Trailing the Field

Horse racing was an odds–on favorite to succeed in Texas, so why has it been such a sucker bet? Greed, ignorance, latent puritanism, bad marketing, bad timing, bad laws, and bad luck.

February 1996By Comments

IN HORSE RACING there are no sure things—an ancient rule of handicapping that horse–loving Texans have had to learn the hard way. After all, even the mighty Secretariat lost a race to an upstart named Onion. But if ever there looked like a winning proposition, the kind of “mortal lock” that would make a gambler throw caution to the wind, it was horse racing in Texas. Who would have guessed that when Thoroughbred racing finally returned to the state in 1987, after being banned for fifty years, the result would look more like a demolition derby than the Kentucky Derby?

“There’s been a little pinprick in the balloon,” acknowledges Helen Alexander, a King Ranch scion and a former president of the Thoroughbred Owners and Breeders Association. Indeed, nine years after the Texas Legislature gave racing the green light, all three of the state’s class 1 tracks (those with the higher purses and faster horses) have stumbled badly, and two of four class 2 tracks have been a total bust. The first track to open in Texas, a class 2 track in Brady named G. Rollie White Downs, lost $1 million and closed less than a month after it opened in 1989. Another class 2 track, Bandera Downs in Bandera, shut down last year owing horsemen more than $1 million; it will be auctioned off this month. The state’s first class 1 track, Sam Houston Race Park in Houston, is still in operation but has reorganized its debt after filing for bankruptcy last spring. Retama Park northeast of San Antonio, whose losses may close it down permanently, had to stop racing prematurely last fall. And Lone Star Park, to be built in Grand Prairie, is only now reaching the construction stage after years of lawsuits and financial maneuvering among prospective owners.

Not even the most pessimistic of handicappers could have predicted the combination of greed, ignorance, latent puritanism, blind optimism, cutthroat competition, overbuilding, under–marketing, tightfisted betting, bad timing, and just plain bad luck that would bring Texas racing to its knees. It’s no surprise that longtime racing opponent Weston Ware of the influential Baptist–supported Christian Life Commission believes that his early warnings about racing’s downside have been “clearly vindicated.” But even the sport’s supporters admit they’ve made some big mistakes along the way. They’re probably right that racing in Texas can still be saved, yet it’s going to take more cooperation within the horse industry, more legislative help, more business savvy, and more public education than anyone predicted. Most important, it’s going to take more time.

Right now, you probably couldn’t get decent odds anywhere on a rosy future for Texas racing. But in the years before betting on the ponies was legalized here, Thoroughbred aficionados from Kentucky’s Churchill Downs to New York’s Belmont Park would speak longingly of Texas as the sport’s ultimate frontier—even its salvation. Texas, after all, was a land of big spenders and horse–crazy cowboys, or so the fantasies went. I remember a meeting of Jockey Club Pooh–Bahs in Saratoga, New York, in the late eighties, where legendary Thoroughbred owner Joe Straus, Jr., the San Antonio auto–parts mogul who heads Retama Park, was lauded as a hero for his role in getting racing legalized in Texas.

Thoroughbred racing, along with parimutuel wagering, had been abolished in Texas during the lean years of the Depression, a casualty of hard times, strong-arm tactics by then-governor Jimmy Allred, and the state’s conservative religious bent. Consequently, the pent–up demand for horse racing should have been as strong as a desert wanderer’s desire for drink. Washington Post pundit Andrew Beyer, probably the canniest handicapper in the country, noted that two of the last big tracks built, Minnesota’s Canterbury Downs and Alabama’s Birmingham Turf Club, went belly–up after being launched with great fanfare—Birmingham declaring bankruptcy just a week after racing was legalized in Texas. But Texas’ situation was unique, he said; it would “mark the start of an important new era in the sport.”

Beyer, like almost everyone else in the business, was swayed by a number of tangible factors. To begin with, Thoroughbred breeding in Texas was already well established; the state ranks fourth in the nation in the production of foals. Texans have been involved in national racing for generations; the King Ranch, for example, boasts two Kentucky Derby winners: Assault in 1946—who also won the Triple Crown—and Middleground in 1950. In recent years a number of top quarter–horse owners have crossed over to Thoroughbreds with dazzling success, including West Texas rancher Clarence Scharbauer, whose Alysheba won two legs of the Triple Crown in 1987. And there was considerable evidence that Texans liked to wager on horses. Marketing surveys by tracks in neighboring states—Louisiana Downs in Shreveport; Oaklawn Park in Hot Springs, Arkansas; and Remington Park in Oklahoma City—showed that the tracks benefited from their proximity to Texas, particularly to the Dallas–Fort Worth area.

