OwnerView To Host Webinar On Horseracing Integrity And Safety Authority Registration

OwnerView announced today that it has added a panel to its Virtual Owner Conference series with representatives from the Horseracing Integrity and Safety Authority (HISA) to assist owners with the registration process for HISA. The Zoom webinar will be held Thursday, June 16, at 1 pm and will last about 60 minutes. Participating in the webinar from HISA will be Lisa Lazarus, chief executive officer; Steve Keech, technology director; Ann McGovern, director of Racetrack Safety; and John Roach, general counsel. The session will include time to submit questions to the HISA team.

The Horseracing Integrity and Safety Act, which was signed into law in Dec. 2020, established HISA as an independent agency to draft and enforce uniform safety and integrity rules in Thoroughbred racing in the United States. The bill goes into effect July 1, and owners are among the list of individuals who must register with HISA as a covered person prior to this date. Interested individuals can sign up for the virtual conference at ownerview.com/event/conference or send an email to Gary Falter, gfalter@jockeyclub.com. The webinar will be recorded and made available on the OwnerView YouTube channel for owners that cannot attend the live session.

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Bennett Liebman: New Fifth Circuit Ruling ‘Uphill Fight’ for HISA

With just over a month before the racetrack safety component of the Horseracing Integrity and Safety Act (HISA) is set to go into effect, two separate lawsuits cast looming shadows over the program's legal and operational future.

One of the suits challenging HISA's constitutionality was filed by the National Horsemen's Benevolent and Protective Association (NHBPA).

In March, United States District Court Judge James Wesley Hendrix dismissed the suit finding that while HISA pushes boundaries of public-private collaboration, the law as constructed stays within the current constitutional limitation. The NHBPA subsequently filed an appeal with the Fifth Circuit Court of Appeals.

The other federal lawsuit was filed by the state of Oklahoma in the United States District Court, Eastern Division of Kentucky. That case has yet to be adjudicated.

To get the skinny on the status of the two cases, along with the implications from the ruling in the HBPA case, TDN spoke with Bennett Liebman, government lawyer in residence at the Government Law Center of Albany Law School. He previously served as the deputy secretary for gaming and racing for Governor Andrew Cuomo and was a member of the state's Racing and Wagering Board.

The biggest takeaway from the conversation? Liebman said that a ruling from earlier in the week in the Fifth Circuit Court of Appeals concerning the Securities and Exchange Commission (SEC) has essentially thrown HISA a curveball.

In short, the Fifth Circuit judges ruled that Congress' delegation of legislative power to the SEC was unconstitutional as it failed to “provide an intelligible principle by which the SEC would exercise the delegated power.”

Substitute the SEC with the Federal Trade Commission (FTC)–the government body given ultimate oversight over HISA–and the ruling has connotations for the HBPA case as it awaits adjudication before the Fifth Circuit, said Liebman.

TDN: Where do the two lawsuits currently stand?
   BL: The national HBPA case has been appealed to the 5th Circuit. The other case, the Oklahoma case, is still before the district court in Kentucky.

TDN: You mentioned there's a new ruling in the 5th Circuit that you say could prove very problematic for HISA. What is that case and why could it prove problematic?
BL: The Fifth Circuit in a decision in the case of Jarkesy versus the Security and Exchange Commission found that Congress unconstitutionally delegated legislative power to the SEC by failing to provide an intelligible principle under which the SEC could utilize its power. These powers have traditionally been regarded as constitutional.
Now, the delegation to HISA–what appears to be a non-government agency–is really broader than the delegation to the SEC. So, at least as far as the Fifth Circuit, which is generally considered to be the most conservative of the federal circuits, HISA's constitutionality is going to face a very, very difficult battle.
By this, I mean their delegation standard would be very, very difficult for the supporters of HISA to maintain. HISA's going to have an uphill fight in the Fifth circuit.

