Diodoro is eligible to race in Texas because the Horseracing Integrity and Safety Authority (HISA) does not have jurisdiction in that state.

Diodoro did not return a phone call from the TDN, but it appears that he will be busy at the Lone Star meet, which concludes on July 14. Diodoro has been allotted 50 stalls, which appears to be the maximum amount allowed by the track's racing department. He has not started a horse since April 3 at Turf Paradise. He was able to run in Arizona after his suspension was announced because the horses had been entered before Diodoro was notified of the violation

Diodoro was provisionally suspended by HIWU on March 29. Though he has been summarily suspended the case must still be reviewed by HIWU's Internal Adjunction Panel. Diodoro also has the option of trying to contest the suspension in court.

Levothyroxine is a thyroid medication. According to the National Library of Medicine the use of thyroid hormones for doping to enhance performance in human sports has long been controversial. There have been claims of abuse of these drugs, but they have not been prohibited by the World Anti-Doping Agency.

The Texas Racing Commission interpreted its state racing rules and concluded that only the racing commission can legally oversee racing in the state and therefore would not allow HISA to come into Texas. Because they are not under HISA's jurisdiction, Lone Star Park and Sam Houston cannot send their simulcast signal out of state.

Diodoro was the leading trainer in 2023 at Oaklawn Park and is currently still in second place in this year's Oaklawn standings. Training since 1995, Diodoro has 3,184 career wins and a winning rate of 21 percent.

A similar scenario is playing out in Louisiana, where trainer Jonathan Wong has begun racing. Wong received a two-year suspension from HIWU after he had a horse test positive for Metformin, a drug that is commonly used by humans to combat type 2 diabetes. Like Texas, Louisiana racing is not under HISA's control. Wong has started eight horses in Louisiana with no winners. He has four horses entered at Evangeline Downs next week and another Saturday night.

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By the numbers, a total of 175 yearlings sold for $3,240,000. The figures represented a decrease from 2022 when 161 sold for a record $3,416,000 in gross receipts. This term, the average was $18,542, while the median was $11,000 and 77 horses reported not sold.

Foster Bridewell, Director of Horse Sales for the TTA, said of the auction, “Three of our top five offerings were Texas-breds, so that was good to see,” he said. “This was one of our largest catalogs in the history of this sale and we had buyers from several key quadrants–Kentucky, Ocala, California and across the Lone Star State.”

A Practical Topper For Al Pike

Offered as hip 122, the dark bay was purchased by Al Pike, acting as agent. The Apr. 30 foal is out of SW Jan's Perfect Star (Imperialism), dam of UAE Jebel Ali Sprint hero Road Bloc (Street Sense). The native Texan from Palestine, and his wife Salley, relocated this past summer to Highlander Training Center, outside of Dallas. A regular on the pinhooking scene, Pike frequents a bevy of juvenile sales, including OBS March, Fasig-Tipton Midlantic and the Texas 2-Year-Old In-Training Sale.

Practical Joke colt (hip 122) | Olivia Friesen/TTA Sale

Pike said he saw this yearling as an opportunity.

“This one is for me and partners,” said Pike. “I thought he was a stunning Practical Joke, beautiful horse, and I think he's going to grow to be really special. It's just the Practical Joke that sold it and he had some pedigree too. I just thought he was a beautiful colt. This will be one to pinhook for the spring and we'll probably look to go to OBS March.”

Bred by Michael and Linda Mazoch of Texas, the colt was consigned by Scott Mallory, agent.

“He came from Buena Madera and they always do an excellent job in preparing the horses for the sale,” Mallory said. “And it makes it a whole lot easier when you get to the sale because they are well presented. With the recent success of Practical Joke, we kind of thought he'd be fairly popular with the sale. He vetted good, handled himself well up there. And with Texas coming up with the $40,000 maiden special weights, we knew that would add an extra bid or two. I didn't quite think he'd bring $110,000, but I'm happy about it. We thought he'd sell well–I thought he'd sell for $70,000 or $80,000, but $110,000 is excellent.”

Vekoma Colt Takes Home Silver

Late in the session, hip 260, a chestnut colt by Vekoma, brought $90,000 from pinhooker David Scanlon. Out of Winning Saga (Tale of the Cat), the May 12 foal was raised and prepped at Elm Tree Farm in Kentucky and consigned by agent Scott Mallory, who also consigned the topper.

“This colt just showed well the whole time, he had a great disposition, he just looks like he is going to turn into a really beautiful 2-year-old and he was bred by Dr. Fred Willis from Louisiana,” said Mallory.

Competitive Edge Colt Reminds Asmussen of Ryvit

The third highest-priced yearling of the session was taken home by Steve Asmussen's KDE Equine for $85,000. Hip 24, consigned by Highlander Training, was bred by Valor Farm in Pilot Point, Texas.

Ryvit schooling at Saratoga with Erik Asmussen up | Sarah Andrew

The Feb. 16 foal is the first foal out of unraced Better Than Mo (Uncle Mo), who counts MSW More Than Most (Indygo Mountain), MSW Worldventurer (Wimbledon) and GIII Miss Preakness S. scorer Red Ghost (Ghostzapper) as half-siblings. His third dam MGISP Alysbelle (Alydar) is a full-sister to Horse of the Year Alysheba.

