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Regulatory feud threatens to end Texas thoroughbred racing

Happy New Year? Not for Texas Thoroughbred racing, at least not according to the stakes. figures obtained during the opening weekend of the thirtieth season of Sam Houston Race Park. According to Equibase, a website that collects nationwide race track data, the Houston circuit opened its three-month, 43-date Thoroughbred competition on January 6 with a total wager of $131,419. (The manual amount refers to the sum of bets on races in the park, not winnings or profits on the track.) On opening day last year, $3,332,147 was received.

The number of bets has dropped so sharply this year because last summer the Texas Racing Commission banned state racetracks from exporting their thoroughbred simultaneous signals to betting venues in other states. This is how tracks across the country collect the vast majority of their revenue from bets, not from on-site visitors. Last season, $98 million of Sam Houston’s total of $103 million came from off-court bettors.

Sam Houston races are now only simulcast at a few other Texas racing locations, including Grande Prairie’s Lone Star Park, home of the spring Thoroughbred season, and select international venues.

The Texas Racing Commission announced its decision last June, waiving oversight by the first-ever national thoroughbred racing regulator to introduce new safety procedures. The Horse Racing Integrity and Safety Administration, or HISA, is a product of federal legislation passed in December 2020 in response to an increase in Thoroughbred horse deaths across the country (and especially in California). The organization is designed to bring uniformity across an industry that has long struggled to balance the competing interests of multiple stakeholders. The state commission refused to accept HISA, citing a Texas law that prohibited any outside organization from having power over the practice of racing in the state. “I don’t like that we had to ban exports,” Judge Robert Pate, chairman of the commission, told the hearing. last year, “but we simply have to.”

Earlier this month, when Sam Houston general manager Dwight Berub looked down the track minutes before the first race of the season, he lamented the loss of the interstate simulcast signal. “It’s devastating,” he said. “We’re just going to make the most of a difficult situation.”

This was announced by HISA CEO Lisa Lazarus. Texas Monthly that states with the same oversight bans as Texas were working with regulators to comply with the new standards and maintain their simulcast export signals. “Texas is not unique, and that’s not surprising when you think about it,” Lazarus said. “All of these racing codes across the country were written at a time when there was no federal regulator. We found a language similar to Texan all over the country. We have requested legal advice on this matter from [Akin Gump Strauss Hauer and Feld], a highly respected national law firm with multiple offices in Texas, and the legal opinion we were given was that the wording of the Texas Horse Racing Act was not an impediment to the implementation of HISA. In essence, it is a political choice.”

Amy Cooke, chief executive of the Texas Racing Commission, dismissed this explanation. “I’m not going to speak for any other states,” she said. “We have not been provided with any legal opinion from HISA or any other interested party indicating that the interpretation of the Texas Racing Commission is incorrect.”

Regardless of whether the state interprets the law correctly, the result is that on opening day in 2023, Sam Houston earned less than 4 percent of the dollars of the stakes received on opening day in 2022. Those numbers are unlikely to improve as Texas races are excluded from national simulcasts, jeopardizing the future of thoroughbred racing in the state.

“I don’t know how Texas can continue to offer horse racing without exports,” said Will Alempievich, executive director of the New York Thoroughbred Association, where HISA is adopted.

Berube said that despite the sharp drop in handling, only a “coincidence” would prevent Sam Houston from finishing the 2023 season. Penn Entertainment, the parent company of the Houston Circuit, operates casinos, racing facilities, and gaming centers throughout the country. Christopher McErlin, Penn’s vice president of racing, declined an interview request.

Texas is one of the few states involved in four lawsuits against HISA. The Fifth Circuit Court of Appeals in New Orleans ruled in November that HISA was unconstitutional due to a lack of government oversight. Congress addressed this in its latest year-end consolidated package; the spending bill at the end of December included language that expanded the FTC’s powers over HISA. Following this action, representatives from HISA and the FTC filed a motion to vacate the Fifth Circuit’s ruling.

Cook said the issue was unlikely to be resolved in the coming months. The legal wrangling could easily last until the end of Sam Houston’s Thoroughbred season in early April, and simulcast uncertainty could extend into next season at Lone Star Park.

The HISA rules went into effect last July when twelve 2022 Lone Star Thoroughbred horses Remaining days of the race. Cook said the loss of interstate simulcast rates for those dates cost the track about $1 million, leaving horse owners and trainers without another $328,000. Officials from Lone Star Park and its parent company Global Gaming Solutions declined to be interviewed for this article. The track authority released a statement accepting the commission’s position that Texas alone should be responsible for overseeing the state’s racing. “If HISA governs racing in Texas,” it said, “the authority of our own Racing Commission is null and void.”

Texas Thoroughbreds were already operating at a disadvantage compared to racetracks in Louisiana, Oklahoma, and Arkansas. In these states, tracks generate additional income through casino gambling, while casinos are prohibited in Texas. (Dade Phalen, Speaker of the Texas House of Representatives, recently said that could change.) In addition, many states allow horse racing bettors to bet online, another convenience that is not allowed in Texas, where betting can only be done on the spot or at a few other horse racing venues across the state.

Compare Sam Houston’s three-day weekend to three days at the Oaklawn Racing Casino Resort in Hot Springs, Arkansas. The Texas track’s off-site cost was $147,001; Oklon had just over $16 million. The nine-race opening day Sam Houston card offered $191,000 combo purses, with a $37,000 cap; Oklon’s nine-race card offered $486,000 that day, with a top of $107,000.

State autonomy is not the Texas Race Commission’s only complaint against HISA. Cook said the federal regulator should not charge government entities to provide needed services. “Resources in any other program always flow from Congress to the states,” Cook said. “It never leaks.” The State Commission also argues that the rule changes were not properly reviewed before going into effect. Lazarus said: “It was the decision of Congress, or at least those who sponsored and basically promoted the bill, that there was an urgent need to act quickly in horse racing. We don’t have the authority to change the time frame.”

The Texas Thoroughbred Association has reported its concerns to the racing commission. “TTA continues to work with TRC to help find a way to comply with state laws and be able to export our simulcast signal,” said association president Tracey Sheffield. Texas Monthly in a statement. “Several other states have found a way to do just that. We remain confident that TRC will be able to do the same. We hope this will happen soon for the benefit of the Texas horse industry.”

The economic impact of the deadlock affects adjacent businesses such as the Highlander Training Center, located south of Sulfur Springs, between Dallas and Texarkana. The 189-acre complex is used to rehabilitate injured horses and train young Thoroughbreds to race. Highlander CEO Jeff Hooper is a former executive director of the Texas Thoroughbred Association and was vice president of Lone Star Park for three years. He said that due to the uncertainty about the future of Thoroughbred racing in Texas, planned overhauls at the Highlanders’ center have been delayed.

“If we can be confident about how HISA will be implemented or not in Texas, it will help all parties,” Hooper said. “It has been implemented in almost every state. While we are very respectful of Texas law, we must also look at it from a practical standpoint. I think we need to take it as a reality.”

Perhaps the courts or Congress will give Texas the autonomy that the state commission is seeking.

Would you like to bet on it?

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