Texas Commission to Weigh Historical Racing

Texas gambling regulators will decide Tuesday whether to continue a standoff between the state's racetracks and its top political leaders with a vote on whether to outlaw a new form of gambling at the tracks.

The Texas Racing Commission authorized historical racing last year, voting to allow the state's racetracks to set up wagering on past races that have already been run, only with identifying details stripped away. Some historical racing machines resemble slot machines, a detail that has alarmed some gambling opponents. The rules allowing historical racing remain in place — albeit contested in court — but no tracks have actually put the new games in place.

A state district judge ruled more than a year ago that the commission had overstepped its authority. The Texas Horsemen’s Partnership, Texas Thoroughbred Association, the Texas Quarter Horse Association and Sam Houston Race Park have appealed the ruling. And in August, the commission — defying pressure from state lawmakers — voted not to repeal historical racing.

The tracks want to keep that lawsuit alive. Some state leaders want the commission to prohibit historical racing — an action that would end the lawsuit and with it, the question of expanding gambling in Texas. Lawmakers have threatened to withhold the commission's funding if the rules are left in place; if the commission shuts down for lack of funding, the tracks won't be allowed to operate.

Lawmakers have twice extended the agency's funding, keeping the commission and the tracks alive while they continued to press for an end to the conversation about historical racing.  

On Tuesday, the nine-member commission — which has two new members and a new chairman — could either repeal historical racing, reconsider its rules for historical racing or do nothing, letting its previous approval stand, according to spokesman Robert Elrod.

Supporters of historical racing say the electronic gaming machines are needed to boost revenue for a struggling industry that employs 36,000 Texans.

“We welcome the new chair and commissioners to the Racing Commission and look forward to educating them about the hope Historical Racing could bring to our industry,” said Marsha Rountree, Executive Director of the Texas Horsemen's Partnership, in a statement. “We are disappointed that their first action will be to vote a third time on an issue the Senate didn't vote on once."

Some state lawmakers argue allowing the machines would be an expansion of gambling that would require approval of two-thirds of the Legislature as well as Texas voters.

“I believe the decision to publish rules for the implementation of historical racing was not an appropriate action for the Commission,” Lt. Gov. Dan Patrick wrote in a letter earlier this month. “The move runs afoul of the Texas Constitution and the express desire of many members of the Texas Legislature, including me.”

Historical racing wasn't originally going to be on the agenda for Tuesday's meeting. Patrick and Gov. Greg Abbott's office had urged then-Chairman Robert Schmidt to include the topic, according to Schmidt.

Schmidt resigned over the disagreement with Abbott, the former chairman said. Abbott's office did not respond to a request for comment. 

Schmidt, who is still a member of the commission, said in an interview: “I felt like I was not serving at his pleasure."

After Schmidt's resignation, Abbot tapped Rolando Pablos of El Paso — a former commission chairman — to lead the board again. Abbott also appointed Margaret Martin of Boerne to the commission and reappointed Commissioner Gary Aber, who voted in favor of historical racing last month. 

Schmidt said he wanted to give the newly appointed commissioners more time to weigh the legal arguments about historical racing before voting. 

“I just thought that it’s their very first meeting, we have a very full agenda to begin with, so it will be a long meeting,” Schmidt said. “We would still have a meeting in February before time ran out.”

In February, the funding for the commission expires. Earlier this year, lawmakers called the commission a "rogue" and "renegade" agency and threatened to defund it because of its decision to allow historical racing. The stalemate led to a shutdown of Texas racetracks for one day — Sept. 1 — until the commission and the Legislative Budget Board agreed to temporarily extend funding for the commission.

The commission’s $7.7 million annual budget comes from licensing and fees paid by the racetracks, but the budget board must appropriate that money. 

The budget board includes four state lawmakers from the House and the Senate, plus Patrick and House Speaker Joe Straus. Straus recused himself from the historical racing issue because his family is in the horse racing business.

Schmidt said historical racing has put the budget board, known as the LBB, in a bad light.

“I have always felt that the LBB was a staff of very experienced, professional public servants,” Schmidt said. “In this case it looks to me they are serving more of the role of political operatives."

Patrick's office did not respond to a request for comment on Friday.

Schmidt said the pressure on the industry is coming from out-of-state casinos and gambling interests hindering the growth of racing in Texas.

“I am not sure how that’s all going to play out,”  Schmidt said. “It’s hard to predict the future.”

Disclosure: Sam Houston Race Park LLC is a corporate sponsor of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.