such services at the Racing Commission.
The board approved funding through the end of this month, but officials have indicated they wouldn’t free up more money “until the agency repeals its rules allowing … Historical Racing,” according to a lawsuit in the case.
State Sen. Jane Nelson, R-Flower Mound, serves on the budget board and could not be reached for comment.
A separate restraining order prevented commissioners from voting on the issue last week. Officials said another court request to prevent the commission from voting Thursday was denied and the first restraining order was withdrawn.
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.
In 2014, 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. An appeal is pending.
The Legislature may choose to address the issue when they return to work in 2017.
Live racing is scheduled to run April 7 to July 17 at Lone Star Park in Grand Prairie for the thoroughbred season. Some work to prepare for that season stalled as officials waited to see what the Racing Commission would do.
“We recognize that the Texas horse racing industry is in need of help, and that some viewed HRT technology as a last-ditch effort to breathe life into our state’s horse industry,” said Scott Wells, president of Lone Star Park.
“At this time, we feel it is best to move forward and have all concerned stakeholders — the state’s horsemen, the Legislature, and the Texas Racing Commission — work together to find mutually agreeable tactics to support and strengthen the industry,” he said. “There are thousands of jobs at stake, including our own employees at Lone Star Park.”
Pablos said Thursday’s decision lets the commission “press the reset button” and move forward, looking for ways to help the industry that aren’t as controversial as historical racing.
“By repealing the rules, we are helping the industry in the short term,” he said.
Schmidt said Thursday’s vote may be the beginning of the end for Texas’ horse industry, which estimates show contributes $5.5 billion to the Texas economy and creates 36,000 jobs.
“I think what you’ll see next is the racing industry wind down in Texas,” he said. “I think you’ll see agricultural jobs leave Texas and I expect to see two of the three main tracks close in Texas.
“We made an effort to improve racing in Texas,” he said. “We’ll try harder next time.”