TDN: For people like me and some of our readers scratching our heads about the intelligible principle, could you just outline what the intelligible principle is, why it's important?
BL: Since 1928, the United States Supreme Court has said that while only Congress can make a law, Congress can also delegate its powers to the president and to administrative agencies. So long as there is an intelligible principle under which the president or the administrative authorities act, the delegation is valid. This standard has not been considered to be an onerous requirement. Since the Depression era, the Supreme Court has not struck down a statute for failure to state an intelligible principle.
Normally, in the horse racing world a delegation “in the best interest of horse racing” suffices at a governmental level to be an intelligible principle. But this [new ruling] is a very in-depth look at limiting delegations of authority [by Congress]. And it could, especially as it pertains to the HBPA case, prove problematic for HISA.

TDN: Essentially what you're saying is this ruling could act as a precedent as and when the Fifth Circuit adjudicates the HBPA's appeal?
BL: Yes, definitely. This is a very broad ruling basically limiting delegation by Congress to agencies, as well as to non-governmental agencies that are affiliated with [government] agencies, as HISA is with the FTC.
It really could prove troublesome for HISA. Other circuits might not agree. But at least at the Fifth Circuit level, this has now become a very difficult case for the supporters of HISA's constitutionality.

TDN: Could this prove the death knell for HISA? Or are there changes they can make to adjust, and sort of fix, its operating framework?
BL: They could try to make adjustments. Even if the [courts] do find HISA unconstitutional, they might be able to get a stay. They might try to find some way to move it to the Supreme Court as quickly as possible. It's obviously not the death knell, but it's truly troublesome.

TDN: In regards the HBPA's appeal, what are some of the potential outcomes?
BL: They could affirm the trial court's decision. They could find it totally unconstitutional. They could find parts of it unconstitutional and sever those parts from the rest of the law. Look, the [Fifth Circuit] decision yesterday really is truly potentially very damaging to HISA. I don't think I can understate it.

TDN: Could either the SEC case or the HBPA case eventually go before the Supreme Court?
BL: They certainly could, and if they did, we might have a better understanding of the Supreme Court's view of the delegation of powers to administrative agencies and agencies like HISA.
The fact is, there's now a majority of Supreme Court justices that have come out against the intelligible principle test under which almost all delegations have been found constitutional for the last 85 years. And so, you know, you don't know what could come out of a Supreme Court review of HISA.

TDN: But again, are there fixes that can be made to HISA's structural framework?
BL: My thought was that even if the Supreme Court or a court of appeals found aspects of HISA unconstitutional, then it might be able to be fixed by certain legislative actions.
Right now, the FTC does not have power to promulgate its own rules on drugs and safety. You could give them [that] power. You could give the FTC power over the terms and ethics of the members of HISA. You could add more non-affiliated, independent members to the authority.
The other problem, of course, is we don't have a rational congressional system that could make these fixes that would keep HISA running. So, as always in the law, we just don't know what's going to happen next.

TDN: Does this ruling from yesterday or the prior decision in the HBPA's case have any impact on the Oklahoma case?
BL: The Kentucky court looking at the Oklahoma case could certainly cite the lower court decision in the HBPA case and use that as a precedent for upholding HISA. I don't think they would go into the Fifth Circuit's decision on the Securities and Exchange Commission.

 

TDN: Has a date been set for the appeal hearing by the 5th Circuit?
BL: Not that I can determine. I'm restricted to a very limited review of documents that have been submitted. I mean, the parties to the case would know what's going on.

TDN: Prior to the SEC ruling this week, which of the two cases, the Oklahoma case or the HBPA case, did you think was more likely to go before the Supreme Court?
BL: It had looked as if the Oklahoma case was perhaps the more significant case. Look at all the parties involved in that case, including all the amicus curiae briefs submitted by everybody, from the sponsors of the legislation, the Jockey Club, prominent owners, prominent breeders, against on the other side a ton of states and the United States Trotting Association. I had thought that there would be more significant legal interest in the Oklahoma case.
I think I pointed out in the speech I gave to the ARCI that the name of the case was Oklahoma against the United States, but that there were actually more parties in that case than there are characters in the musical, Oklahoma.