Asmussen indicated Monday's purchase was prompted by another Texas sale graduate, GIII Chick Lang S. victor Ryvit (Competitive Edge).

“A couple of years ago, I got Ryvit out of this sale,” explained the Hall of Famer. “I think that there are blue collar horses and they have to earn their keep. And it had everything to do that he reminded me of Ryvit. Just a very sturdy and athletic-looking horse and, hopefully, we can create a similar circumstance.”

On behalf of his client Whispering Oaks, Asmussen also purchased hip 110, a Louisiana-bred colt by Spun to Run out of SP Hilarious Brown (Big Brown) for $80,000, in addition to a dark bay filly by Competitive Edge out of Conquest Bebop (Scat Daddy) (hip 51), who also brought $80,000.

Complete sales results can be found here.

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The horse is a fabric of historical Texas. The horse represents how we all arrived here, and how we survived in the earliest days. Some horses are bred to run–that's their job. All animals need a job and thrive when working. The thoroughbred's instinct is to run as fast and as far as it can. As long as there are horses, there will be horse races, and men and women will admire the sheer determination, stamina, strength, and speed of the majestic horse.

The tragedy at Churchill Downs this past May, in which twelve horses broke down on the racetrack, fractured their lower legs and needed to be euthanized, should never be repeated. The cause of this rash of sudden breakdowns is uncertain: the current American thoroughbred may be bred too strong up top across the chest with lower legs that are relatively too thin and fragile, or changes in the surface of the track due to humidity and weather variations may increase the risk of a ligamentous injuries which can then predispose to falls and catastrophic fractures. Most horses can survive the surgery, but few can survive the confinement and partial weightbearing needed to allow these fractures to heal.

The Jockey Club, in recognizing this problem, sought relief from Congress and in one of the few truly bipartisan pieces of legislation in the past 10 years, the Horseracing Integrity and Safety Act (HISA) was passed. This lifesaving legislation allows the government to designate a corporate entity to unite the horse industry, to find ways in which horse tragedies can be eliminated, and drug abuse can be regulated at the Federal level.

The model is not a new one. A Federally sponsored corporate entity serves to regulate the Securities and Exchange Commission. The needs are similar. Regulation among multiple states with multiple interests are consolidated under a single governing body with superior resources and a single purpose-driven goal.

In response to the HISA act, most states have supported and endorsed this model, but a few outliers, including the State of Texas represented by the Texas Racing Commission, have sought to preserve the status quo.

The Commission's stated rationale is that only the Texas Racing Commission may regulate parimutuel racing and simulcast wagering in Texas. Although National regulation affects all aspects of our life living in Texas, the Texas Racing Commission, due to this perceived legal technicality, has been unable to find a compromise solution. As a result, the Texas racing industry suffers, the Texas patrons who enjoy horseracing suffer, and our thoroughbred gladiators suffer the most.

A second consequence of this stalemate is that racetracks in Texas can no longer simulcast Texas races to other communities and states and receive wagers allotted for their racing program.  Without the ability to simulcast, the betting handle at Sam Houston Racetrack during the winter meet fell 90% and the handle at the current Lone Star spring and summer racing meet is not significantly better. Tracks survive by taking approximately 15% of the betting handle to support their operations and purses. The current situation is unsustainable.

Having served on the Texas Racing Commission for 10 years, including four years as Chairman, I can attest that the Commission staff, stewards, and the working regulators are superb and unmatched in their quality and dedication. The political appointees of the Commission, however, have lost sight of their designated purpose.

In this one rare instance, Congress has actually provided us–and our horses–a solution. Ultimately, HISA has the resources, the regulatory power, and sophisticated lab testing that can root out illegal drug use, research track surfaces, and analyze breeding patterns. HISA has the potential to improve the sport and create a safe horseracing animal that can thrive in a newer environment.

The Texas Racing Commission needs to recognize its responsibilities and protect our animals in an ever-changing world. The consequences of the Texas Racing Commissioners' opposition to these efforts simultaneously leaves our horses at risk and our tracks on the path to ruin.

Texas deserves better.

Robert Schmidt, MD is a Fort Worth based orthopedic surgeon specializing in joint replacement surgery of the hip and knee. He and his wife had bred and raced thoroughbreds under the colors of Oak Meadow Farm. He was appointed by Govenor Perry to the Texas Racing Commission and served for 10 years, including 4 years as chairman. He currently serves as Mayor of Annetta North, Texas.

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At stake is the lucrative business of nationally beaming Texas's simulcast wagering signal.

The TXRC initially took the stance that it is legally prohibited from permitting Texan tracks to export their signals. Then at the start of February, the Fifth Circuit Court of Appeals sent the congressionally amended version of HISA down to the district courts for further review.

The Texas commission interpreted this action as meaning that HISA is “facially unconstitutional and therefore has no effect on the State of Texas,” seemingly opening the door to Texas tracks once again engaging in interstate simulcasting.

