Texas Racing Commission Reneges On Out-Of-State Betting

Months of bitter finger pointing and accusations from state and federal horse racing regulators have resulted in devastating losses to the Texas Thoroughbred industry.

Texas horse racing appeared to be set for a change of fortune from the dramatic cratering racetrack handles saw in 2022, but that lasted all of 44 hours.

How did the conflict between state and federal regulators begin?

The Texas Racing Commission (TRC), which had been the sole regulator of Texas horse racetracks for more than 100 years, clashed with the Horse Racing Integrity and Safety Authority (HISA), a newly-established federal regulator, in a regulatory spat over Texas horse racing.

HISA originated out of a 2020 federal bill designed to address a spike in Thoroughbred deaths in the USA. The Horse Racing Integrity and Safety Authority Act was enacted in 2020 giving HISA the authority to regulate state racetracks for consistency and safety, including the export of racetrack signals to other states for the purpose of advance deposit wagering.

HISA entered into agreements with individual horse-racing states to establish federal oversight, and many states worked out early agreements to keep races going. Texas did not.

The TRC contended from the outset that a Texas law, the 1986 Texas Racing Act, prohibited outside entities from regulating Texas horse racing. As a result, a standoff ensued, and the TRC made the financially devastating decision to stop export of its racing signal to avoid HISA oversight.

UPDATE: As it turns out, Texas is no longer alone in shutting down its signal to out-of-state bettors. On Feb. 9, Nebraska’s Fonner Park also decided to cancel exportation of its signal due to “unsurmountable” costs and enforcement regulations imposed by HISA.

Racetrack handles bottomed out due to TRC/HISA spat

As a result, In July of last year, one week after the formation of HISA and the TRC’s decision, Lone Star Park, in Grand Prairie, Texas, saw its handle plummet more than 85% from the same one-week period in 2021.

That drop in revenue affected employees, racers, and the larger racing industry. While the direct impact on the industry is the loss of jobs and ultimately races due to horse trainers leaving the state, the TRC didn’t budge on its decision to cancel exportation of its racing signal to other states.

Fast forward to January 2023 and Sam Houston Race Park’s opening day. In 2022, the track handled $3.3 million in handle on opening day, a record-breaking number. In 2023, they brought in $133,000, a 96% drop off. After its first month of racing in 2023, Sam Houston looks at a 90% drop in total handle and the prospect that they will not be able to pay out the purses for all their races.

Sam Houston and Lone Star Park are two of four Texas race tracks. All have felt the same crushing loss due to the cancelled signal export.

Some short-lived hope and leniency from the TRC

While HISA ruffled the feathers of many state regulators, the TRC dealt with their presence in a truly self-destructive manner. The loss of races, jobs and trainers who may never come back to Texas is hard to justify simply to protect against federal oversight.

And it looked like the TRC may finally have made that realization. Sam Houston Race Park released the following statement on Feb, 1, 2023:

“Effective February 3, 2023, SHRP will export our signal to all locations. Based on the timing of today’s announcement, first post will remain at 1:00pm Central for Feb 3-5.

“We will announce any future changes to our TB post times shortly. See EVERYONE (again) on Friday!”

Effective February 3, 2023, SHRP will export our signal to all locations. Based on the timing of today's announcement, first post will remain at 1:00pm Central for Feb 3-5.

We will announce any future changes to our TB post times shortly. See EVERYONE (again) on Friday! pic.twitter.com/q0AnOevirY

— Sam Houston Race Park (@SHRP) February 1, 2023

Their statement came on the heels of the following statement from the TRC:

“Effective February 1, 2023, all requests from Texas racetrack associations to export wagering signals will only be considered in a manner consistent with Texas law. All horse races in Texas will continue to be conducted in accordance with the Texas Racing Act.”

"Effective February 1, 2023, all requests from Texas racetrack associations to export wagering signals will only be considered in a manner consistent with Texas law. All horseraces in Texas will continue to be conducted in accordance with the Texas Racing Act.” ⁦@TXRC_ED⁩ pic.twitter.com/DwoNOiw4uK

— Texas Racing Commission (@TXRC_NEWS) February 1, 2023

As reported by BloodHorse,

“The [TRC’s] move comes after a Jan. 31 ruling by the Fifth Circuit Court of Appeals that denied a request by HISA and the Federal Trade Commission to put the brakes on the appellate court’s ruling that HISA is facially unconstitutional. Tuesday’s decision also means that a preliminary injunction against enforcement of HISA rules issued by a federal district court in Louisiana, an injunction that had been partially stayed by the Fifth Circuit until it held HISA unconstitutional in November, remains in effect.”

44 hours later, TRC reneges, cancels export of racing signal

Before the start of races on Feb. 3, Sam Houston Race Park made the somber announcement that plans had changed and out-of-state ADW betting would, in fact, not be available. SHRP cited compliance issues with HISA that led the TRC to renege on the plan to re-open out-of-state betting. No timeline for future reinstatement was provided, and the statement’s tone didn’t suggest that one was forthcoming.

An update regarding our export signal. pic.twitter.com/dy4LcytGWx

— Sam Houston Race Park (@SHRP) February 3, 2023

How long the TRC/HISA dispute lasts will determine the future of horse racing in Texas. Without out-of-state wagering, paying employees and filling race purses will become nearly impossible. Ultimately, the TRC may find that when the dust settles on this conflict with HISA, there is nothing of the Texas Horse Racing industry to save.