So what happened? The trouble began even before racing was legalized, when intimidated racing lobbyists—fearing opposition by religious groups—settled for weak legislation. The initial bill that approved pari–mutuel wagering called for the state to take 5 percent of the “handle” (the total amount wagered at each track)—considerably more than the takeout in many other states that allow racing—and there was no allowance for “simulcasting” (betting on televised races at other tracks) or off–track betting (OTB). “It was horrible,” says Keith Kleine, the publicity director for Retama Park, who formerly worked at Churchill Downs. “The racing lobby failed to educate the heavies in the Legislature how immense this industry is, how labor intensive it is, how the dollars multiply.”

With such a big chunk of their revenue to be taken off the top and without the additional revenues of simulcasting and OTB, debt–heavy racetracks would have to start out like gangbusters and keep on rolling. In racing terms, they would have to carry more weight than old Kelso, the great handicap horse, did in his prime. And this would be no easy task, thanks to two problems that affect every track today: a declining base of fans and increasing competition for the leisure dollar. The common wisdom is that horse racing is like a game of checkers in a Nintendo world; it needs new ideas to compete with other sports and games. Even the nation’s most successful tracks—old and beautiful and laden with tradition and mystique—would be in trouble without constant renovations and innovations: Churchill Downs saw its handle and attendance drop until Kentucky approved off–track betting; California’s Del Mar, near San Diego, had to get a new grandstand; and Saratoga has had to juggle racing dates to lure larger crowds.

Still, back in the late eighties, when racing in Texas was pie in the sky, every wheeler–dealer in the state wanted a piece of it—and that, oddly enough, was another problem for the sport. The jockeying for licenses and financing in Houston and Dallas was so intense that rival groups allowed the most formidable competitor of all to get out of the starting gate first: the lottery, which economists estimate can cut track revenues by at least 20 percent. The racing industry was given a chance to counter this effect when lottery lobbyists seeking support in legalizing the lottery offered a cut of the lottery take, but—incredibly—racing officials turned it down. Of course, unlike racing, the lottery wasted little time setting up shop and has been a terrific success. Before most Texans learned how to place an exacta bet on a horse race, let alone read the intimidating charts and terms in the Racing Form, they were enthusiastic patrons of the scratch–off ticket and intimately familiar with the bouncing balls of Lotto.

Timing was crucial in another respect as well: Call it the Big D factor. By all accounts, the first major track to open in Texas should have been in the Dallas area, since it is both a big sports town and a known quantity within racing circles. Yet rather than cooperate, major players in North Texas bitterly battled for a class 1 license, and in the meantime Trinity Meadows, a small track west of Fort Worth, opened ahead of everybody and further complicated matters. It was as bad as a bunch of wildcatters feuding over a mineral lease, and it got even worse when Trinity’s owner, a litigious Ohioan with dreams of parlaying the track into a casino, told Dallas turfwriter Gary West, “Who anointed the horse? It could just as well be pigs racing out there.”

It was up to Houston, then, to launch the first class 1 track in Texas, but Sam Houston Park—an $85 million facility on the far northwest edge of town—had its own set of problems. Foremost was a financial plan that would have been one of the great sweetheart deals in Harris County history: Had the state attorney general’s office not intervened, it would have netted investors more than a tenfold return on their money within a few years. Eventually Sam Houston’s original licensees, including former Houston Astros owner John McMullen, turned for advice to the late John Connally, who brokered a deal with financier Charles Hurwitz, the head of the mineral, lumber, and real estate conglomerate Maxxam. The track’s original management team, kept on by Hurwitz, targeted the city’s high rollers, selling luxury boxes in the clubhouse and charging $25 for grandstand admission on opening night, and they were overwhelmed by requests for stall space by Thoroughbred trainers from other tracks. Reportedly, though, track officials were so confident of success they didn’t bother with the marketing, education, or outreach necessary to land the ordinary kind of patrons who keep a track going. What’s more, Sam Houston had been built along a new toll road northwest of the city, in a remote, sparsely populated area that most Houstonians were not familiar with.