As of writing, no Texas-based track has adopted that policy, and the simulcasting signal remains flatlined. Furthermore, just this May, the federal court judge out of the Northern District of Texas, Lubbock Division, found this version of HISA as constitutional. The case has now been appealed back up to the Fifth Circuit Court of Appeals.

In the meantime, though purses in the state remain fairly stable, the tracks are taking a huge financial knock, and horsemen there are raising concerns about other ancillary impacts on their businesses. Some of the horsemen are now asking: Can HISA be implemented in the state in order to facilitate the interstate simulcasting signal?

The TXRC has taken the stance that state law bars HISA from being implemented in the state unless it is replaced or altered to become a cooperative agreement grant program–an alternative financial and regulatory model for the federal government to cooperate with individual states.

Amy Cook | Courtesy of Amy Cook

Even then, “our statute doesn't even allow us to take grants,” TXRC executive director, Amy Cook, told the TDN last week.

“We've actually made a request to have our statute conform, so, if HISA did become a cooperative agreement grant program, and the [Federal Trade Commission] FTC became a grantor, we could actually take that money and work with HISA. That's the only pathway I see,” Cook added.

In a follow-up email, Phil Fountain, the TXRC's chief of staff, pointed to a previously released commission “fact-sheet” broadly outlining its legal argument. The fact-sheet cites the Texas Racing Act, which directs the commission to “regulate and supervise each racing meeting in this state” that involves wagering.

“There is no provision for the Texas Racing Commission to cede this authority to another party. This means there is no preemption of Texas law under HISA's opt-in structure because HISA does not regulate pari-mutuel horseracing activities,” wrote Fountain.

A legal analysis put together for HISA by the law firm Akin Gump takes the opposite stance. It finds that HISA indeed preempts the Texas law that the commission says confers it exclusive authority to regulate all matters relating to horseracing.

Furthermore, under HISA and state law, the TXRC can implement HISA and still continue to regulate matters outside the reach of HISA's jurisdictions, the Akin Gump analysis finds.

“There is no legal impediment to reversal of the Texas Racing Commission's self-destructive policy decision of restricting interstate wagering on horse racing. Under State and federal law, the Commission may continue to regulate horse racing in Texas to the extent not preempted by HISA rules,” the analysis for HISA finds.

Which side stands on the sturdiest legal legs?

For an independent take on the dispute, the TDN spoke with Daniel Rodriguez, former dean of the Northwestern University Pritzker School of Law and former Minerva House Drysdale Regents Chair in Law at the University of Texas, Austin.

Prior to being asked to sort through the legal bones of the matter, Rodriguez said that he was unaware both of the HISA legislation passed into law at the end of 2020 and of the legal conflict that has arisen in Texas.

His answers hinge on the looming decision in the Fifth Circuit Court of Appeals, which is set to rule on the constitutionality of the congressionally amended version of HISA. That ruling, however, could still take a number of months.

“What the Fifth Circuit is being asked to do is rule on a matter of federal constitutional law, just as they were asked to do on the ruling back in 2022, when the Fifth Circuit struck down the statute as violating what they call the private non-delegation doctrine,” he said.

If the court rules in tandem with the Sixth Circuit Court of Appeals–which recently found the revised HISA statute constitutional–there is “absolutely nothing” in Texas statute that bars HISA from being implemented in the state, he said. “That we can all agree on–even the lawyers for the Texas racing commission.”

When asked about the Texas commission's stance–that state law bars HISA's implementation in Texas, irrespective of any court ruling in its constitutionality–Rodriguez called it “foolishness” as well as “head-scratching.”

In other words, what the commission is saying in that scenario is that “I can't comply with the law,” he said, before describing the stance as a policy posture rather than a solid legal argument.

“I lived in Texas for five years so I get to say that this is typical Texan intransigence,” Rodriguez said.

At the same time, Texas could indeed enter into a cooperative agreement grant program with the federal government, if HISA were structured that way, said Rodriguez. “You certainly could implement [HISA] through a regional compact. But Congress has chosen a different mechanism,” he added.

Sam Houston Race Park | Coady Photography

On the flip side, however, if the Fifth Circuit rules that the amended version of HISA remains unconstitutional–just as it ruled on the prior version of HISA–then the TXRC would be correct in barring HISA implementation in the state, said Rodriguez.

Rodriguez declined to weigh in on whether HISA could be implemented in Texas currently–that is, before the Fifth Circuit ruling drops–explaining that he had not researched the legal landscape of the question enough to opine on the matter.

More within Rodriguez's wheelhouse are the ideological whims and fancies of the various Courts of Appeals–including the Fifth Circuit.

“The Fifth Circuit has a reputation for being an eccentric court of appeals–they've reached judgments in the past that leave us law professors to scratch our heads and wonder exactly why their views are so outside the mainstream of other circuit courts. They do what they do,” he said.

When asked which way he thought the Fifth Circuit would rule on the constitutionality of the congressionally amended version of HISA, Rodriguez sided with the federal government. “I really don't anticipate the Fifth Circuit striking it down as unconstitutional,” he said.

