Arlington Downs, a 1¼-mile track with a 6,000-seat grandstand, opened on November 1, 1929, under the guidance of oil and cattle magnate William T. Waggoner. The track was located on his "Three D" stock farm half-way between Dallas and Fort Worth near Arlington, and the construction cost was nearly $3 million. All of this endeavor was a gamble for the millionaire since pari-mutuel betting, the largest income-producing aspect of horse racing, was illegal at the time of the track's opening. By use of his facility for prize races and for local civic events, Waggoner endeared himself and his track to the local citizenry. Simultaneously, the racing entrepreneur was spending thousands lobbying Austin for legalization of pari-mutuel wagering.
Although lawmakers were unsuccessful in their attempts to pass legislation in support of Waggoner's gamble, a test case arose when two racegoers, O. O. Franklin and J. B. Coulter, were arrested at Arlington Downs in the fall of 1931 for openly betting on the races. The resulting publicity and court case allowed racing proponents to make their case public. In 1933 the Texas legislature legalized pari-mutuel; it issued the first permit to a hastily expanded and remodeled Arlington Downs.
The income generated by pari-mutuel betting breathed new life into the racetrack, and thoroughbred owners from across the country sent their horses by rail to compete at Arlington Downs. During its first year of full operation under the new laws, 650 horses ran on the track, profits averaged $113,731 a day, and the average daily attendance was 6,734. As Arlington Downs increased its financial health, Waggoner's physical health broke. On December 11, 1934, he died of a stroke, thus depriving the racing industry of one of its most vocal and successful boosters. In Austin support was growing for a repeal of pari-mutuel as pro-racing lobbyists scrambled to buy time. By careful maneuvering, a decision on the issue was avoided during the 1936–37 seasons, and the popularity and prestige of Arlington Downs grew throughout the country. In 1937 the Texas Derby was heralded as the "tryouts" for the more famous Kentucky Derby.
At the end of the 1937 regular session the state legislature repealed the pari-mutuel laws. Arlington Downs was sold to commercial developers. The racetrack was used for rodeos and other events until 1958, when the buildings were razed. In 1978 a Texas historical landmark was placed on the site.