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HISA CEO at Symposium: ‘To External Threats, We Need to Speak in One Voice’

Lisa Lazarus, the chief executive officer for the Horseracing Integrity and Safety Authority (HISA), on Tuesday made an appeal for sport-wide unity with United States racing on the cusp of a Jan. 1 roll-out of HISA's Anti-Doping and Medication Control rules.

“I want you to think about what this sort of change is going to mean for the industry,” Lazarus said. “It's going to look and feel different, and it's going to allow us to say to those that are our detractors, to those that doubt horse racing is clean, 'Look, we now have a rigorous, comprehensive program that is uniform; where laboratories are harmonized.'”

Lazarus made her remarks as part of the kickoff to the 2022 Global Symposium on Racing hosted by the University of Arizona Race Track Industry Program in Tucson, Arizona. She briefly acknowledged, but did not dwell upon, the looming legal fight that HISA faces that could derail its very existence.

The U.S. Court of Appeals for the Fifth Circuit on Nov. 18 ruled that HISA is unconstitutional, and the Sixth Circuit Appeals Court will hear oral arguments Dec. 7 in a similar case that also seeks to reverse a lower court's decision to dismiss a constitutional challenge.

Although petitions for legal stays, rehearings, or potential actions by Congress are all in play for the near future, HISA is otherwise operating in business-as-usual mode until an expected Jan. 10 mandate gets issued by the Fifth Circuit to enforce its order. So in that spirit, Lazarus kept her Dec. 6 remarks forward-focused.

“One of two things are going to happen,” Lazarus said. “Either we're going to be able to show, and I think we will, that the vast majority of racehorses are competing clean. And if we have [drug] positives, we'll be able to show that we're now taking significant action, that we're now on our own initiative cleaning things up. So this, to me, is a game-changer.”

Lazarus said she would like industry stakeholders to think of HISA as a “stabilizer.” She gave the analogy of a stable stock market, in which that stability allows growth to occur.

Lazarus also mentioned a couple of ways in which she didn't want stakeholders to think of HISA: Not, she said, as an entity “making rules that complicate people's lives. Not to being sort of a top-down regulator. But genuinely helping to grow the industry through creating uniformity; through creating this protective sheath around issues of integrity and safety.”

Wrapping up, Lazarus underscored the need for unity.

“We need to be united as an industry. We can fight, and scream, and yell, and debate and malign behind closed doors. But to the outside public, to the external threats, we need to speak in one voice,” Lazarus said.

“This is our moment in time. This moment is very unlikely ever to replicate itself,” Lazarus said. “We can't lose this moment in time.”

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HISA Opponents Spar On Fifth Circuit’s Unconstitutionality Ruling

With the United States Court of Appeals for the Sixth Circuit set to hear oral arguments Dec. 7 in a case that seeks to reverse a lower court's decision to dismiss a constitutional challenge of the Horseracing Integrity and Safety Act (HISA), the two opposing sides have filed new documentation pertaining to a separate but related Nov. 18 decision by the Fifth Circuit that did, in fact, declare HISA unconstitutional.

Although it's tough at this stage to get a consensus on what might happen with HISA over the next six weeks until an expected Jan. 10 mandate gets issued by the Fifth Circuit to enforce its order (petitions for legal stays, rehearings, or potential actions by Congress are all in play), there is one issue that HISA proponents and opponents seem to agree on: If the Sixth Circuit renders an opinion that is in direct conflict with the one the Fifth Circuit just came up with, HISA's fate could very well end up getting decided by the U.S. Supreme Court.

In the Sixth Circuit case, the plaintiffs are the state of Louisiana; Oklahoma and its racing commission, plus West Virginia and its racing commission. Three Oklahoma tracks-Remington Park, Will Rogers Downs, and Fair Meadows-are also plaintiffs, as are the Oklahoma Quarter Horse Association, the U.S. Trotting Association, and Hanover Shoe Farms, 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).

On Apr. 26, 2021, the plaintiffs had sued, alleging that “HISA gives a private corporation broad regulatory authority.” On June 2, 2022, that claim was dismissed by a judge in U.S. District Court, Eastern District of Kentucky (Lexington) for failure to state a claim of action. The plaintiffs then appealed to the U.S. Sixth Circuit.

While that Sixth Circuit appeal was pending, the Fifth Circuit came out with its decision in the similar case against HISA that was led by the National Horsemen's Benevolent and Protective Association (NHBPA).

That Nov. 18 ruling stated that HISA is unconstitutional because it “delegates unsupervised government power to a private entity,” and thus “violates the private non-delegation doctrine.” The order remanded the case back to U.S. District Court (Northern District of Texas) for “further proceedings consistent with” the Appeals Court's reversal.