In that scenario, said Rodriguez, the plaintiffs would likely file a petition of certiorari with the Supreme Court–a request that the Supreme Court orders a lower court to send the case up to them for review.

But in that instance, there would be no obvious “circuit split” between the Fifth and Sixth Circuit Courts of Appeals for the Supreme Court to weigh in on and consider, meaning it's unlikely the highest court of the land would take the case, he said.

“It's always important for those of us to check our biases, no matter how much expertise we have as law professors,” said Rodriguez.

“But in a nutshell, the issue is, 'can Congress, consistent with their authority, delegate authority to an administrative agency whose constitutionality has never been questioned–I'm talking the FTC–to establish rules for Thoroughbred horse racing?' And the answer to that now is clearly, 'yes,'” he said.

The post Legal Expert: If Fifth Circuit Finds HISA Constitutional, Texas “Absolutely” Can Implement Law appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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Texas almost certainly will not be in on the party.

When HISA's racetrack safety program launched on July 1 last year, the Texas Racing Commission (TXRC) argued that it was statutorily barred from joining HISA. And because the HISA Authority has jurisdiction over the interstate simulcasting of races, the commission said it was therefore prohibited from permitting Texan tracks to export their signals.

But with the Fifth Circuit Court of Appeals set to soon rule on the constitutionality of the congressionally amended version of HISA, the commission could soon face a tricky dilemma.

If the Fifth Circuit finds the revised law unconstitutional, that sets up a “circuit split” with the Sixth Circuit Court of Appeals which could propel the case all the way up to the Supreme Court.

If the court upholds the constitutionality of the amended version of HISA, however, “the legal game is very close to being over for the opponents of HISA,” as constitutional law expert Lucinda Finley recently put it.

Either way, without the ability to beam is simulcasting signal out of state, Texas racetracks have taken a financial pounding.

Sam Houston's 2023 Thoroughbred meet ran from Jan. 6 through Apr. 8. During that time, the track handled roughly $6.39 million, according to Equibase-a drop of nearly 93% from the year prior, when the facility handled over $101 million with only 80 more individual races carded.

As for HISA, TXRC executive director Amy Cook remains adamant that the legal door to that barn is shut in Texas unless the law is restructured or replaced by a “cooperative agreement grant program”–what would be an alternative financial and regulatory model for the federal government to cooperate with individual states.

Cook, who said she spends a “great deal of time” at Texas racetracks, in barns and in public forums listening to industry stakeholders, claims she is aware of only “one human being that's upset in all of Texas about the approach that we're taking. Only one human being.”

It turns out that's an undercount.

Stakeholder Input

“We have some serious concerns about the direction that Texas Thoroughbred racing is headed given the resistance to participate with HISA,” said Jeff Hooper, chairman and CEO of Highlander Training Center, a Northeast Texas-based full-service training and equine fitness and therapy facility.

Hooper describes Texas racing as having been on “the up” because of state legislation passed in 2019, funneling to the purse account monies from a tax on equine products like feed and tack. But the uncertainty in Texas surrounding the commission's approach to HISA has stymied that progress, he added.

“We're certainly not saying HISA is 100% hitting on all cylinders. [But] we feel that it is in Texas's long-term best interests to find a way to participate with HISA,” said Hooper.

Corey Johnsen is a Texas owner and breeder who said he felt the same way.

“As an industry, we ask the tracks to offer quality live race meetings. How long can that go on without simulcast-out wagering?” said Johnson, stressing how “simulcast-out commissions” are a vital revenue stream for the tracks.

According to Chris McErlean, vice president of racing for Penn Entertainment, Sam Houston's parent company, the track largely met its 2023 financial projections for its Thoroughbred meet, which were based on numbers crunched with the expectation of a simulcast signal blackout.

Soon, however, “we're going to have to step back and evaluate at that point what the landscape is, and start making decisions for 2024,” said McErlean.

If the simulcasting signal out of Texas remains flatlined for the foreseeable future, could that mean an even more truncated 2024 Thoroughbred race meet at Sam Houston?

“Again, I think we'll have to see what we're able to do or not able to do,” McErlean replied. “We obviously want to get the races out to as many people as we can. Unfortunately, this is a complicated, multi-pronged issue. It's not as cut and dried as many people make it out to be.”

TDN reached out to Matt Vance, executive vice president of racing at Lone Star Park, but didn't receive a response before deadline. Lone Star Park is a plaintiff in litigation seeking to derail HISA.

At the same time, Texas's purse account is bolstered by as much as 85% from the state sales tax on equine products, meaning purse levels have remained relatively stable.

Indeed, purses at Sam Houston decreased by only about $2 million from last year, according to Equibase-from around $12.2 million in 2022 to $10.1 million this year. With 80 fewer races, the purse-per-race rate increased marginally.

The simulcasting blackout, however, has impacted horsemen other ways-frustrating out-of-state owners, for one.

