Texas Racing Commission Seeks Input on Controversial Technology

The Texas Racing Commission voted Tuesday to take steps toward allowing state racetracks to tap into a controversial technology known as historical racing.

The vote allows proposed rules to be posted for a 30-day period of public review, and the commission will decide as soon as August whether to accept them. Ann O’Connell, a special counsel at the state comptroller's office who was voting on behalf of Comptroller Susan Combs, was the lone dissenter, questioning whether the commission had the authority to authorize historical racing.

Historical racing entails betting on past races, with most identifying information removed, at video terminals similar in design to slot machines, which are banned in most of Texas. Proponents argue that historical racing constitutes a new form of pari-mutuel betting, which is permitted.

At the meeting, industry leaders laid out the case for historical racing, saying it would be a lifeline for a struggling industry. Opponents questioned the legality and morality of authorizing historical racing.

“If we don’t embrace this new technology, we won’t be able to compete in the future,” said Texas Thoroughbred Association President Ken Carson, citing years of declining business and the need for new sources of revenue.

Bruce Bennett, a lawyer for Lone Star Park, a horse racing track in Grand Prairie, used the book industry’s digital transformation as an analogy to argue that historical racing is just an evolution of pari-mutuel racing.

“The book is still a book, even though I can read it on my Kindle or iPad,” he said. “And a horse race is still a horse race, even though it’s recorded and displayed on a terminal screen.” Bennett emphasized that historical racing does not include wagers against the house, as slot machines do.

But Rodger Weems, chairman of Stop Predatory Gambling Texas, said the proposed rules relied on misleading maneuvers to legalize slot machines by another name.

“Calling a slot machine ‘historical racing’ doesn’t make it pari-mutuel gambling,” he said. “Facts are stubborn things. They refuse to succumb to a change of names.”

The rest of the country offers no clear precedent: Kentucky and Arkansas have given historical racing a green light, while attorneys general in Maryland, Nebraska and Oregon and the Wyoming Supreme Court have deemed it distinct from pari-mutuel wagering in recent years, the Austin American-Statesman reported Sunday.

Questions arose at Tuesday's meeting about the commission’s authority to approve historical racing. Any expansion of Texas gambling constitutionally requires two-thirds votes in both chambers of the Legislature and a majority vote from Texas voters. Opponents of historical racing have argued that the industry is using the commission to circumvent a frequently gambling-unfriendly Legislature.

But Commission Vice Chairman Ronald F. Ederer said he led a panel on the issue that found that approving historical racing would be within the purview of the commission, which is tasked with regulating all aspects of pari-mutuel racing.

Ederer pushed for the passage of the motion to post the proposed rules. He encountered resistance from O’Connell, who said that the comptroller believes “the authority of the commission to move forward here is arguable at best” and that the potentially significant impact of historical racing would render it “the purview of the Legislature.”

The rest of the commission sided with Ederer, voting to push the proposed rules forward for public review. Some commission members also requested that more information about the potential effects on racetrack revenue and state taxes be made available during that period.