Happy New Year? Not for Texas thoroughbred racing, at least not according to the betting numbers that came out of the first weekend of Sam Houston Race Park’s thirtieth season. The Houston track opened its three-month, 43-date thoroughbred meet on January 6, with a total betting handle of $131,419, according to Equibase, a website that compiles nationwide racetrack data. (Handle refers to the amount wagered on the park’s races, as opposed to the track’s winnings or profits.) Last year’s opening day produced a handle of $3,332,147.
Betting numbers fell so dramatically this year because last summer, the Texas Racing Commission prohibited state racetracks from exporting their thoroughbred simulcast signals to betting venues in other states. That’s how tracks across the country collect the vast majority of their wagering revenues, rather than from on-site patrons. Last season, $98 million of Sam Houston’s total reported handle of $103 million came from off-site bettors.
Sam Houston’s races are now simulcast at only the handful of other racing locations in Texas—including Lone Star Park at Grand Prairie, which holds a spring thoroughbred season—plus some international centers.
The Texas Racing Commission announced its decision last June, as it rejected oversight from the first-ever national regulatory body for thoroughbred racing that was set to impose new safety procedures. The Horseracing Integrity and Safety Authority, or HISA, is the product of federal legislation passed in December 2020 in response to an increase in thoroughbred horse deaths around the country (and particularly in California). The organization is meant to provide uniformity throughout an industry that has long struggled to balance the competing interests of multiple stakeholders. The state commission’s refusal to accept HISA cited Texas law prohibiting any outside entity from having authority over state racing practices. “I don’t like that we had to ban export,” commission chairman Judge Robert Pate said at a hearing last year, “but we simply must.”
Earlier this month, as Sam Houston general manager Dwight Berube looked out onto the track minutes before the season’s first race, he lamented the loss of an interstate simulcast signal. “It’s devastating,” he said. “We’re just going to make the best of a difficult situation.”
HISA CEO Lisa Lazarus told Texas Monthly that states with similar oversight prohibitions as the one in Texas worked with regulators to meet the new standards and preserved their simulcast export signals. “Texas isn’t unique, and it’s not surprising when you think about it,” Lazarus said. “All of these racing codes across the country were written at a time when no federal regulator existed. We found language similar to Texas’s across the country. We’ve sought legal advice on this issue from [Akin Gump Strauss Hauer and Feld], a very well-regarded national law firm with a number of offices in Texas, and the legal opinion we were given was that the language in the Texas Racing Act is not a bar to implementing HISA. It’s essentially a policy choice.”
Amy Cook, the Texas Racing Commission’s executive director, rejected this explanation. “I am not going to speak for any other states,” she said. “We have not been provided any legal opinion from HISA or any other interested party indicating the Texas Racing Commission’s interpretation is incorrect.”
Whether or not the state is correct in its interpretation of the law, the result is that on opening day in 2023, Sam Houston generated less than 4 percent of the betting dollars generated on opening day in 2022. Those numbers are unlikely to improve as long as Texas races are excluded from national simulcasts, leaving the future of thoroughbred racing in the state in jeopardy.
“I don’t know how Texas can continue to offer racing without export,” said Will Alempijevic, executive director of the thoroughbred horsemen’s association of New York, where HISA has been accepted.
Berube said that despite the precipitous drop in handle, only an “act of God” would prevent Sam Houston from completing the 2023 season. Penn Entertainment, the Houston track’s parent company, operates casinos, racing facilities, and gaming centers across the country. Christopher McErlean, Penn’s vice president of racing, declined an interview request.
Texas is one of a handful of states involved in four lawsuits against HISA. The Fifth Circuit Court of Appeals, based in New Orleans, ruled in November that HISA was unconstitutional due to a lack of government control. Congress addressed that in its latest year-end omnibus package; the late-December spending bill included language that increased the Federal Trade Commission’s authority over HISA. Following that action, representatives of HISA and the FTC filed to vacate the Fifth Circuit’s ruling.
Cook said the issue is unlikely to reach a resolution for months. The legal wrangling could easily last through the end of Sam Houston’s thoroughbred season, in early April, and the uncertainty over simulcasts could extend into the ensuing season at Lone Star Park.
HISA’s rules went into effect last July, with twelve of Lone Star’s 2022 thoroughbred race days remaining. Cook said the loss of interstate simulcast wagering for those dates cost the track an estimated $1 million and left horse owners and trainers out another $328,000. Officials of Lone Star Park and its parent company, Global Gaming Solutions, declined to be interviewed for this story. The track office issued a statement adopting the commission’s position that Texas alone should be responsible for overseeing state racing operations. “If HISA regulates racing in Texas,” it read, “our own Racing Commission’s authority is disabled.”
Texas thoroughbred tracks were already operating at a disadvantage compared to racing grounds in Louisiana, Oklahoma, and Arkansas. In those states, tracks generate additional revenue through on-site casino gambling, while Texas prohibits casinos. (Dade Phalen, Texas’s Speaker of the House, said recently that that might change.) Also, many states allow horse-racing gamblers to bet online—another convenience that’s banned in Texas, where wagers can can only be placed on-site or at the handful of other racing locations across the state.
Compare Sam Houston’s three-day opening weekend to the same three dates at Oaklawn Racing Casino Resort, in Hot Springs, Arkansas. The Texas track’s off-site handle was $147,001; Oaklawn’s was slightly more than $16 million. Sam Houston’s nine-race card on opening day offered combined purses of $191,000, with a high of $37,000; Oaklawn’s nine-race card that day offered $486,000, with a high of $107,000.
State autonomy isn’t the Texas Racing Commission’s only gripe with HISA. Cook said the federal regulator shouldn’t be charging state organizations to enact its required services. “The resourcing in every other program always flows from Congress down to the states,” said Cook. “It never flows up.” The state commission also contends that the rule changes weren’t adequately studied before going into effect. Said Lazarus: “It was Congress’s determination, or at least those who sponsored and basically carried the bill forward, that there was an urgent need within horse racing to act quickly. We have no authority to alter time lines.”
The Texas Thoroughbred Association has communicated its concern to the racing commission. “The TTA continues to work with the TRC to help find a way to follow state law and to be able to export our simulcast signal,” association president Tracy Sheffield told Texas Monthly in a statement. “Several other states have found a way to do just that. We remain confident that the TRC will be able to do the same. For the benefit of the Texas horse industry, we hope this will happen soon.”
The economic fallout from the impasse affects related businesses, such as the Highlander Training Center, just south of Sulphur Springs, between Dallas and Texarkana. The 189-acre complex is used to rehab injured horses and teach young thoroughbreds to race. Highlander CEO Jeff Hooper is a former executive director of the Texas Thoroughbred Association and was a Lone Star Park vice president for three years. He said that thanks to the uncertainty around the future of thoroughbred racing in Texas, planned capital improvements at the Highlander center are on hold.
“If we can have some certainty about how HISA is going to be implemented or not in Texas, that would help all parties,” Hooper said. “It has been implemented in most every state. While we’re very respectful of what Texas statutes are, we also have to look at this from a practical standpoint. I think we need to deal with it as a reality.”
Maybe the courts or Congress will provide Texas with the autonomy the state commission seeks.
Wanna bet on it?