So naturally, both parties prepping for the Dec. 7 oral arguments in the Sixth Circuit case wanted to let that court know of this similar U.S. Appeals Court order, with each side putting its own spin on the recently issued unconstitutionality decision.

The plaintiffs/appellants led off with a Nov. 21 filing.

“The Fifth Circuit reversed the Northern District of Texas's decision on which Defendants-Appellees and the district court below relied, and the court emphatically rejected the very arguments that Defendants-Appellees assert in defense of HISA here,” the document stated.

“The Fifth Circuit held that HISA violates the Constitution's private nondelegation doctrine because 'the Authority is not subordinate to the FTC' [and] 'Congress has given a private entity the last word over what rules govern our nation's Thoroughbred horseracing industry' [and the] 'Authority's power outstrips any private delegation the Supreme Court or our court has allowed.'”

The plaintiffs' filing summed up: “The Fifth Circuit cogently rejected all of the arguments that Defendants-Appellees' raise here. This Court should do the same and reverse the judgment of the district court.”

The U.S., HISA and FTC defendants had a different interpretation in their own Nov. 28 filing.

“The Fifth Circuit panel's decision to invalidate HISA rests on at least two fundamentally mistaken premises,” the pro-HISA reply stated.

“First, the panel determined that 'the FTC's consistency review does not include reviewing the substance of the rules themselves.' That is untrue: HISA requires the FTC to apply its independent judgment in reviewing the substance of all proposed rules for consistency with HISA's standards.

“Whether characterized as an exercise of policy discretion or evaluation for statutory compliance, the FTC (not the Authority) ultimately decides, e.g., if a proposed medication amount is 'the minimum necessary to address the diagnosed health concerns identified during the examination and diagnostic process,' or if a proposed racetrack-safety standard is 'consistent with the humane treatment of covered horses…'”

“Second, the panel determined that the FTC lacks power to modify HISA rules,” the pro-HISA filing continued. “That contradicts (without addressing) the FTC's interpretation of its independent rulemaking authority [and] turns constitutional avoidance on its head….”

The pro-HISA reply summed up: “For both reasons, the Fifth Circuit panel's decision is wrong-and stands at odds with not only the two other federal courts that have upheld HISA, but also 80 years of precedent from the Supreme Court [and] the courts of appeals.”

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“This is a Voice for All of Us”: Q&A with TOC’s Bill Nader

Last week, industry organizations announced the launch of the California Horse Power Coalition, a collaborative endeavor sold as something of a unified foghorn to extol the good word of the sport's economic and cultural impacts.

The list of Coalition members reads like a who's who of California racing industry mainstays, including Del Mar, Santa Anita, the Thoroughbred Owners of California (TOC), the California Retirement Management Account (CARMA), the California Thoroughbred Breeders' Association (CTBA) and others.

To discuss this new venture–along with a suite of other timely industry talking points–the TDN spoke with newly minted TOC president and CEO, Bill Nader.

Before joining the TOC, Nader's decades-long career in industry management included long stints in senior positions with both the Hong Kong Jockey Club and the New York Racing Association.

The following is from a longer interview, heavily edited for brevity and clarity.

TDN: What was the genesis for the California Horse Power Coalition?

Nader: Well, it was really to speak up for California horse racing and the equine industry [in general] to provide simple and clear communication that shows the enormous contribution we make to jobs, agriculture and tourism across the state. We've all come together.

TDN: Is this because you think the industry's economic clout hasn't really been relayed to the public in a very effective manner so far?

Nader: When I say to speak up for California horse racing, it's really to make sure that the correct messaging is going out. The mission here is to preserve, protect equine culture and the industry, and bring awareness to the significant benefits that we bring to the state.

Horse racing is one of the oldest and most celebrated sports in the world. Through the coalition, we highlight not only the economic impact but also widespread employment and the part we play to help drive tourism.

When I would come over here for the Breeders' Cup with the international community–people coming from Europe and Asia–they were positively blown away at how beautiful these racetracks are. Then, when you add in the history and the tradition with the value that it creates for the state–in terms of the creation of jobs, agriculture, tourism–it's a pretty powerful position to be in.

We want to draw that out and make sure it's communicated in a way that people easily understand.

TDN: What specific events or actions are planned through the coalition?

Nader: We'll work together as a unit to deliver unified messaging to get the maximum impact. I think horse shows and expositions will be a good opportunity, but also, each of the partners using their own platforms to get the message out and provide opportunities to like-minded people who love horses and love horse racing to be able to join in.

TDN: How do you plan to get this message out to the people that need to hear it the most? Targeting politicians, for example?

Nader: We want to get it to the widest possible audience within the state to really understand who we are and what we represent and what we bring. So yes, that would be part and parcel of the segment that we're trying to reach. But back to the original point, I think it's about speaking up for California.

