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Oklahoma Attorney General Files Lawsuit Challenging HISA

A federal lawsuit spearheaded by the state of Oklahoma to try and get the Horseracing Integrity and Safety Act (HISA) voided for alleged constitutional violations was filed Monday, meaning there are now two active legal challenges in the United States court system attempting to derail the regulatory powers of the HISA “Authority” prior to that regulatory body's planned 2022 phase-in.

According to a press release issued by the state attorney general's office in Oklahoma, the suit is challenging that “HISA gives a private corporation broad regulatory authority over Oklahoma's horse racing industry, and does so with no funding mechanism, forcing the financial burden onto states. If a state refuses to pay, the state's legislature and executive agencies would be punitively banned from collecting taxes or fees to enforce their own state regulations.”

The complaint demanding declaratory judgment and injunctive relief was filed Apr. 26 in United States District Court (Eastern Division of Kentucky) even though most of the plaintiffs are based in Oklahoma or West Virginia. The lawsuit's timing coincides with the start of the GI Kentucky Derby week festivities in that state.

Oklahoma and its racing commission are joined as plaintiffs by West Virginia and its racing commission. Three Oklahoma tracks–Remington Park, Will Rogers Downs, and Fair Meadows are plaintiffs, as are the Oklahoma Quarter Horse Association, the U.S. Trotting Association, and Hanover Shoe Farms, which is a Pennsylvania Standardbred breeding entity.

The defendants are the United States of America, the HISA Authority, and six individuals acting in their official capacities for the Federal Trade Commission (FTC).

“HISA grants the Authority broad regulatory power, yet the Authority is unaccountable to any political actor,” the complaint states. “The Authority has the exclusive power to craft regulations relating to doping, medication control, and racetrack safety in horse racing.

“HISA relegates the FTC to a ministerial role in which it is required to approve and issue certain of the Authority's regulations so long as they are consistent with HISA and 'applicable rules approved by the Commission.' And no federal official can remove the members of the Authority's Board of Directors. HISA thus delegates to a private body the full coercive power of the federal government while simultaneously making it completely unaccountable to the people.

“After creating this vast new federal regulatory structure and delegating it to a private corporation, Congress disclaimed any responsibility for funding the Authority itself. Instead, it forced the funding responsibility onto the states, imposing on them the choice of either funding the Authority with state funds or, if a state refuses, collecting fees directly from racing industry participants in that state while punishing the state by banning it from collecting similar taxes or fees itself.”

The complaint summarizes: “Plaintiffs…pray that this Court: 1) declare that HISA violates the U.S. Constitution on its face and is therefore void; 2) enjoin the defendants from taking any action pursuant to HISA; and (3) award nominal damages.”

Some of the FTC defendants in this new lawsuit overlap with those named in a March lawsuit over alleged non-constitutionality filed by the National Horsemen's Benevolent and Protective Association and some of that organization's individual state members.

Oklahoma Attorney General Mike Hunter said via press release that, “If allowed to go into effect, this act will harm states like Oklahoma that have a robust equestrian industry.

“Additionally, the HISA disregards foundational law within the Constitution, including the Tenth Amendment. Congress cannot force a state legislature to either appropriate dollars for a private corporation, like [HISA], or be banned from passing legislation imposing certain taxes or fees. That puts Congress in control of state branches of government, which violates the law.

“Oklahoma already has government oversight in place through the Oklahoma Horse Racing Commission, which does what the federal government seeks to take over and give to a private corporation completely unaccountable to Oklahoma voters,” Hunter said.

The defendants could not be reached for comment prior to deadline for this late-breaking story.

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Thoroughbred Safety Coalition: HISA ‘The Beginning Of A New, Safer Era For Our Storied Sport’

To all of the hard-working individuals who make up the Thoroughbred community and the fans who share in our love for the horses that set our sport apart from all others:

As one of our nation's oldest and most celebrated pastimes, racing's traditions run deep. However, the most durable traditions are the ones that evolve and improve with time. Amid the pageantry and beauty, we've faced challenges around equine safety and racing integrity throughout our history, which is why leaders across the Thoroughbred industry came together to make the changes necessary to bring our sport into the 21st century and secure its future for generations to come. Leaders in Thoroughbred racing agree with those who have argued for greater transparency and more rigorous safety standards, and are united in choosing to prioritize, above all else, the safety and well-being of our equine athletes.