TDN: But now you're saying all bets are off thanks to yesterday's ruling?
BL: Yes. I mean, as far as I can see this is really a major decision by the Fifth Circuit on the limits of how Congress goes about apportioning power to administrative agencies.

TDN: As you had said earlier, the current makeup of the Supreme Court is such that there…
BL: There is a majority that have at various points rejected–and that doesn't include justice [Amy Coney] Barrett–the reliance on the intelligible principle standard. But will they go as far as the Fifth Circuit? Who knows?

TDN: If they did, this could all take years to play out though, right? What happens to HISA in the meantime?
BL: Oh God, who knows? It's law; it's not something you should bet on.

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Graham Motion Talks Importance of Taking Shots On Writers’ Room

In an era where trainers are increasingly hesitant to run their horses frequently and/or in races where they might be longshots, Graham Motion is a throwback. It often pays off for his perennially successful outfit, as it did on Saturday at Belmont, when his Highland Chief (Ire) (Gleneagles {Ire}), dismissed at 19-1 in a five-horse field, upset defending champion turf male Yibir (GB) (Dubawi {Ire}) and MGISW Gufo (Declaration of War) in the GI Man O' War S. Tuesday, Motion joined the TDN Writers' Room presented by Keeneland as the Green Group Guest of the Week to talk about why he's steadfast about taking shots and running his horses, how he feels about the current state of the Horseracing Integrity and Safety Act, the upcoming Royal Ascot trip for his undefeated Spendarella (Karakontie {Jpn}) and more.

“I think we are very cautious these days,” Motion said of modern trainers. “I think everyone's so worried about that [win] percentage. I think you can learn a lot from watching a guy like Wayne [Lukas], who's never been afraid to take a shot. I think we're just so caught up in being careful. It's so easy to ship across the country now. It's so easy to avoid races that you think are too tough. At the end of the day, that takes a little bit away from the sport, which is to see who has the fastest horse, and the challenge. I kind of live for that. That's what I find so exciting. That's why I love going to Ascot, because it's out of the normal and it's a challenge for these horses. That's what it's all about, right?”

An early supporter of the HISA reform law that has since hit hiccups in potential implementation, Motion was asked how optimistic or pessimistic he is that the program will take full effect and the new rules will fundamentally improve the sport.

“It's going to be difficult, there's no doubt about it,” he said. “I realize there are issues with cost and where the money is going to come from. What I don't understand and what frustrates me a little bit–I'll probably get chastised for saying this, but–we're running for these extraordinary purses. We're running for $100,000 with maidens. Couldn't we put some of that money aside toward the integrity of our sport? I don't understand it. Improve the backstretch, improve safety, improve the integrity of our sport and put some of this money toward HISA. It's going to be a difficult task. I was disappointed when USADA dropped out. I don't know much about the new arrangement. I'm surprised how little, quite frankly, we read about it. So, look, I'm optimistic it's going to happen. I hope everybody eventually gets on board because I think it'll be game changing, and it's going to take a while. There are going to be some hiccups along the way.”

Elsewhere on the show, which is also sponsored by Coolmore, the Pennsylvania Horse Breeders Association, XBTV, West Point Thoroughbreds and Legacy Bloodstock, the writers had a thorough discussion on the proposals to increase the spacing of Triple Crown races and previewed a Rich Strike-less Preakness. Click here to watch the show; click here for the audio-only version or find it on Apple Podcasts or Spotify.

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Q&A with HISA’s Lisa Lazarus: Part Two

Last week, an important piece of the Horseracing Integrity and Safety Act (HISA) puzzle was slotted into place when the Horseracing Integrity and Safety Authority's board of directors announced that Drug Free Sport International (DFSI) had been selected as the enforcement agency for the Anti-Doping and Medication Control (ADMC) arm of the program.