Look at it over history, from Seabiscuit to Flightline, all the great horses in between, the high-profile people–whether they're owners, trainers, or jockeys that have played an important role during that time–but also the people who do the work on the backstretch each and every day. This is a voice for all of us, right?

It's a voice for all of us to be able to say, 'we've been here a long time, we've been a big part of California, we've got great history and tradition, we've great people, we've a great story to tell, and now we're going to tell it.' This coalition is a vehicle to deliver that message that we should all be very proud of.

TDN: If anyone is interested in getting involved, what should they do?

Nader: Right now, we're asking people to join in. We'll get a list together, and then with that, we can then determine next steps, how best to leverage what we have. There will be the rollout over the different platforms at the different shows and expositions. Hopefully people will have ideas for us, too. It's going to be a two-way communication.

TDN: You've landed at the TOC in the midst of various swirling developments for the state's industry, none more so than the shifting sands beneath the Horseracing Integrity and Safety Act (HISA). Last week, the California Horse Racing Board (CHRB) reaffirmed its intent to enforce HISA's rules in the state. Given the question marks over HISA's constitutionality–and therefore, about its enforcement authority moving forward–do you think that was the right move?

Nader: The right move? How do you mean?

TDN: The CHRB supporting enforcement of HISA right now.

Nader: We have a TOC member, Rick Gold, who's been at the forefront from day one representing us with HISA. He's now on the [HISA] Horsemen's Advisory Group. He's been there every step of the way.

California is also in a unique position that our rules are closely aligned with the HISA rules. [Despite] the recent uncertainty in the appeals courts and the cloud of uncertainty going forward, we are committed and have been committed to safety and integrity. Over the last three years in California, we've come a long way and put extraordinary emphasis on making these improvements.

From where we stand, we remain committed to safety, integrity, and we also believe in uniformity. Our interest in that is steadfast.

TDN: Are you concerned that moving forward, HISA-related rulings that come down in California will be subsequently appealed or challenged on the grounds that they're unconstitutional?

Nader: We have to take a step back now and wait to see how the HISA situation plays out. Fortunately, we're coming at it from a position of strength. But it's too speculative for me to really say with any clarity as to what may or may not be in a situation like that.

TDN: Another key industry issue has been sports betting, with both sports betting-related ballot measures failing in the recent elections. What are the next steps for sports betting in the state?

Nader: We need to regroup and find a way to work collaboratively with industry partners to determine the next steps. I think it's too soon after the election to have a firm plan in place, but California is a major market and sports betting is available in about 28 states.

We hope to see some immediate upside early next year through 'merged wallet,' which makes horse racing available on sports betting platforms across the country. That could bring some upside to handle on our races that are conducted here in California, and hopefully that results in some real upside for purses.

TDN: Looking forward to any future sports betting efforts here in California, is it too soon to speculate how the racing industry might fit into that?

Nader: The one thing I would like to say to that, betting on horse racing has been a big part of California for about a hundred years at highly regulated, well-established racetracks.

So, expanding the menu for legal wagering to other sports–with wagering conducted at racetracks–might be the only entry point to help channel gaming demand responsibly and also create a new stream of income for the state. We're in a strong position to fit the racing industry into whatever is considered possible in the next cycle.

TDN: Outside of Del Mar–which once again produced impressive numbers this summer–field size is an ongoing industry concern in the state. How do you see your role at the TOC in helping to bolster field sizes here in California?

Nader: I think our role is to really do anything within our means to improve the value proposition for horse owners, which translates into trickle down benefit to other stakeholders, such as trainers, jockeys, everybody. I think the one thing about field sizes, the betting public should never be overlooked. This is where the relationship between the racing product and the betting public are connected.

Look, it's a growing concern, not just across the country but globally. In my last days in Hong Kong, we were concerned that field sizes were averaging just under 12 horses per race, which sounds like a lot to anybody here, but it was a bit troubling in Hong Kong because the aim was to average 12 and a half horses a race. But there was a real concern there that it was dropping to 11.98.

So, it's relative, whether it be Asia, Europe, America, the decline in the foal crop and the number of races and supply and demand–how it all really works together–but in the end, we want to put forward competitive, entertaining content for the betting public which will then drive handle.

We are taking a serious look at all the resources that are available to us to then target those resources to achieve the best outcome over the full calendar year.

TDN: What are we doing right and what are we doing wrong about field sizes?

Nader: Look, having worked in New York and in now coming to California, I think the brand image of a Saratoga or Del Mar, they have a built-in advantage. But there are things here like Ship & Win and other things that we have in California.

This is where I think we need to take a little bit more time and really evaluate what works, what doesn't work, how we can target our resources more effectively, more efficiently, and come up with a plan that really works not only for the TOC, but also for the tracks and for the horseman and for the public. When you look at something like this, you have to take the 360 view, think of how it impacts everybody.