“A lot of my clients don't come to the races. They like to watch their horses run remotely,” said a Texas-based horseman who asked to remain anonymous for fear of regulatory retaliation.

“You pay all these monthly fees, and if you can't watch your horse race in person and you can't watch it on simulcast and you can't even bet $2, it takes away a lot of the fun,” said the trainer.

Instead, the commission should have adopted a legal approach similar to the ones in Louisiana and West Virginia, which succeeded in getting an injunction to allow interstate simulcasting, but still operate outside of HISA's jurisdiction, said the trainer.

“People joke, 'we didn't even know you were still racing in Texas,'” said the trainer, who fears that the situation might have deterred new owners from investing in Texas racing. “I just don't like our options right now.”

A Texas mainstay, trainer Bret Calhoun said that his numerous concerns about HISA are outweighed by fears for the economic future for racing in Texas without the ability to export its simulcasting signal.

“People who are breeding, it's making them uneasy. People buying Texas-breds, I think it's making them a little more cautious. Obviously, these racetracks can't keep operating in the manner they're operating right now,” said Calhoun.

“At this point in time, HISA is the law of the land,” Calhoun said, adding that he would be reluctantly amenable to Texas joining HISA if the law continues to have legs into the future. In that scenario, “what is Texas's plan moving forward? I'm just hoping there is one,” he said.

Sam Houston Race Park | Coady Photography

Texas Racing Commission

“I'm not sure I know the answer to that,” said Cook, when asked how long tracks like Sam Houston and Lone Star Park can continue operating without an exported signal.

“We just can't take the resources we currently have and give it to HISA to regulate us and the tracks understand that,” she said. “I would just say that we are hopeful that maybe at some point something will change to break the logjam.”

Could that break constitute a legal compromise?

While the TXRC has steadfastly maintained that Texas law bars HISA from being implemented in the state, HISA takes a different stance.

A legal analysis put together for HISA by the law firm Akin Gump found that “There is no legal impediment to reversal of the Texas Racing Commission's self-destructive policy decision of restricting interstate wagering on horseracing. Under State and federal law, the Commission may continue to regulate horseracing in Texas to the extent not preempted by HISA rules.”

When asked if the legal situation, therefore, is less black-and-white than has been the commission's approach to date, Cook remained unyielding.

“No, there's not a possibility unless HISA somehow becomes a cooperative agreement grant program,” Cook responded.

“Our statute doesn't even allow us to take grants,” Cook added. “We've actually made a request to have our statute conform, so, if HISA did become a cooperative agreement grant program, and the [Federal Trade Commission] FTC became a grantor, we could actually take that money and work with HISA. That's the only pathway I see.”

If the courts maintain HISA's constitutionality and the law remains unchanged, however, such a scenario could leave Texas in an increasingly precarious position if it continues its current trajectory.

Asked if Texas stakeholders should therefore be braced for a possible long-term simulcasting signal blackout, Cook demurred, saying that “it's not my job to send that message,” but that she was hopeful “something will change” for the 2024 racing season.

“I would say, and I've said to a few other folks I've talked to, if you're out of state and you want to watch Texas horses, then come to the track,” Cook said. “You don't have to watch it on TV.”

Budgetary Changes

Having assumed the position of TXRC executive director only about 18 months ago, Cook's tenure has overlapped arguably one of the most important junctures for the state industry-this, with no prior experience in the horse racing industry.

In that period, Cook's rigid stance on HISA has helped cultivate an industry-wide visibility rather atypical for the position, aided by appearances on popular horse racing radio shows and as a panelist at the HBPA's annual conference.

“I would say, and I've said to a few other folks I've talked to, if you're out of state and you want to watch Texas horses, then come to the track. You don't have to watch it on TV.  —Texas Racing Commission Executive Director Amy Cook.”

“I'm not here to be on anybody's side other than perhaps the side of the horses, the jockeys and the Texans who are the licensees of the commission,” Cook responded, when asked about her suitability for the role, at the same time emphasizing her “35 years of military service” as an example of her commitment to public service.

While Cook has enjoyed a long and distinguished military career, it hasn't been without its missteps, most notably in 2014 when she was brought into the Arizona National Guard to supervise a financial audit of the Arizona U.S. Property and Fiscal Office (USPFO), which oversees state National Guard funds.

Several Arizona National Guard colonels suspended in that Cook-led audit over suspected financial wrongdoing were subsequently exonerated by an internal investigation, but not before their careers were ruined or finished in what they perceived as a leadership purge, according to an investigation by the Arizona Republic.

“[Cook] was in over her head and didn't grasp Army finances,” the former USPFO boss replaced by Cook told the Arizona Republic, claiming that false allegations, employee suspensions and transfers created havoc in the USPFO, including fiscal changes that cost the department millions of dollars in losses. “There is no excuse to have that kind of money leave Arizona because somebody doesn't know what they're doing.”

Cook characterized the Arizona Republic's reporting as incomplete and lacking in important details. At the same time, she pointed towards certain accolades awarded to her after the Arizona incident, including her 2020 promotion to Brigadier General.

