Horseracing Integrity and Safety Act Authority

Texas Once Again Allows Simulcasting Signal Exports

On the back of Tuesday's decision in the Fifth Circuit Court of Appeals denying a motion by the Horseracing Integrity and Safety Act (HISA) Authority for that court to vacate its recent opinion that the law is unconstitutional, the Texas Racing Commission (TXRC) has reopened the door for Texas tracks to beam their signals out-of-state, with Sam Houston set to begin this Friday.

Last year, the TXRC argued that it was statutorily barred from joining HISA, and because the enabling federal legislation gave the HISA Authority regulatory jurisdiction over the interstate simulcasting of races, the commission prohibited Texan tracks from exporting their signals.

“I called the Sam Houston Park general manager this morning and asked him to provide me an export request, and I've already approved them,” said TXRC executive director Amy Cook, who also wrote in a memo Wednesday to licensees that the Fifth Circuit's decision finding the law “facially unconstitutional” meant it has no effect on the State of Texas.

Chris McErlean, vice president of racing for Penn Entertainment, Sam Houston's parent company, confirmed that the simulcast signal will be beamed to its out-of-state partners when racing resumes this Friday. Sam Houston's current season began on Jan. 6 and ends Apr. 8.

“We have multiple racetracks, so, our contracts cover all our tracks. Everybody was ready to go as soon as there was some change in the status,” said McErlean. “It's literally the flick of a switch to get it going. We welcome the change. Sam Houston's a good wintertime meet on the schedule for a lot of people, and we're glad people will be able to see it live to bet on.”

When asked to comment on the TXRC's actions, HISA spokesperson Mandy Minger wrote in an email: “The Fifth Circuit's decision concerns only the prior version of HISA, before Congress amended it to remedy the constitutional concern the Fifth Circuit identified. No court has expressed any constitutional concern about, let alone enjoined, the current version of HISA now in effect. We look forward to working with the Texas Racing Commission and Texas racetracks should they resume operations falling within HISA's jurisdiction.”

Early last year, the State of Texas and the TXRC joined as intervener plaintiffs on one of the cases before the Fifth Circuit, led by the National Horsemen's Benevolent and Protective Association (NHBPA).

On Jan. 3, the HISA Authority asked for the Fifth Circuit's Nov. 18, 2022, anti-constitutionality order to be vacated based on a federal rewrite of the HISA law in December.

On Tuesday, the Fifth Circuit panel of judges denied this motion and also shot down separate motions for a rehearing of the case made by both the HISA Authority and the Federal Trade Commission (FTC).

After ruling on those two motions, the Fifth Circuit then issued a mandate that stated, “It is ordered and adjudged that the judgment of the District Court is reversed and remanded to the District Court for further proceedings in accordance with the opinion of this Court.”

The Fifth Circuit encompasses the states of Texas, Louisiana and Mississippi.

Cook explained that her policy decision last year to prohibit the export of simulcast signals from the state's tracks was made “hoping for the legal outcome that HISA has no legal jurisdiction in our state.

“We have avoided HISA jurisdiction because we didn't think that regulatory scheme was constitutional as a policy decision, and now we've avoided it in a legal decision as well,” Cook added. “We were certain that we were going to prevail, but I needed to provide certainty.”

Cook wrote in a memo Wednesday to licensees that, “All horseraces in Texas will continue to be conducted in accordance with the Texas Racing Act and the Texas Rules of Racing.”

This means that Texan racetracks continue to operate in a similar position to those in West Virginia and Louisiana, in that they are bound under the state's regulations and not HISA's safety regulations that went into effect in July last year.

With no simulcast signals beamed out of the state for months, concerns have understandably surrounded the impact on purses from a massive drop in handle.

In early January, the Daily Racing Form reported total wagering had dropped from $11.75 million on six days of live racing in 2022 to $1.04 million on seven days of live racing in 2023. The average per-race handle reportedly declined 92.3%.

The TDN's Bill Finley reported that Saturday's handle at Sam Houston for the Houston Racing Festival was $488,385. Last year, when the races were run on a Sunday, the handle was $5,698,052–a decline of 91.4%.

Cook was unable to provide specific figures as to the numerical hit on the state's purse account, but she played down the impact by saying that out-of-state simulcasting at Texas tracks accounts for roughly 15% of the total purses, the latter of which is bolstered by state subsidies and an increased percentage of on-track handle.

