Racing Commission Still at Risk of Being Cut Off

Even after a conciliatory visit from the head of the Texas Racing Commission, the senators in charge of the state's budget are still threatening to defund the commission, calling it a “rogue” and “renegade” agency.

Members of the Senate Finance Committee grilled racing commission Chairman Robert Schmidt for more than 40 minutes on Wednesday, making the case that the commission should have waited for the Legislature’s approval before deciding last summer to approve a new form of gambling technology at Texas racetracks.

“Right now your budget is zero, and I’ve had nothing here today that’s convinced me that it needs to change,” committee Chairwoman Jane Nelson, R-Flower Mound, told Schmidt.

The nine-member commission voted last summer to allow historical racing — betting on electronic simulations of old horse races with all identifying information removed — despite a letter from angry Senate Republicans who claimed that the commission was expanding gambling opportunities in the state without the approval of the Legislature or voters.

“When you received that letter and ignored it, I was livid,” Nelson told Schmidt.

Schmidt said the commission considered the letter carefully, but thought the senators had been misinformed.

“If we received the letter today, if we had to do it all over again, I’d be in your office the very next day,” Schmidt told Nelson. “Of course we’d change our pattern.”

Some of the language in that letter was drafted by lobbyists for out-of-state casinos owned by major political donor Tilman Fertitta, The Texas Tribune reported Tuesday.

Proponents of historical racing said the technology would bring increased revenue to struggling Texas racetracks. But conservatives opposed to expanding the gaming industry compared historical racing to slot machines and said the racing commission was permitting Las Vegas-style gambling in Texas.

Expanding gaming in the state would require two-thirds approval by the Legislature. Schmidt said Wednesday that the technology didn’t represent an expansion of gambling, and was just another form of horse betting already allowed in Texas.

Even though the commission doesn’t receive any taxpayer dollars — its entire $7.7 million annual budget comes from licensing and fees paid by the racetracks — that money still flows through the Legislature. That means lawmakers hold all the chips and could leave the commission empty handed by the end of fiscal year 2015.

That point wasn’t lost on either side.

“We do not have to fund you,” said state Sen. Robert Nichols, R-Jacksonville. “We can figure out a different way to handle race tracks than this. I hope that you understand and are listening carefully to what we’re saying.”

“Quite honestly, you control the whole situation,” Schmidt later said.

State Sen. Craig Estes, R-Wichita Falls, has filed a bill to eliminate the racing commission and hand over its duties to the Texas Commission of Licensing and Regulation.

After a state district court ruled in November that the racing commission didn’t have the authority to allow historical racing, several state racetracks appealed the decision, Schmidt said. The commission is still deciding whether or not to join in the appeal, he said.