When it comes to this topic, the betting public is a big part of the audience. It's not just the owners, trainers and tracks. This is what we're putting forward. On one side, we're looking for quality. But we also want quantity. So, it's a matter of how we put those pieces together.

We don't have that secondary income stream that other states have through an alternative form of gambling, that's why we need to be very, very sure we're being effective and efficient in our use of resources.

TDN: Field sizes, of course, are closely tied to handle which is tied to purses. Can current levels in the purse account be maintained if field sizes and handle continue to take a knock?

Nader: I think it can. We'll make an announcement soon enough for Santa Anita. The first condition book for Santa Anita's [winter/spring] meet will be coming out soon.

With 'merged wallet' coming on the scene in January, we're cautiously optimistic. In the beginning, there will be about five states which will [use] 'merged wallet.' We can then monitor what the benefits or what the positive impact is from that. And then we'll have a better idea in terms of purse structure as we move forward into the new year where we stand.

This is a new source of an untapped income where we don't have a way to really quantify how much that might be.

TDN: Are you able to speculate?

Nader: Well, different people have different opinions on it. I really don't. It could be something in the neighborhood of $5 million for California.

TDN: Annually?

Nader: Yes.

TDN: By the time your tenure ends at the TOC, what do you hope to have achieved?

Nader: I think from the standpoint of horse ownership, the single most important thing is to make purse money more attractive, to increase the quality of racing, to present racing in a way that it is–from the standpoint of the integrity of racing and the integrity of the wagering–to make it as good as it can be for the racing fan. I think those are the fundamental things that help drive results.

I always thought there were four pillars for success in Hong Kong and I don't think it differs here: Quality of racing, integrity of the racing and wagering, field sizes to make the racing attractive, and liquidity. Liquidity, that comes with greater handle. I think all those things are connected, and if you can get those four pillars correct, then you can walk away thinking, 'job well done.'

It's not easy. I get that. But those are the things that we really have to work on together because the TOC can't do that on its own, and the racetracks can't do that on their own.

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ARCI’S Ed Martins Joins The TDN Writers’ Room

Confusion has reigned ever since an appellate court ruled last week that the Horse Racing and Integrity Act (HISA) is unconstitutional. So what does that mean for the state racing commissions and what should they do going forward? The TDN Writers' Room presented by Keeneland called upon Ed Martin, the chairman and CEO of the Association of Racing Commissioners International to help clear up the situation. Martin was this week's Green Group Guest of the Week.

Martin believes that considering the situation HISA should drop the Jan. 1 date and put off taking over drug testing until after the situation has been fully resolved in the courts.

“HISA could fix this themselves by going back to the FTC and saying we're going to put off enforcement of our drug rules,” Martin said. “And they could put it off six months and hopefully we'll get a final court answer by then. But it doesn't look like we're going to get a final determination of their constitutionality any time soon. So this is going to go into a great gray area.”

Martin said he feared that if HISA were to sanction someone after taking over drug testing and enforcement from the state racing commissions that the ruling could be thrown out because the court has said that HISA is unconstitutional.

“We're in a situation where we have a sport where the HISA rules will apply on January 1st and people will get sanctioned for a drug violation or a doping violation under the HISA Rule,” Martin said. “Then if HISA is ultimately declared unconstitutional and invalid, then that violation goes away. It doesn't exist. The penalty goes away. And you've redistributed purses. So this has the potential to be an enormous, chaotic situation.

“There's also been a number of jockeys across the country who have been sanctioned for HISA crap rule violations. Well, if there aren't constitutional, those violations really don't exist. So expect litigation.”

Martin said he is hearing that should HISA go through some tracks will elect not to take part. That would mean they cannot send out their simulcast signal, a price some may be willing to pay.

“There are tracks that, and I'm not at liberty to say who they are, that are considering not simulcasting their signal to come out from under HISA,” Martin said. “And there are states where the tracks in that state, some of them will simulcast and some of them won't. It depends on their economic viability. This was supposed to bring uniformity to the sport. Right now, it's kind of going in the other way. It's off the rails right now. ”

Elsewhere on the podcast, which is also sponsored by Coolmore, Lane's End, the Kentucky Thoroughbred Association, XBTV and https://www.threechimneys.com/ West Point Thoroughbreds, Bill Finley, Zoe Cadman and Randy Moss gave their own take on the HISA mess. They also looked at Frankie Dettori's decision to join the Santa Anita riding colony starting on Dec. 26 and hue and cry over overly aggressive riding in New York and the feeling that the NYRA stewards are not doing enough to discipline jockeys who go over the line.

To listen to the audio version only, click here. To watch the entire video, click here.

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