Gaming helps out-of-state horse tracks outrun Texas facilities
A Length BehindTexans are still playing the ponies, but race fans aren't crowding the rails the way they once did, or the way they are in neighboring states with video gaming terminals at tracks.
In 2003, Texans wagered more than $114 million on live racing at the state's five horse and three greyhound tracks and bet another $443 million on simulcast racing, or racing broadcast from tracks around the U.S., according to the Texas Racing Commission. Those figures were down from 2002, when Texans wagered $131 million on live races and $478 million on simulcast races.
Live racing's decline could hurt the state's $4.2 billion equine industry. About 290,000 Texans owned more than 1 million horses in 2003, according to Texas A&M University's Equine Science Program.
Attendance at Texas racetracks fell from 3.5 million in 1997 to 2.8 million in 2003. Purses--the money paid to the owners of winning horses--fell 9 percent from 2002 to 2003, from $45 million to $41 million. The value of purses, used to attract the best horses, is an important measure of a track's success.
State racing officials attribute Texas' woes to the lure of Louisiana and New Mexico, where revenue from video gaming terminals at tracks is boosting purse sizes. The terminals offer a variety of games, including poker and blackjack.
Adding video lottery terminals (VLTs) to Texas' tracks, along with gaming at Native American reservations, could bring in more than $1 billion in revenues annually, along with 30,000 new jobs, said Carole Keeton Strayhorn, Texas Comptroller.
"Over 1 billion dollars are being sucked out of our Texas classrooms," Comptroller Strayhorn said. "I want to repatriate those dollars, those ponies and those jobs for the schoolchildren of Texas and the taxpayers of Texas."
The Texas Legislature has not authorized the use of VLTs, though some legislators tried to bring them to Texas race fans. Efforts to attach an amendment authorizing VLTs to Senate Bill 270, a Texas Lottery Commission bill, were defeated in May 2003 when former Sen. Bill Ratliff threatened a fillibuster. In September 2003, the Texas Attorney General's office said video lottery legislation would require a constitutional amendment.
Supporters expect the Legislature to consider VLTs as one option for increased public school funding during a possible special session in spring 2004.
"We're talking about [VLTs] as a revenue generator for the state of Texas and placing these video lottery machines in existing gaming facilities, which are the racetracks, so that you would not expand the footprint of gaming in Texas," said former Secretary of State Elton Bomer, a lobbyist for the Texas Racing Agri-Industry Council, a coalition of racetracks and horse and dog breeders.
The pari-mutuel industry, including horse and dog races, generates $2.7 billion for the Texas economy annually, according to a May 2003 report by the Perryman Group, a Waco-based economic analysis firm. Allowing VLTs at the state's racetracks would add $2.2 billion to the state economy, including $926 million in personal income and thousands of jobs, according to the report.
"Texas needs a new economic engine, and schools need a new money generator," Strayhorn said. "Video lottery at racetracks will provide both."
Bryan Brown, CEO of Retama Park in Selma, near San Antonio, agrees.
"We feel very strongly that VLTs at racetracks would be a huge benefit to the state, helping fund education," said Brown.
Getting a handle
Bob Bork, president and general manager of Sam Houston Race Park in Houston, estimates that 25 percent of his patrons are going to Louisiana to bet at tracks with larger purses."We're a little bit over $100,000 a day now, so we think it could go to $200,000 or $300,000 a day, which puts us right up there with Kentucky and California," Bork said.
The "on-track handle," or the amount wagered on the track at Sam Houston Race Park, fell 8 percent, from $146 million in 2002 to $134 million in 2003. Purses fell almost 12 percent between 2002 and 2003, from $14.5 million to $12.8 million.
At Lone Star Park in Grand Prairie, the total on-track handle fell 8 percent between 2002 and 2003, from $237 million to $216 million, according to the Texas Racing Commission.
"We're seeing an increase in competition from casino-style gaming in Louisiana, Oklahoma and New Mexico," said Corey Johnsen, president of Lone Star Park. "From a customer point of view, there are hundreds of millions of dollars leaving North Texas that's being spent at casinos, especially in Oklahoma and Louisiana."
VLTs have their critics. Dr. Steven Hotze, a conservative Republican activist in Harris County, opposes any expansion of gambling in Texas.
"Any state revenue will be more than offset by gambling's destructive impact on families and the resulting increases in crime, unemployment, divorce and bankruptcy," Hotze said.
A losing bet
Track officials say Texas racetracks are also losing the best horses and breeders to tracks in bordering states that offer higher purses."When the surrounding states have higher purses, our Texas horsemen--people who live here and raise their horses here--will travel to those states to race," said Paula Flowerday, executive secretary for the Texas Racing Commission.
Horses are expensive to own, so breeders and trainers want to race their horses at tracks with higher purses, said Chris Scherf, executive vice president of the Thoroughbred Racing Associations, which represents 43 racetracks in the U.S. and Canada.
"Obviously if you own one of those animals, you're going to run them where you get the best return on it," Scherf said.
Sunland Park Racetrack and Casino in New Mexico is a four-minute drive across the border from El Paso. David Hooper, executive director of the Texas Thoroughbred Association, said that after Sunland Park installed gaming machines in 1998, its purses increased from $30,000 a day to $240,000 a day.
"Sunland Park's racing wasn't worth two dead flies," Hooper said. "Now they've got a bigger purse structure on a daily basis than they have at Lone Star Park."
If the Texas Legislature decides to allow VLTs at Texas tracks, it isn't clear how many track owners would install, or who would oversee them. Texas Lottery Commission Executive Director Reagan Greer said his agency would work under the Legislature's direction.
Strayhorn has said that if the state approves VLTs at Texas racetracks, it must address the issue of gaming operations by the state's Native American tribes, or the tribes may go it alone. Many tribes would like to offer VLTs as well.
Kevin Batisse, vice chairman of the Alabama-Coushatta, says a portion of the VLT money could be spent on education.
"We feel like we can reach some kind of agreement with the state entities to earmark a percentage of the revenues created from having machines here on the reservation to help the school kids of this great state of Texas," Batisse said.
Johnsen said Texas already has a premier horse breeding and racing industry that could be on par with Florida, California or Kentucky.
"We have some quality pari-mutuel facilities that already offer wagering that can efficiently add another form of gaming and continue to be regulated by the state," Johnsen said.
Karen Hudgins
