Governor Abbott Signs Two Bills That Benefit the Texas Horse Racing Industry

(Austin, Texas - Friday, June 21, 2019) - After years of effort, the voices of Texas horsemen and women were heard by our legislators in Austin. On June 14, Governor Greg Abbott signed two pieces of legislation into law that will aid our state’s horse racing industry by providing a new revenue stream for purses while also providing stable funding for the Texas Racing Commission.

The law enhancing purses (HB 2463) will eventually put $25 million annually into an escrow account from a portion of the taxes collected on the sale, storage, and use of horse feed, horse supplements, horse tack, bedding and grooming supplies, and any other taxable expenditure directly related to owning, riding, or boarding horses. For perspective, this economic incentive fund is approximately equal to the total “earned purses” (from factors including a percentage of all wagers on or placed at Texas racetracks) generated last year in the State of Texas.

Of the $25 million, up to 70% ($17.5 million) will be available to racetrack operators for purses, and 30% ($7.5 million) will be available to the recognized breed registries to enhance incentive programs or for “any event that furthers the horse industry.” The recognized registries include the Texas Thoroughbred Association, Texas Quarter Horse Association, Texas Arabian Breeders Association, and Texas Paint Horse Breeders Association.

Economist Jon Hockeneyos estimates that by the third year of implementation, the state will more than recover the annual investment based on the increased economic spending spurred by higher purses. In other words, taxes collected on horse industry activity will be put back into the industry to grow it for the benefit of the horsemen and women and the state’s economy.

A recent economic impact study by TXP Inc. also shows that this incentive fund has the ability to generate in the neighborhood of 1,800 new jobs in the horse industry in Texas. Moreover, 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 law goes into effect on September 1.

The Texas Racing Commission will ultimately decide how the funds are to be distributed between the racetracks and the associations. Those rules can be proposed starting with the Texas Racing Commission’s meeting in the second week in September. The Texas Comptroller, the Texas Department of Agriculture, and the Legislative Budget Board also get to provide input on any proposed rules, which require at least 90 days before they can become official.

The other legislation passed that will benefit the Texas horse racing industry is HB 1995 that directs 1% of each simulcast pari-mutuel pool and 1.25% of each cross-species pari-mutuel pool to fund Texas Racing Commission operations.

Prior to this law, the Commission has been funded exclusively through annual racetrack license fees. In 2016, Laredo Race Park, Longhorn Downs and Saddlebrook Park gave up their pari-mutuel licenses. Together those tracks were paying almost $700,000 in license fees annually, and the remaining active license holders had their license fees increased to cover the Texas Racing Commission’s resulting budget shortfall. The high license fees and a lack of expanded gaming options at Texas racetracks to keep purses competitive with other racing jurisdictions created an increasingly financially challenging combination for track license holders.

“We are pleased and encouraged to see the Governor and Texas Legislature recognize the importance of our sport and take steps to strengthen and revitalize the Texas horse racing industry,” said Texas Horsemen’s Partnership Executive Director Marsha Rountree. “We are optimistic that this will allow Texas racing to again become regionally competitive and able to attract horses and horsemen back who have left the Lone Star State for economic reasons, as well as new horsemen and women.”

If you have questions, please feel free to contact the THP office at (512) 467-9799.
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