Search Results for: texas

RACETRACKS ARE NOT THE ONLY COMPANIES DISCRIMINATED AGAINST IN TEXAS

Earlier this year (February 9 and 13), Horse Racing Business ran two posts on the unfavorable state government-imposed environment for racetracks in Texas (click here for reference.)   For example, Texas prohibits wagering via the Internet/telephone and pari-mutuel wagering on historical races.

Given Texas’ well-deserved reputation for fostering business and entrepreneurship, I thought the forgoing bans were uncharacteristic for the Lone Star state.  I changed my mind when I read about Wal-Mart’s current lawsuit against the Texas Alcoholic Beverage Commission.

Texas has a 1995 law that restricts hard alcohol (excludes beer and wine) sales to stand-alone stores owned by private companies holding state-issued liquor licenses.  Further, under a 1977 Texas law, a private company cannot own more than five store permits, with the huge exception that the principal owner can buy additional permits from a “first-degree” blood relative.  In other words, closely related family members can own an unlimited number of permits and stores.

In Texas, public companies (defined as firms with more than 35 stockholders) like Wal-Mart are confined to selling beer and wine.  Texas is the sole state to permit private companies to sell hard alcohol but not public companies.

In addition to Wal-Mart’s lawsuit, the corporation has joined Kroger and a number of other public companies and groups in seeking legislative relief.

The view here is that, while Texas generally offers a “can do” climate for doing business, the state nonetheless has laws and attitudes that are remnants of an insular culture intended to protect small business from the “predatory” Wal-Mart’s of the world.  The same lingering culture explains the legislature’s paternalistic stance towards its citizenry when it comes to such putative temptations as advanced deposit wagering and betting on historical races.

Copyright © 2015 Horse Racing Business

OVERLOOKED ATHLETES TURN INTO STARS

When quarterbacks Josh Allen of the Buffalo Bills and Baker Mayfield of the Cleveland Browns led their teams to places in the 2020/2021 National Football League playoffs, it reminded me again about how exceptional athletes, human or equine, are often overlooked early-on by talent evaluators with a reputation for expertise.

Josh Allen in high school sent approximately 1,000 emails to college coaches inquiring about playing for them.  Only the University of Wyoming showed interest. After a year in junior college, Allen transferred to Wyoming and took the Cowboys to a conference championship and two bowl games.  Drafted by the Bills at number seven in the first round of the 2018 NFL draft, Allen developed into a franchise-caliber quarterback.  Similarly, Browns quarterback Baker Mayfield was a walk-on at Texas Tech University before transferring to the University of Oklahoma, where he won many honors including the coveted Heisman Trophy.  He was drafted first overall by the Browns in 2018. 

Many such cases can be readily cited in any sport.  How in the world did Michael Jordan get rejected by his junior high’s basketball coach? Johnny Unitas was one of the greatest NFL quarterbacks of all time, yet he was virtually unwanted by the pros out of college.  Tom Brady, arguably the greatest NFL signal caller ever, was a sixth-round pick of the New England Patriots. The list goes on.

In horse racing, John Henry and Seattle Slew were low-priced yearlings and Sunday Silence and Northern Dancer did not meet modest reserve prices at auction and were returned to their consigners.  The recently retired Maximum Security, who won over $12 million on the track, as a 3-year-old ran in a $16,000 claiming race.  Tiz the Law, also recently retired with earnings of over $2.7 million, was deemed insufficiently qualified for the 2017 Saratoga Fasig-Tipton select sale of yearlings and instead brought $110,000 in the Fasig-Tipton sale of New York breds.

No matter the sport, the potential is always there to find a diamond in the rough.  In horse racing, a seven-figure yearling at auction may temporarily get the publicity.  But two or three years later, a lesser purchase, or a reserved not attained, may get star billing.  This is the hope and challenge of buying a future racehorse.

Copyright © 2021 Horse Racing Business

WILL PETA HAVE BOARDROOM ACCESS TO LOBBY FOR ITS PROPOSALS?

The People for the Ethical Treatment of Animals organization recently announced that it had purchased small amounts of stock in publicly traded racino companies, namely Boyd Gaming, Gaming and Leisure Properties, Penn National Gaming, and VICI Properties.  Penn National Gaming owns the largest number of racetracks of any company in North America.

These firms operate racinos in Louisiana, New Mexico, Ohio, Pennsylvania, Texas, and West Virginia.  Some of their many racetracks are Belterra Park, Evangeline Downs, Mahoning Valley, Mountaineer, Penn National, and Thistledown. 

PETA reportedly intends to offer eleven reform recommendations to the companies in which it now owns stock, such as banning medication for a horse in the two weeks leading up to a race; replacing dirt-track surfaces with synthetic surfaces; and banning whips (a change that lies within the purview of state racing regulatory bodies rather than racetracks.)

Kathy Guillermo, PETA Senior Vice President, said: “Track owners in California and Kentucky are changing their rules and sparing horses a gruesome death, and every track owner in every racing state needs to do the same.  PETA is eager to get inside the boardroom and push racetracks to make simple changes that will make a world of difference for vulnerable horses.”

The purpose here is not to discuss the merits of the eleven PETA proposals.  Rather, the intention is to evaluate the practicality of the stated PETA goal “to get inside the boardroom and push racetracks to make simple changes…”

Publicly traded companies almost always have social and governance initiatives advanced at annual meetings by activist shareholders that their respective boards of directors routinely advise shareholders to vote down, which they almost always do.  So it would be difficult, to say the least, for PETA to get a majority of shareholders to go along with a proposal that a board of directors is against.  Moreover, the eleven recommendations PETA has put forward are largely tactical matters that are decided by management rather than by boards of directors who properly focus on macro strategic and governance decisions.

The view here is that PETA will not have much success getting an audience with the board of directors of the aforementioned casino companies, for two reasons:  PETA does not own enough shares of stock to have much influence and most of their proposals are not sufficiently strategic to warrant the attention of boards of directors of large public corporations, especially in companies wherein horse racing is subordinate in importance to casino operations.

On a personal note, although I own a sizeable amount of stock in a well-known casino and racetrack corporation, it is doubtful that I could get the chief executive officer on the phone, much less influence a board of directors meeting.

Copyright © 2020 Horse Racing Business