Through the collaborative work of the Thoroughbred Safety Coalition (the Coalition), its members, and broader efforts by leading organizations across the Thoroughbred industry, including The Jockey Club, we worked with lawmakers to help pass The Horse Racing Integrity and Safety Act (HISA), which was signed into law on December 27, 2020.

Under the oversight of the Federal Trade Commission (FTC), the independent Horseracing Integrity and Safety Authority (the Authority) will implement consistent, transparent, and enforceable rules across all state racing jurisdictions. These efforts will be divided into an Anti Doping and Medication Control Program, which will be executed and enforced in partnership with the United States Anti-Doping Authority (USADA), and a Racetrack Safety Program. Most of the medication, organizational and operational reforms that the Coalition and the National Thoroughbred Racing Association (NTRA) have adopted and continue to advocate for will likely serve as a basis for these programs. Additionally, the Authority will work with state regulators and horsemen's groups to ensure the most efficient and cost-effective approach to implementing the new programs.

The passage of HISA represents a monumental turning point for our traditionally decentralized industry, and we hope it will go a long way in increasing public confidence in the sport. Even stakeholders who historically sought to avoid government intervention in racing are embracing HISA because they understand that it represents a roadmap to a safer sport and will modernize the industry through strengthened accountability measures.

HISA has given all of us a mandate to build on the unprecedented display of unity that brought us to where we are today. The formation of the independent Authority as a vehicle to establish and implement uniform medication rules and racetrack safety standards will codify the culture of safety and integrity that the Coalition was founded to strengthen and protect. The Coalition, The Jockey Club, the NTRA and our respective members are proud to have played a role in this industry-wide effort that will improve our sport. Now, we must work together to support HISA's continued success and the success of Thoroughbred racing for generations to come.

This is the beginning of a new, safer era for our storied sport, and our work has only just begun. We can't think of a greater task to undertake.

Sincerely,

American Association of Equine Practitioners

Aqueduct Racetrack

Belmont Park

Breeders' Cup Limited

Churchill Downs, Incorporated Colonial Downs Racetrack

Del Mar Thoroughbred Club Fair Grounds Race Course

Golden Gate Fields

Gulfstream Park

Keeneland Association Inc.

Kentucky Thoroughbred Association Laurel Park

Monmouth Park

National Thoroughbred Racing Association

New York Racing Association, Inc. (NYRA)

Parx Racing

Pimlico Race Course

Presque Isle Downs

Santa Anita Park

Saratoga Race Course

Suffolk Downs

The Jockey Club

Thoroughbred Owners & Breeders Association

Thoroughbred Safety Coalition

Turfway Park

1/ST RACING

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USTA To Join Upcoming Lawsuit Challenging Horseracing Integrity And Safety Act

By a vote of 35-8, the United States Trotting Association Board of Directors on Friday, April 16, elected to join an upcoming federal lawsuit challenging the constitutionality of the Horseracing Integrity & Safety Act (HISA), which was passed by Congress and signed into law last year. The USTA repeatedly has expressed reservations about the legislation's legality, in particular whether or not it violates the Constitution's non-delegation doctrine and anti-commandeering principle.

In a statement made in September 2020, USTA President Russell Williams said, “The constitutional concerns raised by HISA are substantial and pervasive. Those concerns embrace the structure and powers of the regulatory body at the heart of the bill and extend even to the bill's more peripheral provisions.”

On Friday, Williams further elucidated his concerns to the USTA Board in prepared remarks in which he also assured the board that the Association will assume no portion of the cost of district court proceedings.

If allowed to stand, HISA would remove from the states the power to regulate racing medication and safety matters and give them to a private entity, the newly created Horseracing Integrity & Safety Authority (Authority). HISA is scheduled to go into effect no later than July 1, 2022. The Federal Trade Commission will oversee a rule-making process that eventually will establish and approve the medication control and racetrack safety programs to be enforced by the Authority. The new law stipulates that HADA initially will be funded by loans taken out by the Authority, which will then be repaid by fees assessed to the state racing commissions. No price tag has yet been attached, however, nor has it been determined which segments of the industry will pay for HISA.

The legal action that the USTA will be joining is expected to be filed shortly by the State of Oklahoma and Hanover Shoe Farms. That follows a similar claim against HISA brought last month by the National Horsemen's Benevolent & Protective Association (NHBPA) and 11 of its affiliated state organizations. That suit, filed in the Northern District Court of Texas, alleges the law creates a private organization and gives it federal authority, which it claims is unconstitutional.

An attendance and voting summary appear below. A “yes' vote reflects support for joining the lawsuit, while a “no” designation indicates opposition to doing so.