“If I cared what was in the papers, I wouldn't be continuing my service for Texas,” said Cook. “I'm doing the best job I can do. I'm not perfect, but I show up every day and I try to do my best for the state of Texas.”

The TXRC is currently undergoing its own major financial reorganization by seeking to significantly revise its funding model, going from one financially self-sustained by the industry to an agency heavily reliant on taxpayer support.

“We are the only racing commission I found that is paid directly by its regulated industry, which has been problematic for the past 30 years,” said Cook, in explanation of the budgetary change. She pointed to a Texas governmental report that found the commission's current funding model dependent on sources like racetrack fees could undermine “effective” regulation.

“The general revenue [monies] would also pay for drug testing because I don't want to have to argue with someone over whether or not I can do a necropsy on their horse,” said Cook. “We should just be able to do it.”

According to figures provided by Cook, the TXRC had originally sought over $21 million from the state general fund to buttress its operations between 2024 and 2025, including dozens of new commission staff and a modernization of its online enforcement database. In the state's latest budget decision, that number is now just over $7.5 million in taxpayer revenues for the same period.

Interestingly, HISA assessed Texas the ultimately unpaid fee of around $351,000 for its 2022 operating expenses. According to sources familiar with the negotiations, HISA's 2023 fee assessments for both Sam Houston and Lone Star Park total around $1.5 million, with the opportunity for significant credits to be used against that amount.

“We'd like to see all revenue streams maximized, and that includes simulcasting,” said Hooper. As such, he added, “I just felt like the best thing to do was participate with HISA from its outset.”

The post Sam Houston Handle Down 92%, Texas Industry At Crossroads appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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Last year, the TXRC argued that it was statutorily barred from joining HISA, and because the enabling federal legislation gave the HISA Authority regulatory jurisdiction over the interstate simulcasting of races, the commission prohibited Texan tracks from exporting their signals.

“I called the Sam Houston Park general manager this morning and asked him to provide me an export request, and I've already approved them,” said TXRC executive director Amy Cook, who also wrote in a memo Wednesday to licensees that the Fifth Circuit's decision finding the law “facially unconstitutional” meant it has no effect on the State of Texas.

Chris McErlean, vice president of racing for Penn Entertainment, Sam Houston's parent company, confirmed that the simulcast signal will be beamed to its out-of-state partners when racing resumes this Friday. Sam Houston's current season began on Jan. 6 and ends Apr. 8.

“We have multiple racetracks, so, our contracts cover all our tracks. Everybody was ready to go as soon as there was some change in the status,” said McErlean. “It's literally the flick of a switch to get it going. We welcome the change. Sam Houston's a good wintertime meet on the schedule for a lot of people, and we're glad people will be able to see it live to bet on.”

When asked to comment on the TXRC's actions, HISA spokesperson Mandy Minger wrote in an email: “The Fifth Circuit's decision concerns only the prior version of HISA, before Congress amended it to remedy the constitutional concern the Fifth Circuit identified. No court has expressed any constitutional concern about, let alone enjoined, the current version of HISA now in effect. We look forward to working with the Texas Racing Commission and Texas racetracks should they resume operations falling within HISA's jurisdiction.”

Early last year, the State of Texas and the TXRC joined as intervener plaintiffs on one of the cases before the Fifth Circuit, led by the National Horsemen's Benevolent and Protective Association (NHBPA).

On Jan. 3, the HISA Authority asked for the Fifth Circuit's Nov. 18, 2022, anti-constitutionality order to be vacated based on a federal rewrite of the HISA law in December.

On Tuesday, the Fifth Circuit panel of judges denied this motion and also shot down separate motions for a rehearing of the case made by both the HISA Authority and the Federal Trade Commission (FTC).

After ruling on those two motions, the Fifth Circuit then issued a mandate that stated, “It is ordered and adjudged that the judgment of the District Court is reversed and remanded to the District Court for further proceedings in accordance with the opinion of this Court.”

The Fifth Circuit encompasses the states of Texas, Louisiana and Mississippi.

Cook explained that her policy decision last year to prohibit the export of simulcast signals from the state's tracks was made “hoping for the legal outcome that HISA has no legal jurisdiction in our state.

“We have avoided HISA jurisdiction because we didn't think that regulatory scheme was constitutional as a policy decision, and now we've avoided it in a legal decision as well,” Cook added. “We were certain that we were going to prevail, but I needed to provide certainty.”

Cook wrote in a memo Wednesday to licensees that, “All horseraces in Texas will continue to be conducted in accordance with the Texas Racing Act and the Texas Rules of Racing.”

This means that Texan racetracks continue to operate in a similar position to those in West Virginia and Louisiana, in that they are bound under the state's regulations and not HISA's safety regulations that went into effect in July last year.

With no simulcast signals beamed out of the state for months, concerns have understandably surrounded the impact on purses from a massive drop in handle.

In early January, the Daily Racing Form reported total wagering had dropped from $11.75 million on six days of live racing in 2022 to $1.04 million on seven days of live racing in 2023. The average per-race handle reportedly declined 92.3%.

