House Passes Horse-Racing Bailout

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horse racing

Update:

Shortly before midnight Thursday, on the last day for consideration of new bills, the House on a voice vote passed House Bill 2463, to divert $149 million in tax revenues to aid the state’s long-ailing horse-racing industry.

“Actually, this is a very troubled industry and this just puts more money into it,” state Rep. Charlie Geren, R-Fort Worth, said before the vote.
An amendment by state Rep. Mayes Middleton, R-Wallisville to block the diversion of equine-related sales taxes from the general fund failed on a voice vote.

 

The Texas House on Thursday is expected to consider a bill that would divert $149 million in tax revenues to aid the state’s long-ailing horse-racing industry.

House Bill 2463, which very quietly made it out of a House committee in early April, would divert a variety of equine-related sales taxes from the state’s general fund to the Texas Racing Commission to boost the purses awarded to the owners of winning horses at all of the state’s tracks.

According to the bill’s fiscal note prepared by the Legislative Budget Board, this racing purse escrow account would deprive the general fund of roughly $50 million in the next three biennial budgets. LBB analysts are predicting the revenue loss will be more than made up by the taxes generated by an expected boom in business at the tracks.

Three pari-mutuel horse racing tracks in Texas are eligible for the funding: Lone Star Park in Grand Prairie, Retama Park just north of San Antonio and Sam Houston Race Park in Houston.

Predictably, horse racing interests are strong supporters of the bill, while fiscal conservatives decry singling out an industry for preferential tax treatment.

“The bill, which creates no new taxes, would make Texas racing regionally competitive again,” the Texas Horsemen’s Partnership said in a statement. “Taxes collected on horse industry activity would be put back into the industry to grow it for the benefit of the horsemen and women and the state’s economy.”

Texas Action, a conservative, small-government legislative analyst group, had a different opinion. “HB 2463 provides direct taxpayer subsidies to the horse industry, primarily for the horse racing industry. This is antithetical to the principles of limited government and free market,” the group wrote in its floor report about the bill.

The bill’s author, state Rep. Tracy King, D-Batesville, did not respond to a request for comment by publication time.

The push to use taxes and fees generated from horse industry equipment sales, storage, feed and supplements as an economic boost has been bound up for the past several sessions with attempts to make the horse racing industry more competitive with neighboring states that offer other forms of gambling at their tracks.

According to a study prepared for racing industry consultants by TXP Inc. in Austin, bettors were waging $900 million and horse breeders and owners chased $32.5 million in purses a year in Texas in the early 2000s. Last year a little more than $340 million was wagered at Texas tracks and the owners took home purses of $16.8 million, according to the study.

The study contends that a state contribution of up to $25 million a year in purse money would not only boost tracks revenue but would, by 2022, double the current direct impact on the overall Texas economy to $154.6 million.
The legislature has for the last three sessions been largely unwilling to help the industry, either by direct subsidy or by easing the laws on other types of gambling.

In 2015 a bill similar to King’s, by state Sen. Kel Seliger, R-Amarillo, failed to make it out of committee. The following February the Texas Racing Commission pulled the plug on its decision to allow tracks to offer historical racing, a kind of betting done on real races already run and replayed on machines similar to slots.

In the last session state Sen. Lois Kolkhorst, R-Brenham, was able to get her purse enhancement bill passed in the Senate, only to see it wither away in a House committee. In this session, Kolkhorst’s SB 1998, identical to King’s, has failed to make it out of committee.

After the 2015 and 2017 sessions, journalists predicted the demise of horse racing in Texas. The Sam Houston track, however, said to be in its death throes just a few years ago, had a strong year in 2018, according to the Houston Chronicle.

Unlike in past sessions, the horse track bills this time have drawn almost no editorial or political attention. There is scant information about the bills on the websites of the Texas Quarter Horse Association and the Texas Thoroughbred Association.

Calls placed to both groups for comment by The Texas Monitor were not returned before this story published.

Mark Lisheron can be reached at [email protected].

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Mark Lisheron has more than 30 years of experience in newspapers and was most recently the managing editor for Reason.com. He also served as deputy editor, national reporter and Austin bureau chief for Watchdog.org. He was the founding Austin bureau chief for the bureau's predecessor, Texas Watchdog, winning the First Amendment Award from the Society of Professional Journalists in Texas.

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