Present: C. Antonacci, I. Axelrod, S. Beegle, D. Bianconi, D. Bittle, J. Bluhm, M. Breuer-Bertera, B. Brown, J. Cross, G. Ducharme, Chairman J. Faraldo, M. Ford, J. Frasure, R. Gillock, K. Greenfield, J. Gregory, T. Haight, S. Hedington, J. Hensley, S. Hoovler, J. Ingrassia, M. Kimelman, S. Lilly, Vice Chairman M. Loewe, D. Marean, J. Matarazzo, S. McCoy, C. McErlean, R. Miecuna, Treasurer J. Miller, J. Mossbarger, S. Oldford, J. Pennacchio, J. Reynolds, A. Roberts, R. Roland, J. Roth, J. Settlemoir, D. Siegel, D. Spriggs, M. Sweeney, A. Tetrick, M. Torcello, S. Warren, President R. Williams, J. Zambito

Not Present: B. Alexander, D. Ater, L. Calderone, C. Callahan, K. Crawford, B. Kenney, C. Leonard, R. Mackinnon, S. O'Toole, S. Peine, T. Powers, R. Schnittker, J. Stratton, G. Wand

Yes: Axelrod, Bianconi, Beegle, Bittle, Breuer-Bertera, Brown, Cross, Ducharme, Faraldo, Frasure, Gillock, Gregory, Haight, Hedington, Hensley, Hoovler, Ingrassia, Kimelman, Lilly, Loewe, Marean, Matarazzo, McCoy, Miecuna, Miller, Oldford, Pennacchio, Roberts, Roth, Spriggs, Sweeney, Tetrick, Torcello, Williams, Zambito

No: Antonacci, Bluhm, Ford, McErlean, Roland, Settlemoir, Siegel, Warren

*Two votes from directors who were confirmed to be present on the call but experienced technical difficulties in being heard were added to the final tally.

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Canterbury VP Andrew Offerman Joins Writers’ Room

With smaller tracks gradually disappearing over time, it takes a concerted effort to build a fan customer base that can sustain your business in a non-marquee racing state. Minnesota's Canterbury Park is one of those outliers, a track whose management has put in the work to run a profitable enterprise while managing to attract novice fans and satisfy horseplayers alike, all without the buttressing revenue of slots.

Wednesday morning, Canterbury's VP of Racing Operations Andrew Offerman joined the TDN Writers' Room presented by Keeneland to talk about the track's blueprint for standing out on a lesser circuit. Calling in as the Green Group Guest of the Week, Offerman discussed the track's decision to drop its Pick 5 takeout to an industry-low 10%, what it's trying to do to attract new owners and trainers and how to still bring fans to the track in 2021.

“We've had a couple different forays into takeout reduction,” Offerman said regarding the successful Pick 5 experiment. “We did some more across-the-board cuts a few years ago, and that didn't work as well as the Pick 5 takeout reduction did. Last year, when we were kind of forced to change our business strategy from being really on-track centric to trying to focus more on off-track betting markets, we knew we had to do something to become more attractive, beyond just running through the middle of the week. So looking at our Pick 5 and trying to do something unique with that wager as it continues to grow in popularity seemed like a good opportunity. The results were great. It enhanced our visibility, did a lot for our other pools around those races and really showed us a new ability to generate interest in a pool that ended up averaging around $80,000, which for us is pretty substantial.”

Faced with the difficulty of drawing owners, trainers and horses to a relatively remote part of the country, Offerman laid out some new incentive programs Canterbury is trying out for the 2021 meet, which starts May 18.

“We've always tried to come up with unique things,” he said. “We realized that when you look at the normal areas that race across the country, Minnesota's not necessarily on their map. So we came up with an early-meet incentive program that gives everyone who starts in an open overnight race an extra $1,000 throughout the month of May to try to help offset the costs of shipping, because we acknowledge that most people have a long van ride to get here from wherever they might be during the winter. We also guarantee stipends per starter over the course of the meet. It's tiered by purse level, but starts at $200 and works its way up from there. We've also been able to offer an interest-free loan program for qualified applicants where people can basically sign a zero-interest shipping loan that they can pay back over the course of the summer.”

Elsewhere in the podcast, the writers responded to the reaction from Bill Finley's critical op/ed about horsemen's groups' suit over HISA, and, in the West Point Thoroughbreds news segment, analyzed the delinquent Ramseys story and positive returns from OBS March. Click here to watch the podcast; click here for the audio-only version.

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