Yes, some horses have to race in a tongue tie. Sometimes a bit holder works to keep a horse's tongue under the bit and sometimes it doesn't and the trainer has to tie the horse's tongue -- and it has to be tied correctly. [A bit holder is a red rubber device that goes around each side of the bit between the horses mouth and Dee Ring on the bit and holds it up in the horse's mouth. It comes across the nose and up in-between its eyes and fastens to the crown of the bridle.]
A figure 8 does something completely different. It keeps that horses mouth shut without restricting its air.
When I applied for my first Trainers' License, I had to pass a 'hands on test' and had to show how each was properly applied and explain why they might be needed.
So, they all have their proper place in a race trainer's barn and a qualified trainer should know how they are used. If a horse has cut its tongue, it has gotten it over a bit in a race or fast workout. And, yes, a horse will 'quit' if they do.
If you now a horse like this , the owner needs to have a long talk with the trainer and probably needs another trainer. If it is an 'owner/trainer', they probably need to get a 'real' trainer. [Owner/trainer licenses are easier to get because these people do not train for the public. I've seen a few that were that stupid and they sure needed a real trainer.]