Scott Wells, Lone Star president and general manager, says he’s optimistic Texans will always have a love of horses.

Ron Baselice/Dallas News Staff Photographer

DALLAS, TX—MAY 5, 2014—Not that long ago, Texas was a major horse racing state. In October 2004, more than 53,000 fans jammed Lone Star Park in Grand Prairie for the Breeders’ Cup, the only time that premier event has ever been held in the state.

The off-track parties, featuring George Strait and Willie Nelson, were memorable, too. Longtime industry executive Dan Fick says many of his friends from around the country still call it “the most fun Breeders’ Cup” ever. A decade of decline later, though, the fun is almost gone. When it comes to horse racing, the words “major” and “Texas” no longer seem to go together.

Last year, Texas ranked 17th among states for purses paid in Thoroughbred races, just ahead of Iowa, according to The Jockey Club. Attendance and total wagering are less than half their levels of 2000.

It’s becoming more and more evident that traditional horse racing, on its own, can’t compete in a world with so many other entertainment and gambling choices. Some wonder how much longer the sport — and industry — will last, especially if it doesn’t get help from the Legislature.

“I’m saddened that the industry I spent a lot of my prime in is having so much difficulty, because at one time I thought it was going to be so successful,” said Paula Flowerday, former executive secretary of the Texas Racing Commission, who is now an attorney in private practice in Denton.

And it’s not just Texas.

In Massachusetts, the owners of Suffolk Downs, an 8-decade-old track near Boston, warn that this is likely to be its last season of live racing unless its gaming partner is awarded the right to build a resort casino on land owned by the track. One Texas track — Manor Downs near Austin — has stopped racing in recent years. But the tracks in the state’s largest metro areas aren’t at that point yet. Each, though, has aligned with an out-of-state gambling company within the last four years. If Texas ever approves gaming machines or other forms of gambling at the tracks, they are ready to move. Lone Star Park is owned by Global Gaming Solutions, the gambling arm of the Chickasaw Nation of Oklahoma. The tribe’s WinStar World Casino on the border with Texas is one of the largest casinos in the world.

“There’s no doubt the decline in Texas is real, and it’s not a mystery why,” said Scott Wells, who is president of Lone Star Park and Remington Park in Oklahoma City, as well as president of Thoroughbred Racing Associations, which represents operators at about 40 tracks in the U.S. and Canada.

He said Texas is surrounded by states that offer better horse racing prize money because purses are boosted by slot machines and other forms of gambling.

Purses at Lone Star Park, where the spring season began April 10, average about $130,000 a day, Wells said. At Remington Park, which has 750 gaming machines, purses average between $250,000 and $270,000 a day. Remington Park is also owned by the Chickasaw Nation.

Following The Money

Horse owners and trainers follow the money, so purse levels have a ripple effect throughout the industry, from breeding to veterinary services. Higher purses mean better horses, better competition and more spectator interest. “Remington Park had the padlock ready to put on the door in 2004 when Oklahoma voters approved expanded gaming,” Wells said.

As part of a joint venture with the company that owns Sam Houston Race Park in Houston, Penn National Gaming Inc. has pledged to lend up to $375 million to cover development costs if expanded gaming is legalized. The venture includes Valley Race Park, a greyhound track in Harlingen and an option to buy land for a horse track in Laredo.

In the meantime, Sam Houston president Andrea Young said, the track has changed its business plan to try to create what she calls a lifeline to the future.

Sam Houston has reduced the number of days it holds races while increasing purses to better compete.

“We’re paying $160,000 a day in purses compared to $250,000 a day in Louisiana,” she said. Before the change, Sam Houston paid about $90,000 a day, she said.

Las Vegas-based Pinnacle Entertainment Inc. owns a majority of the partnership that owns the racing license for Retama Park Racetrack near San Antonio.

While Penn National’s Texas investments are a long way from its closest other track and casino, located in Hobbs, N.M., the Texas investments for Pinnacle and the Chickasaws are clearly hedges against losing customers they already have. WinStar has said that the vast majority of its customers come from North Texas. Pinnacle states in its securities filings that if gaming were legalized in Texas, “it would adversely affect our business, particularly our Louisiana properties.”

Pari-mutuel betting on horse races in Texas has always been mixed with politics. There were periods of legality beginning in 1905, according to the state attorney general’s office, before it was repealed in 1937 and legalized again in 1987. With racing in decline, there have been many attempts to allow expanded gaming at tracks. The proposals have met with strong opposition in the Legislature and none has succeeded, though there are sure to be more bills presented again next year.

A more recent issue is online gaming, a growing activity. In September 2012, Churchill Downs Inc. filed suit against the Texas Racing Commission, challenging a law that required Texas residents to bet in person at a track if they want to wager on horses.

The law was upheld by a lower court and the case now awaits a ruling from the Fifth U.S. Circuit Court of Appeals. Betting in person allows the Texas Racing Commission “to police the crime, fraud and other social ills that gambling often produces,” the Texas attorney general’s office argued in its brief to the appeals court defending the law.

Declining Popularity

As other forms of gambling have proliferated across the country, there has been a decline in the popularity of horse racing — based on attendance and wagering. Big events like this weekend’s Kentucky Derby still attract marquee attention, but the everyday business is challenging.

Consider the competition from WinStar, an hour north of Dallas. It opened in 2004, the same year the Breeders’ Cup came to North Texas. The Chickasaw Nation doesn’t break out gambling separately in its public records. But it does list revenue from the many businesses it owns, which are largely driven by gambling.

In fiscal 2003, the nation said, its business revenue totaled $192 million; in 2013, more than $1 billion, a five-fold increase, in large part because of WinStar.

Politics aside, there is no argument that the business of horse racing in Texas is hurting. The charts don’t lie. Attendance has declined from about 3.3 million (mostly at horse tracks but including dog tracks) in 2000 to about 1.5 million last year, according to the Texas Racing Commission. In that same span, total wagering on horse races in Texas and on Texas races (live and simulcast) declined from $908 million to $361 million.

“It’s sad,” said Ray Paulick, a longtime industry watcher and publisher of the Paulick Report. “The horse racing industry in Texas is fighting with two hands behind its back.”

While the prognosis is bleak, there is still hope that Texas horse racing can be revived.

The Chickasaw Nation has spent millions of dollars upgrading Lone Star Park since acquiring the track in 2011. A previous owner, Magna Entertainment, declared bankruptcy two years earlier. The investments are beginning to show some return. So far this year, Wells said, betting at live and simulcast races are both up by double digits. He also said there is evidence that Thoroughbred sales are finally rebounding from the Great Recession.

“I’m not blindly optimistic,” Wells said. “But I know Texans have enough pride and enjoyment of the horse that they don’t want to see racing go away.”