In part one of this two-part Q&A, HISA CEO Lisa Lazarus discussed the reasons behind DFSI's selection, details about the newly announced Horseracing Integrity and Welfare Unit (HIWU) and broad updates on the Anti-Doping and Medication Control (ADMC) program in general.

In part two, Lazarus discusses the working relationship between DFSI and the Authority–the non-profit umbrella established by HISA to oversee the broad program–as well as practical concerns about implementation of the safety program on July 1.

The following has been edited for brevity and for clarity.

TDN: What will the working relationship between the Authority and DFSI–what is essentially a service agency–look like? Will they be working primarily at the behest of the Authority or will they be an entirely separate, autonomous agency?

Lazarus: Entirely separate. Once we sign off and give them the contract, we don't have any influence.

Our only authority, so to speak, is over the rule-making process and over, of course, selecting the agency. So, if we feel the agency is not doing their job, we have the right to make changes. But ultimately, running the day-to-day business of the unit is going to be their responsibility and the responsibility of the advisory council.

TDN: At the recent Association of Racing Commissioners International (ARCI) conference, journalist Tim Livingston made remarks about lax drug-testing protocols in sports like the NFL and the NBA. He said, “I think you guys have to be careful because a lot of these guys who architect these doping programs are doing so with the leagues,” and then he made the comment that they're not particularly thorough and aren't designed to catch cheats.

DFSI has worked with both the NFL and the NBA. Do these comments concern you?

Lazarus: They don't at all. I think they're completely untrue and actually quite shocking.

I worked at the NFL for 10 years, so I know very well how the NFL runs its drug program. To say that it's not intended to catch [cheats] while people are caught all the time, I don't really understand that perspective. I mean, I would disagree wholeheartedly.

I know people involved in every sports league in the U.S. I think the one difference is that the drug programs are collectively bargained between the leagues and the unions. So, there's obviously a representative of the athletes that has the chance to make sure that there's due process. There are protections–that's expected. That's what makes a program good. I mean, the program has to have integrity and fairness. But DFSI for me has the highest level of integrity. They also do work for USADA [U.S. Anti-Doping Agency] from time to time. So, they really have a stellar reputation.

I think the comments that were made are really unfounded and I don't know where they come from. My understanding was that his talk and experience wasn't in anti-doping, it was [to do with] a referee scandal.

Sarah Andrew

TDN: But in terms of transparency of results, transparency of who's getting tested, the sharing of results, this is a different ball game to what DFSI has had to largely handle with some of those other human leagues, right? This is a different beast for DFSI, no?

Lazarus: Yes, it is an entirely different beast. And that's why we've created this Horseracing Integrity and Welfare Unit.

The way that I look at it is, DFSI is sort of the anchor tenant, because testing is the most work-intensive component of the unit. But ultimately, what they're doing is working with the advisory council to oversee experts that we're going to hire in all of these different pillars. So yes, it is an entirely different beast than what they're used to, but that's why the structure reflects that difference.

TDN: Stepping back, July 1 is looming large, and so far only three states–California, Kentucky and Minnesota–have agreed to shoulder the costs of the track safety component of HISA. What if all or nearly all of the other states decide not…

Lazarus: And Colorado. But I don't know if that's public.

TDN: But what if all, or nearly all, of the other states decide not to join them? In that worst-case scenario…

Lazarus: It's not a worst-case scenario. It's not a question of whether or not the costs get paid, it's a question of who's responsible.

The constitution doesn't allow us to force the state to do anything, so, if the states choose not to pay, what happens is that cost gets transferred to the racetracks on a per-start, strength-of-purse basis. The race tracks then take on that responsibility and they have to come up with a formula to spread that cost amongst the covered persons and to determine who pays how much.

If it's not paid, obviously we're going to work with the tracks to make it as easy as we can for them, but ultimately, the stick that we have in the Act is that they can lose their signal for pari-mutuel wagering.