The TDN's Bill Finley reported that Saturday's handle at Sam Houston for the Houston Racing Festival was $488,385. Last year, when the races were run on a Sunday, the handle was $5,698,052–a decline of 91.4%.

Cook was unable to provide specific figures as to the numerical hit on the state's purse account, but she played down the impact by saying that out-of-state simulcasting at Texas tracks accounts for roughly 15% of the total purses, the latter of which is bolstered by state subsidies and an increased percentage of on-track handle.

“It's not that we don't think [HISA] has an admirable goal, it's the way they're going after the goal,” said Cook, raising alternative uniform regulatory approaches to HISA, like a “cooperative agreement” model.

“It's not personal,” Cook added. “I told Lisa [Lazarus, HISA CEO] that when she came to Texas. I invited her. She came June 8. I drove her round in my pickup truck, and I said, 'It's not personal but you have a problem. You don't have a sustainable resource model here.'”

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During Wednesday's meeting of the Texas Racing Commission meeting, Sam Houston Park General Manager Dwight Berube confirmed that the Houston-area track will apply for 43 live race dates in 2023, beginning Jan. 6, 2023. The 2023 Texas live racing schedule will be similar to 2022, as Lone Star Park has already applied for 48 days.

While plans for the overall stakes program have not been finalized, the 2023 race meet at Sam Houston will feature the inaugural running of the $100,000 Texas Thoroughbred Association Derby and Oaks for graduates of the 2021 TTA Yearling Sale and 2022 TTA Two-Year-Olds in Training Sale.  The schedule will also include 10 Texas-bred stakes and two legs of the Clarence Schaubauer, Jr. Texas Stallion S.

“With Monday's Texas Thoroughbred Association Yearling Sale on the immediate horizon, we appreciate the continued support of the Texas tracks,” TTA Executive Director Mary Ruyle said.  “On Monday, we will offer more than 200 yearlings, which is the most in recent history. Over the past couple years, we have made great strides in the quality of racing in Texas.”

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The TDN sent out survey questions to a number of racing officials Saturday to determine how many, if any, horses had to be scratched because either the horses or their owners or trainers had not been registered with HISA. The TDN heard back from eight tracks–Gulfstream, Laurel, Belmont, Churchill Downs, Evangeline Downs, Los Alamitos, Monmouth and Charles Town. All eight reported that not a single horse at their tracks had to be scratched because of HISA's regulations.

The numbers may have been a pleasant surprise for the HISA team, which had told the TDN earlier in the week that they were prepared for some scratches.

“Since such a registration process has never existed at the national level before, it's unclear how many people and horses are or will be participating in racing come July 1,” a spokesperson told the TDN. “It should be noted that the universe of people expected to register is limited to the 24 states conducting covered horse races under HISA's authority.”

As of Friday night, the last chance individuals had to register themselves and their horses so that they would be eligible to race on Saturday, there were 27,074 covered horses and 24,147 covered persons. Through mid-week, 30,846 different horses had competed in the U.S. this year, but that doesn't mean that some 3,846 horses were not registered. A good number of the 30,846 runners may have been hurt and/or retired at some point in the year, meaning there was no need to register them.

There were also no reports of jockeys who weren't registered and therefore could not ride.

The news wasn't nearly as good out of Texas. The Texas Racing Commission has not complied with the Horse Racing and Integrity Safety Act, arguing that under Texas law only the commission has the authority to oversee racing. That led the commission to rule that the signal from the state's tracks cannot be sent out of state and that advance deposit wagering companies could not take betting on Texas races.

Predictably, that led to a massive decline in handle Saturday at Lone Star Park on the first day that its races couldn't be sent out of state. Lone Star ran a 10-race card on Saturday, June 25 and handled $1,771,138 or $177,113 per race. There was an eight-race card on Saturday and total handle for the day was $215,107, for an average of $26,888 per race.

The Lone Star meet concludes July 24, so it's unlikely that the decreased handle will affect purses in the short term, but that could change if the HISA-Texas Racing Commission standoff persists.

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In the letter, Amy Cook, the Texas Racing Commission's executive director, invokes various statutes in the Interstate Horseracing Act, the Texas Racing Act and the Texas Rules of Racing to substantiate this approach.

“Since the Texas Racing Commission regulates all aspects of Texas horse racing, including, in particular, pari-mutuel and simulcast wagering in Texas, the application of federal law pursuant to HISA in any aspect of horse racing regulation for a particular race or meet will necessarily preclude the Texas Racing Commission from full compliance with the Texas Racing Act and will, therefore, necessitate that no such affected race shall be allowed to conduct on-site pari-mutuel wagering or provide simulcast export signal,” Cook writes.

“Any such request will, of necessity, be denied by the Texas Racing Commission,” Cook adds.

In an article for horseracing.net, Cook is quoted as explaining how Texan tracks will, pending race-date approval by the commission, be permitted to run after July 1, but that imported and exported wagering signals will not cross the state line. In other words, “Texans supporting Texans,” Cook is quoted as saying.

