After months of political bickering over so-called "historical racing" the Legislative Budget Board called the racing industry's bluff and refused funding for the Racing Commission which forced all of the horse and dog tracks in Texas to shutter effective September 1st.
One day later, it appears that is changing as new reports are suggesting that tracks can reopen and simulcasting can continue. Reading through all of the stories it appears that the Legislative Budget Board has agreed on a 3-month temporary funding deal that will allow both sides more time to work out their differences over historical racing, which the industry feels is key to their financial success.
And here we are. While I'm just an accounting manager I would not feel comfortable reopening my doors under a 3-month stay of execution when the likely result is that the courts are going to rule against the thing I think can keep me solvent sometime before the year is out anyway.
Even IF the Texas State Senate (who is, to be honest, the main push behind all of this political anger) ultimately decides to let historical racing have its day in court I really think this is just lengthening the song that tracks are singing as they take a long stroll by the graveyard.
The problem, as I see it, lies with Texas refusal to seriously consider casino gambling within the State. This has always been the pile of horse dung (or dog dung, whatever) in the room for the industry and nothing has changed. The reason that horse racing is working in Louisiana and Oklahoma (and to a certain extent, New Mexico) is because the purses for their races are propped up by some pretty ridiculous slot-machine revenues whose payout levels are allowed to be ridiculously low per state regulations. This provides the tracks in neighboring states an extra pile of cash to "add to" the purses for which the horses (dogs) are running. Higher paybacks mean a better return on investment for animal owners, trainers and jockeys. All of this means that a higher quality horse, trainer and jockey are competing right across the border.
Because of this Louisiana Downs has the $400,000 Super Derby (Gr II) on it's schedule and Remington Downs (OK) puts on the $540,000 Remington Park Futurity. While Lone Star Park has a Nice stakes payout schedule (including a $1Million dollar race) other tracks, such as Sam Houston, dither around the $200,000 or less level for stakes races. What this means is that the top horses, trainers and jockeys, are moving their tack elsewhere for bigger payouts. This has been a problem from the beginning of the industry, whose high point was the running of the 2004 Breeder's Cup at Lone Star.
Personally, the decline of Sam Houston has been especially disappointing.
The facility is beautiful and, for the most part, top notch. It's also in a bad location and has been poorly managed. The old saying was that, when building it, 'they spent twice as much as they should have, put it in a place that no-one can get to, and then put the wrong people in charge of it.' Besides that, they did do some things right. The turf course, for example, is considered one of the better in all the land. The seats have great sight-lines and it's possible to view the finish line from most of the seating areas. The track is well maintained, has a great tote-board/video monitor in what is a very picturesque infield.
Are there downsides? Sure. For one, the concessions are borderline awful, there's no good dining option at the track and the liquor beer and wine options are basic, at best. Finding a Texas craft beer is a miracle, and don't even ask for a wine that's not also available in a 1.5L format at the grocery store for under $10. There are not enough betting terminals for big events (for example, I used to go on the Friday before the Kentucky Derby to place my bets because there was a good possibility I wouldn't be able to get through the betting line in time on racing day to bet live) and their betting options are sub-par.
As an example of bad betting Sam Houston never, to my knowledge, offered a pot-guaranteed early or late pick 4. Never. One of the most popular bets in horse racing (and one that's saved Los Alamitos in California) and Sam Houston never seriously considered it. Granted, now that things are bad there's not enough money in the bank for them to make a guarantee. But the old management, the group before the current group, actually could have done this and possibly increased their betting handle (which would allow for bigger purses) but they were fairly clueless on how to run a horse gaming operating and were soon forced to sell out to the current group.
I do, to some extent, give the current management team a pass. They arrived at a time where the industry was faltering, the ambulance had come out on the track and there weren't many options left. In response to a dying racing industry, the current management group tried to supplement income by turning the track into a concert venue, extreme racing location and festival grounds. This has kept them financially afloat but none of that money was significant enough to plow into the racing operation. So, Sam Houston (and the other tracks in Texas) are still looking up at neighboring states who use casino revenue to inflate their purses to levels Texas cannot hope to reach.
All of this brings us back, conveniently, to casino gambling. Namely, slots.
From the go, horse racing in Texas was always built on the thought that casino gambling would eventually be authorized and the tracks would be competing on equal footing with neighboring states. Of course, the industry couldn't admit that when they first sought (and received) legislative authorization to conduct business. Doing so would have immediately torpedoed their lobbying and would have led to no racing in Texas. Depending on your view of gaming, this might not have been a bad thing.
Regardless of whether or not you approve of gaming in Texas, if the racing owners didn't include the variable of slot machines in their initial economic forecasts then they were running on a set of the worst economic impact reports I've ever seen. I've always thought however, that the racing industry based their initial projections on slots being present. There's no way they could have thought that non-casino revenue assisted racing was ever going to work.
So now, we're moving (it seems) back into limbo. If the legislature authorizes a 3-month extension of funding for the Texas Racing Commission then the tracks will fire back up and everyone will turn a wary eye to the Texas Supreme Court who is going to rule on the legality of the TRC's authorization of historical racing which will signal to Texas whether or not any of this matters long-term. The thought being that, should the TXSC reject historical racing the tracks will have to close due to impossible economics. IF however, track owners say, they're allowed to install historical racing terminals then everything is going to turn around and Texas will be churning out horses and races that rival American Pharoah and the Triple Crown.
Except, they won't. Because even IF the TXSC rules in favor of the tracks (Aside: I don't think they will) historical racing terminals in and of themselves are not going to be the cure-all that the tracks need. These terminals will just be a Band-Aid on the cancer that is an uncompetitive environment. What the tracks really need is the expansion of gambling in Texas to include Class III slot machines. IF they could get that, then they would stand a good chance of succeeding long term.
Given the current political make-up of the Texas Legislature and body politic I can almost guarantee you this is not going to happen. As proof of this I offer up the following evidence: Tillman Fertitta, owner of the Landry's empire and the Golden Nugget casinos, has long advocated for casino gambling in Texas. He even has a resort in Galveston (the San Luis) that is designed for such a purpose. Last year, he finally opened up a Golden Nugget in Lake Charles Louisiana, which relies almost exclusively on Texas imports for its financial success.
Looking back on this the revocation of funding for the Texas Racing Commission might have been a blessing in disguise for the race tracks. Sometimes it's better to be humanely euthanized than it is to slowly bleed out.