The opening night crowd of 16,000 in April 1994 was considerably smaller than had been expected. But even worse was the handle: The bettors were acting more like skinflints than high rollers. As it turned out, most of the crowd didn’t know beans about racing or betting. There had been no racing in the state for more than fifty years, after all, and you can hardly learn the intricacies of the sport by watching the Kentucky Derby on TV. “I knew we were in trouble,” recalls one Sam Houston official, “when this lady came up to me and went on and on about a Queen Ella. She kept saying, ‘I’ve seen the governor and the mayor, but where is this Queen Ella I’ve been hearing about?’” The official finally realized the confused patron was referring to the “quinella,” a type of bet involving the first two finishers in a race.

Neither the size of the crowd nor the betting handle improved over the rest of the season, and the purses awarded to the winning horses, taken as a percentage from the handle, began to decrease accordingly. Sam Houston’s trainers, particularly those with better horses, began to make plans to leave. And as the quality of the fields in the races decreased, they became even less attractive to horseplayers. Sunk by the amount of money it was losing, the track filed for bankruptcy protection in April 1995.

For the folks at Retama Park, who were building a track outside San Antonio, Sam Houston’s failure was a sobering but instructive lesson, and they determined not to make the same mistakes. Track publicists made forays to shopping malls and civic and business groups, promoting racing and educating the public about it. And when the track opened last summer, patrons were greeted by friendly “betting buddies,” employees trained to help them learn their way around the track and the tote board. Nevertheless, the big lake in the center of the track became an omen for Retama Park’s future. Because of faulty engineering, the lake never filled, and it remained simply a big hole in the middle of the racetrack, an unforeseen flaw in the field of dreams. The problem was that the demographics for a big–spending racing public in San Antonio weren’t there. “We just never found the heavy hitters,” says Keith Kleine. People were betting, on average, less than $50 during a trip to the races, as opposed to more than $100 at most viable tracks. What’s more, the devaluation of the peso and the economic crisis in Mexico cut down drastically on the number of patrons from south of the border, whom track officials had been counting on.

Ironically, as Retama made preparations last fall to shut down its quarter–horse meet ahead of schedule, and as plans to reorganize its debt fell through, the financing and power plays in Dallas were finally resolved, principally because of the Trammell Crow family’s entry into the fray. Partners of the Lone Star Turf Club, minus certain ousted members, announced that they would break ground in Grand Prairie for a simulcasting parlor (simulcasting was legalized in 1991) to be opened this spring, with live racing under way by the end of the year.

If this seems like a ray of hope for racing, the optimism is probably warranted. Dallas may have been the scene of the most frustrating and byzantine of the class 1 track battles, but it also remains the most promising site for racing. It is also good news that a number of Texans who have invested in farms and breeding and racing stock still want racing in Texas to succeed. “Lots of my owners are willing to go the extra mile if we can just see a little farther down the road,” says trainer Tommie Morgan of Rockdale, who kept a string of horses at Retama. Likewise, a number of nationally prominent Texans, including Helen Alexander, would like to race here once the purses make it worth their while. Yet another bright spot is a recent upturn in the handle at Sam Houston, which has become home to a new group of horseplayers, including a coterie of Chinese Americans who come to the track late at night to bet on races simulcast from Hong Kong.

Of course, the problems that have beset racing in Texas since its inception haven’t gone away. There is still an anti–gambling contingent in the Legislature that is reluctant to make concessions. There is still the Legislature’s refusal to approve off–track betting, as though lawmakers still want to rein in the pastime they’ve legalized. (“It’s like when we used to have blue laws,” says Joe Straus, Jr. “They would have aisles roped off so you could buy nails but you couldn’t buy a hammer.”) There is still the problem of competition among tracks for the best racing dates. There is still the problem of a public locked into the lottery, lured away by casino gambling in Louisiana, or simply distracted by leisure activities with more bells and whistles.

But it’s hard to count out any pursuit in Texas that involves two things so dear to Texans: horses and risk. And there may actually be a positive side too to the lack of veteran horseplayers at the tracks in Texas, since one of the major problems in racing is the aging of its hard–core fans. When I visited Sam Houston and Retama last year, I found the crowds fresh–faced and wholesome, a far cry from the grizzled regulars with nicotine–stained fingertips and marked–up Racing Forms who hover around the betting windows at tracks elsewhere. In the long run, the sight of all those young people and families at the racetrack should be heartening to industry forecasters.

One day at Retama, I saw a toddler perched on his daddy’s shoulder as the man headed for the betting window. Leaning over toward his father’s ear, he called out, in a tiny but insistent voice, “I want the ten horsie.” If racing officials can just hang in there a few years, that little boy, and others like him, could be the sport’s future.

Freelance writer Carol Flake lives in Austin.

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