Analysis: A Dubious Future for Historical Racing in Texas

As state agencies go, the Texas Racing Commission is a pipsqueak, costing under $9 million per year. The industry it regulates is relatively small, too, but it has a lot of romance and history around it, whether your interest is the tracks themselves, the gambling, the horses or the people and personalities it attracts.

That’s why talk of shutting the commission down gets an outsized reaction.

The industry claims 36,000 jobs in Texas, direct and indirect, and asserts that this is a $5.5 billion economic boon to the state.

But the horses and the dogs have hobbled along since voters authorized pari-mutuel betting back in 1987. The people who built the tracks in Texas have been scratching, with varying levels of success, for ways to survive and thrive. They’ve pushed unsuccessfully to turn their tracks into casinos. They’ve begged lawmakers to allow slot machines, to no avail. They finally got their regulators to approve something called “historical racing” — a way of betting on races that have already taken place, with identifying information stripped away — that opponents have likened to a form of illegal slot machines.

Racing commissioners approved historical racing in August 2014, but by November of that year, a state district judge had ruled it illegal without legislative approval. That’s under appeal, and historical racing is not currently occurring at any Texas tracks.

The Legislature, meanwhile, threatened the agency’s existence if commissioners didn’t retract their approval. But this past August, the commissioners defied their legislative opponents — some of whom were working with help from out-of-state gambling interests — and voted not to outlaw historical racing.

Lawmakers granted the Racing Commission another 90 days to reverse course in September — a grace period that ends this month.

But when the commission met in October, none of this came up, according to the official minutes, and commissioners aren’t planning to meet again until Dec. 15. They did, however, accept a staff recommendation for 2017 that includes 186 live horse race dates, 85 live greyhound performances and 2,228 simulcast dates (betting on races broadcast from other locations), all of which depends on the agency itself staying alive. A spokesman, Robert Elrod, said this week that the agency is waiting to see what lawmakers will do and has received no real signals.

“We don’t know,” he said, when asked what will happen. “We’re optimistic.”

If lawmakers do nothing, the agency will shut down, and if it shuts down, the tracks around the state are barred from conducting any wagering. They can sell sodas, but not much else.

The commission's future — and the short-term fate of racetracks in Texas — now rests with the Legislative Budget Board, a powerful agency ruled by ten state lawmakers, including the speaker of the House and the lieutenant governor. Speaker Joe Straus, whose family has been in the horseracing business for years, has recused himself from voting on any of it, so nine lawmakers will settle the dispute over funding for the commission and decide what gambling is allowed.

The last line in the Racing Commission’s 2016-17 budget is the killer: “None of the appropriations above in Strategy D.1.1, Central Admin & Other Support Services may be expended until the Texas Racing Commission receives written approval from the Legislative Budget Board.”

None of the other money in the agency’s budget matters much if the administration shuts down. Tracks can’t operate without the regulators, according to state law, and those regulators are part of the administration.

Whatever else you say about them, those budget writers are clever animals.

If the Budget Board does nothing, the commission’s money dries up on Nov. 30 — the latest deadline in the long-running drama over gambling in Texas.

And to touch that last base, add this bit of information: The Budget Board has no meetings scheduled between now and the end of the month. There is still time, but not much.

“I think what we’re looking at is another 90-day extension, over my objection,” said House Appropriations Chairman John Otto, R-Dayton. He said the House is pushing for a minimum six-month extension that would give the tracks more certainty about spring racing schedules, but he’s doubtful that the Senate, with its strong objections to historical racing, will go along.

Whichever interval they choose, lawmakers are planning to hit the snooze button on their brinksmanship clock one more time. Maybe the commission will change its mind and back down. Maybe the courts will rule. Maybe lawmakers will ultimately decide to leave this fight for the 2017 legislative session.

Curiously, they weren’t so alarmed a year ago, when this was the subject of court fights. They could have put a ban in state law if they wanted, but nobody in either the House or the Senate proposed a legislative fix.