Historical Racing Takes Step Forward in Texas

Rules will be posted for public comment for 30 days.

The Texas Racing Commission has approved the publication for public comment the proposed rules for historical race wagering, also known as Instant Racing, at tracks in that state that have been authorized to conduct live racing.

During its June 10 meeting, the commission received a petition signed by a broad-based representation of the Texas horse racing and breeding industries supporting historical race wagering and the posting of the rules so the measure could move forward. The petition requests that the commission move forward with implementation of historical racing not later than Sept. 1 of this year.

The proposed rules were drafted by the racing industry, including an Advisory Committee on Pari-Mutuel Wagering chaired by commission vice chairman Ronald F. Ederer.

According to the Texas Tribune, Ederer told other commissioiners the panel found that the commission already has the statutory authority to regulate pari-mutuel wagering on historical horse and greyhound races, meaning additional legislative action or voter approval would not be needed  to implement the new form of gaming.

The vote to publish the proposed rules was 7-1, with one absentee.

Ann O'Connell, a special counsel at the state comptroller's office who was voting on behalf of Comptroller Susan Combs, was the lone dissenter in moving the rules forward, questioning whether the commission had the authority to authorize historical racing, the Tribune reported.

O'Connell said that the comptroller believes "the authority of the commission to move forward here is arguable at best" and that the potentially significant impact of historical racing would render it "the purview of the Legislature," according to the newspaper.

A commission spokesman said publication in the Texas Register will likely occur on June 27, and the comment period will close on July 27. The Commission could take action on the rules as early as the August meeting, but it has the option to delay action until as late as Dec. 27. If the commission takes no action by Dec. 27, the proposed rules will automatically expire by operation of law.

"Publication in the Texas Register only means that the commission is gathering additional information so that it can make an informed decision as to whether it is good public policy to authorize historical racing," said Robert Elrod, the commission's public information officer. "While the Commission does not anticipate that everyone will agree with proposal, it believes that, as the commission charged with regulating pari-mutuel racing in Texas, it has an obligation to listen to and consider any ideas the industry brings."

Under the proposal approved by the TRC, tracks wishing to seek a historical racing license would need to have a valid contract with the horsemen's representative that establishes the portion of the association's commission that will be set aside for purses and a valid contract with the official breed registries that set aside the portion of commissions for purses and breeder incentives for allocation among the various breeds. It does not specify what those commissions should be.

The machines, which resemble video lottery terminals with outcomes based on previously run races, are technically known as "historical racing" terminals. Modeled after the Instant Racing form of gaming conceived by Oaklawn Park in Arkansas, and in Kentucky historical race wagering has proven popular at Kentucky Downs and has been added at Ellis Park.

Historical race wagering was deemed legal in Kentucky as a result of an interpretation that it is legal pari-mutuel wagering, but it still is being challenged in court. The Kentucky Supreme Court recently upheld the authority of the KHRC to promulgate rules and regulate historical race wagering; the court did say the state Department of Revenue did not have the authority to collect taxes on the wagers and sent the case back to a lower court.

"The mode and manner of pari-mutuel wagering on horse and greyhound racing continues to evolve as the result of new technologies and innovations," the Texas rule states. "The commission finds that its rule-making authority can and should be used to respond to the changing technological, commercial, and societal needs, conditions, and patterns of the horse and greyhound industry.

"The primary advantage of historical racing is the additional revenue it provides for purses for live races conducted in this state."

In the petition supporting publication of the rules, horse industry representatives noted that since 2004 when an estimated 19,000 Texans were employed in the horse racing industry, "significant numbers of owners, breeders, and trainers have left Texas for other states in which higher purses are offered."

Specifically, the petition cites the average daily purses of $139,459 in Texas pales in comparison to the $352,235 and $347,796 averages in Kentucky and Arkansas, respectively.

Additionally, since 2004 the number of live races in Texas has declined 50%, live wagering in the state is down 66%, and the number of foals bred in Texas is also down 66%, the petition states.

"We believe that permitting pari-mutuel wagering on historical races in Texas would halt and reverse those declines in jobs, purses, live races, and wagering," said the industry representatives.