Horsephotos

TDN: There's an important personnel component to this as well, right? Let's take regulatory vets. There's already a real shortage of qualified veterinarians available to do the regulatory work. If a substantial number of states opt to leave that part of the equation to HISA come July 1, do you have a contingency plan to make sure there is a nationwide team of vets who can do the pre-race examinations, all that necessary work?

Lazarus: You're mixing up two concepts here. There are two components with every state. One is the money assessment. The other is the voluntary agreement. While only a few states have agreed to opt into the money [assessment], we have about 80% of the states agreeing to enter into a voluntary agreement.

For a very high level of success with voluntary agreements, I'm hoping it's going to be about 90%. But we're at about 80% now. And what that means is that we're agreeing with the states…to use their state stewards to enforce the HISA rules. Otherwise, what's going to happen is that HISA is going to have to come in and hire a steward to sit alongside the state steward.

We do have plans in place for those states where we have to do that. But a few racetracks have [also] come to us and said, 'Even though our state doesn't want to enter the agreement, can we work out a deal with you, because we have these staff, we want to be able to use them?' And we've been able to work with them.

We're in the process of getting together a stewarding panel that we can ship out to different racetracks if we need to, as well as regulatory vets, which you are right, there's definitely a shortage of. We're looking at ways that we can essentially plug those shortages if we have to. But we're really hopeful and optimistic that most states are going to reach that voluntary agreement with us.

TDN: As many as 80% to 90% of states have already signed the voluntary agreement?

Lazarus: No, I'm sorry, I should have said that about 80% have said that, because we still have a few more weeks. So, the deadline for opting in [about the] money was about May 1. The deadline for the voluntary agreement is toward the end of May. We've reached agreements with a number of them, but very close to reaching agreement with the majority.

To be fair, what I'm basing that number on are the ones that we're speaking to, working through logistics, coming to an arrangement. It's my belief and understanding that with those states, it obviously shows they want to make it work. We just have a couple more weeks to kind of wrap it all up.

TDN: You do have a contingency plan to make sure that the necessary personnel will be in place for those 10%, 15%, 20% of jurisdictions that don't sign that voluntary agreement?

Lazarus: Correct.

Coady

TDN: There is a considerable amount of concern–both from people stridently against HISA and those who are wholly supportive of it–that come July 1, we won't be ready for launch. What does the industry need to do to make sure this plane lands smoothly?

Lazarus: A couple things. One is everyone needs to go on to hisaus.org and register. We will soon be launching a campaign to remind everyone that they need to do that by July 1.

The second is racetracks need to get more involved and engage with us more–and most are–but especially in those jurisdictions where the racing commissions are not working with us, particularly the states that are suing us or are less likely to work with us. In those states, that's where the racetracks need to get involved because the burden is going to fall on them, not to pay for everything, but to be the sort of [fee] collector or the place where the information is going to be disseminated.

And [lastly], do what you can to kind of help get the message out to those that maybe are less likely to be on their laptops reading about developments. The industry belongs to all of us and this is a heavy lift. Congress gave us very aggressive timelines and we're going to be ready on July 1, but you're right, we're definitely going to need help and support to make this work.

TDN: There's a lot of really busy people in this sport who just don't have the time to go onto a website and try to find information that may not always be easily accessible. Do you think your outreach could be better?

Lazarus: Yeah, for sure. And we're working on that now and there'll be a lot more outreach between now and July 1.

I cannot tell you how many groups I've spoken to and how many appearances I've made on board calls, on Zoom calls, etcetera. I do that day and night. So, I hope I've reached a lot of people that way. And I think I have.

We've created materials for jockeys that are kind of a cheat sheet guide for them, what they need to do. We've disseminated those. We have one for the trainers that's coming up very soon and we also have a social media campaign that's about to launch. So, I'm hoping that's going to do as good a job as we can expect. We still have a couple months to get the word out, and I think we're going to get there. It's moving quickly, but we're going to get there.

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