Texas politics has always had a streak of state independence. As residents of one of a few states that were independent nations before joining the union, Texans have always prided themselves on taking care of their own. Whether it’s the often-troubled stand-alone state power grid or the economy that would be the ninth-largest among the countries in the world by GDP, citizens of the Lone Star State are teeming with autonomy.
That independent streak may become the downfall of one of the state’s industries: horse racing.
As Wednesday’s monthly Texas Racing Commission meeting concluded with no action on the front, a former chairman is at odds with the state’s horse racing regulatory oversight authority regarding federal regulations.
Debate over state versus federal horse racing regulations
Dr. Robert Schmidt penned a column that appeared in The Community News, the newspaper that serves his hometown of Annetta North. Schmidt, who served 10 years on the commission, including four as chairman from 2013 to 2016, believes it’s time for state officials to abide by national regulations set forward by the federal government’s Horseracing Integrity and Safety Authority (HISA) to save the racing industry and horse betting in Texas.
“The political appointees of the (racing) commission have lost sight of their designated purpose,” Schmidt wrote. “In this one rare instance, Congress has actually provided us – and our horses – a solution.
“Ultimately, HISA has the resources, the regulatory power and sophisticated lab testing that can root out illegal drug use, research track surfaces, and analyze breeding patterns. HISA has the potential to improve the sport and create a safe horse racing animal that can thrive in a newer environment.”
TRC officials don’t want federal-level interference of any kind. The commission raises many points:
- The commission has overseen racing for more than a century;
- HISA would interfere with betting and purses;
- Implementing HISA standards would cost the state money (an unspecified amount on HISA fees); and
- The commission would have to open its financial books to HISA.
HISA’s initial effect on Texas horse racing
Congress created HISA in 2020 to establish and enforce uniform rules applicable to every thoroughbred racing participant. The self-regulatory nonprofit organization was established to address a spike in thoroughbred deaths in the US.
Texas did not adopt the national regulations by the July 2022 deadline. Because of that, horse tracks saw their betting handles plummet. If states do not adopt the federal rules, HISA can cut a track’s racing signal nationally, stopping any off-track wagering on races in a noncompliant state.
Since July 2022, Texas racing tracks have been unable to take out-of-state online bets, and betting handles have cratered since this decision. Without the ability to simulcast, the betting handle at Sam Houston Race Park during the winter meet fell 90% compared to the prior year.
“Tracks survive by taking approximately 15% of the betting handle to support their operations and purses,” Schmidt wrote in his column. “The current situation is unsustainable.”
When reached by PlayTexas, a TRC representative said the commission would not comment on Schmidt’s column.
Texas Racing Commission has a plan to help
At the June TRC meeting, the commission’s current chairman, Robert Pate, dug his heels in, sounding like he doesn’t want to explore moving to national regulations.
“Following the (2023) legislative session, I can confirm that there is absolutely no interest in conforming Texas law to afford HISA the opportunity to commandeer Texas Racing Commission staff to perform federal regulatory duties,” Pate said.
The state is looking into an end around to get its signal broadcast across the nation. The TRC is looking to sign reciprocity agreements with neighboring states to exchange the broadcasting and betting between Texas and those states. Pate mentioned at the June commission meeting that the TRC would begin with Oklahoma. No agreements have been signed yet.
Another hurdle for the state is a legal spat over the constitutionality of HISA. In May, a federal judge found the act constitutional, but that decision has been appealed, and a hearing is scheduled in October. Texas racing officials point to the Texas Racing Act that specifically outlines the TRC’s duties and that there’s no provision to “cede authority to another party.” Essentially the court case is a battle between state oversight and federal oversight.
The fallout from the HISA disagreement
The three horse tracks across the state continue to suffer from the two-year dispute. In the first week of races after the TRC refused to recognize HISA’s authority in 2022, Lone Star Park in Grand Prairie lost more than 87% of its handle compared with a similar stretch in July 2021. For that week, the revenue dropped from $13 million to $1.7 million. LSP’s entire handle comes from those who attend horse racing venues in person in the state.
Horse trainers left the state as soon as the standoff started. In a June 2022 social media post, notable thoroughbred trainer Karl Broberg said trailers of his horses were already headed to other out-of-state tracks.
“In addition to the patrons suffering, the jockeys suffering, the workers suffering, I still have difficulty understanding why the racing commission wouldn’t seek a solution to protect our equine athletes,” Schmidt told PlayTexas. “HISA is not perfect, but it’s clearly something done to improve the condition and safety of the horses.
“We could have the best racing in the world, and now we’re below small Midwestern tracks.”