Racing Commission Upholds New Gambling Rules, Could Face Lawmakers' Wrath

The same innovation poised to help keep the horse racing industry alive might instead end up killing it by the end of the month.

Yesterday, the Texas Racing Commission voted 4-3 (with one abstainer) to uphold rules for a new type of gambling called "historical racing." And while industry leaders were thrilled about the possibilities this may create for the industry, they're also a little worried that this might mean legislators choose to shut down the commission, and thus the industry, altogether. The reason: the Legislative Budget Board hates historical racing. And it has six more days to approve TRC's budget. No approval, no industry.

The battle over so-called historical racing—which happens on a simulcast video that plays past, unidentified races—surfaced last summer. After the TRC approved the rules, the Legislature saw this as TRC flouting its authority, since it had already sent a letter that claimed the agency did not have the right to approve them. When the LBB passed a rider in March requiring the TRC to submit its budget for approval, many thought that it was out of spite, that the LBB would withhold the money until the TRC repealed the rules.

But on Tuesday, TRC press officer Robert Elrod said 150 to 200 horsemen showed up to testify at the hearing on why the TRC should instead keep them. According to Elrod, commissioners told the horsemen:“So you understand that, if we don't repeal these rules, the industry could be shut down. Is that a chance you're willing to take?” Virtually everyone said "yes." 

Mike Lavigne, an industry spokesman at the hearing who primarily works with Sam Houston Race Park, said that many in the racing industry have viewed the historical racing rules as a kind of life support until “the Legislature decides whether they want to give the industry any real help.” The horse racing industry decline in Texas has been steep: According to TRC numbers, the total amount of money wagered at Sam Houston Race Park declined 72 percent between 2004 and 2014. Lavigne said that no one expects historical racing to “save” the industry, but that it would at least allow the tracks to offer more competitive purses so that horsemen stop fleeing Texas to find better industries in neighboring states. “It's assistance,” he said. “It's not even about expanding. It's just a matter of staying alive.”

Of the 1,300 letters the TRC received before today's hearing, only three opposed historical racing. Those letters were from a greyhound racing group called GREY2K USA; a bingo group, which, fearing competition, filed a lawsuit against the TRC for approving the rules (a state district  judge agreed with the Legislature in November that TRC did not have the authority to approve historical racing, but that decision is currently up for appeal); and the Kickapoo tribe, which owns the Kickapoo Lucky Eagle Casino.

The Houston Chronicle reported yesterday that Kickapoo donated over $150,000 to Republicans last October, around the time lawmakers started to push back against TRC's historical racing rules. Given the casino's long history of clashing with the horse tracks, industry leaders have speculated this may play a role in the Legislature's opposition to historical racing—the potential risk of losing campaign money.

But despite the fierce speculation that Tuesday's TRC decision on the rules will affect the budget approval, there's nothing on paper to justify that—not in the rider, and not in the instructions the LBB sent to the racing commission on how to request approval. "We're just waiting for them to make their decision," Elrod said.

As for historical racing, if industry leaders don't succeed in appealing the judge's ruling, then today's vote becomes moot. And even if they do, Lavigne says it could be 18 months to two years before we ever see a historical racing terminal in Texas.

If the race tracks are even still in business, that is.

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