To discuss some of the legal implications of Texas' approach, TDN spoke with Frank Becker, a noted equine lawyer and former adjunct professor at the University of Kentucky College of Law.

The following is a mix of written answers and a recorded conversation, slightly edited for brevity and clarity.

TDN: As I understood, the federal HISA supersedes state law. Am I wrong in thinking that?

Becker: No.

TDN: And so, this includes Texas?

B: HISA goes so far as to state it preempts inconsistent state law. Texas obviously has its haunches up by the federal government's intrusion into what it considers state business.

TDN: Cook is reported as saying that when it comes to pari-mutuel betting, only in-state wagering will be allowed come July 1. She also states that under the Texas Racing Act, no pari-mutuel wagering on live or simulcast races is permitted on races the state commission does not supervise. What are your thoughts about the arguments and the approach? Are they legal?

B: The federal government's authority is limited by the United States Constitution. Typically, the federal government justifies its constitutional authority for pervasive regulation on the 'commerce clause' of the constitution. The 'commerce clause' provides that the federal government has jurisdiction over 'interstate commerce.'

HISA's purported jurisdictional authority is based on the commerce clause. Thus, it relies on 'interstate commerce' as its justification. HISA attempts to codify the authority in the definitions of 'covered horse,' 'covered persons' and 'covered horserace.'

Texas appears to be attempting to be excluded from the definition of 'covered horserace.' That definition is: “The term 'covered horserace' means any horserace involving covered horses that has a substantial relation to interstate commerce, including any Thoroughbred horserace that is the subject of interstate off-track or advance deposit wagers.”

Although Texas attempts to avoid its races being covered horseraces by eliminating 'interstate off-track or advance deposit wagers,' that may not fully solve the problem because a Texas track might be considered to be otherwise having a 'substantial relation to interstate commerce.'

The federal government often takes a very expansive view of what constitutes 'interstate commerce,' and might argue that many other aspects of horseracing involve 'interstate commerce' such as the presence of horses, participants, and even equipment from other states.

It will be up to a federal court to ultimately determine this issue, although some courts have recently taken a dim view of regulatory overreach attempted to be justified by an expansive view of 'interstate commerce.'

TDN: Let's take the hypothetical scenario that Texas takes this approach on July 1. What you're saying is, if trainers, owners and jockeys and such who are registered with HISA, and compete in states under the supervision of HISA, if they also try to compete in Texas, that potentially could yolk Texas to the Interstate Horseracing Act?

B: Even if Texas succeeds in avoiding HISA for horseracing conducted in Texas, are horses and participants nevertheless subject to HISA, even with regard to activities in Texas? We look to HISA's definition of 'covered horse' and 'covered person.'

A 'covered horse' is any Thoroughbred from the time it begins a workout at 'a racetrack that participates in covered horseraces or at a training facility' and ends 'when the horse has been retired.'

The federal government might take the position that any Thoroughbred horse that has ever done a workout at any track outside of Texas, or any training facility anywhere, remains subject to HISA even while in Texas.

And because the definition of 'covered persons' is very expansive and applies to those dealing with 'covered horses,' the federal government might take the position that all racing professionals and owners are subject to HISA, even while racing in Texas, if the horse involved ever worked out outside the state of Texas.

If the federal government takes this approach, it appears that the only way to avoid HISA is for horses and participants to conduct activities exclusively in Texas.

Thus, Texas' effort to avoid HISA may end up excluding horses, trainers, owners, and other participants from being involved in racing in Texas, unless they confine all of their activities to Texas.

TDN: I know you're not a self-professed expert in the economics of the industry, but just on a common sense reading of the threatened scenario, how impactful could this be to the industry there? Is Texas shooting itself in the foot?

B: It could have a dramatic negative impact on Texas horse racing. It's hard to imagine it wouldn't.

I don't think it takes an economics expert to say, 'gosh, eliminating simulcasting is one thing, but if Texas has to keep out participants from other states, that's going to have an extremely deleterious effect.'

TDN: So, what do you think is driving this?

B: Do you want me to answer this?

TDN: Sure.

B: It doesn't appear to be difficulty in complying with the regulations. It appears to be somewhat philosophical. Texas has, traditionally, been averse to federal regulatory overreach into what it considers state business.

TDN: What do you think about the other argument Texas is making, that they're doing this to slow down HISA's implementation so as to better manage some of the problems that have arisen, and are expected to still arise?

B: It seems to me that the slowing down may be their main goal here. It's hard to say. I mean, [if so], it's a pretty drastic action to get them to slow down.

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Sam Houston Race Park was granted 46 Thoroughbred days in 2021 and had one of its most successful seasons since it opened in 1994 as the first Class 1 racetrack in Texas. One of the major highlights was its $5.3-million handle for the annual Houston Racing Festival.

Sam Houston Race Park also received approval for its annual Quarter Horse racing season. The 25-day meet will begin Apr. 22 and continue through June 18.

“We are pleased that we have approval for next year's live racing schedule,” said Dwight Berube, Sam Houston Race Park's General Manager. “We are in the midst of planning for 2022 and look to build on the momentum that we were able to achieve this year.”

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