“It's not that we don't think [HISA] has an admirable goal, it's the way they're going after the goal,” said Cook, raising alternative uniform regulatory approaches to HISA, like a “cooperative agreement” model.

“It's not personal,” Cook added. “I told Lisa [Lazarus, HISA CEO] that when she came to Texas. I invited her. She came June 8. I drove her round in my pickup truck, and I said, 'It's not personal but you have a problem. You don't have a sustainable resource model here.'”

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Fifth Circuit Judges Deny Motions Related to Rewritten HISA Law

by Sue Finley and T. D. Thornton

This story has been updated.

The Fifth Circuit United States Court of Appeals on Tuesday denied a motion by the Horseracing Integrity and Safety Act (HISA) Authority for that court to vacate its recent opinion that HISA is unconstitutional.

Back on Jan. 3, the HISA Authority had asked for the Fifth Circuit's Nov. 18, 2022, anti-constitutionality order to be vacated based on a federal rewrite of the HISA law in December.

Also on Tuesday, separate motions for a rehearing of the case made by both the HISA Authority and the Federal Trade Commission (FTC) were shot down by the same Fifth Circuit panel of judges.

And after ruling on those two motions, the Fifth Circuit then issued a mandate that stated, “IT IS ORDERED and ADJUDGED that the judgment of the District Court is REVERSED and REMANDED to the District Court for further proceedings in accordance with the opinion of this Court.”

The flurry of Fifth Circuit court action Jan. 31 bolstered the case for a plaintiff team led by the National Horsemen's Benevolent and Protective Association (NHBPA), which two weeks ago urged the court not to grant either the vacated order or the rehearings because the new federal law that amended the operative language of HISA did not “fix” all the alleged constitutionality issues that plaintiffs have raised in federal lawsuits.

“We view this as additional strong evidence as to the valid concerns we have been raising all along and this should remind everyone that constitutionality isn't optional,” Eric Hamelback, the chief executive officer of the NHBPA, said in a statement.

“We have made it very clear that the one-sentence so-called fix tucked into Congress's must-pass year-end spending bill did not address all the legal questions created in the HISA corporation's enabling legislation,” Hamelback continued.

“With that said, it's extremely gratifying that the Fifth Circuit Court of Appeals has denied the HISA corporation's motion to vacate the Appellate Court's original unanimous opinion that found the Horseracing Integrity & Safety Act unlawful,” Hamelback said.

Asked to comment on Tuesday's court orders and the mandate, Mandy Minger, HISA's director of communications, wrote in an email that, “In the aftermath of the recent Congressional amendment, and without opining on the newly amended HISA law, the Fifth Circuit has sent the case back to the district court. Outside Louisiana and West Virginia, the Authority will continue enforcing the Racetrack Safety Program and preparing for the implementation of its Anti-Doping and Medication Control Program on March 27, subject to the Federal Trade Commission's approval of the rules.”

At a later point in the NHBPA statement, Hamelback took umbrage with the HISA Authority's recent resubmission of those medication rules while constitutional questions remained in limbo.

“Citing the legal uncertainties in the wake of the Fifth Circuit's ruling, the FTC issued an order on Dec. 12 of 2022 disapproving the Anti-Doping and Medication Control proposed rules submitted by the HISA corporation until those questions regarding constitutional challenges are resolved,” Hamelback said. “Therefore, it was the height of arrogance for the HISA corporation to recently resubmit such rules on the pretext that the so-called fix actually was one. As we see it now more than ever, the Fifth Circuit Court made it clear significant constitutional questions remain with HISA.”

Hamelback continued: “To be clear, absolutely nothing has changed in the Fifth Circuit Court of Appeals since the FTC originally rejected these rules, and the FTC must wait on the outcome of ongoing litigation to be resolved. Along with a bipartisan group of U.S. Senators and Congressmen, we believe the FTC must reject these again based on the unconstitutional uncertainty.”

Prior to reaching the Fifth Circuit on appeal, the underlying lawsuit was initiated by the NHBPA and 12 of its affiliates against personnel from the HISA Authority and the FTC on Mar. 15, 2021, bringing anti-constitutionality claims under the private-nondelegation doctrine, public-nondelegation doctrine, Appointments Clause, and the Due Process Clause.

On Mar. 31, 2022, a U.S. District Court judge dismissed that suit, writing in an order that “despite its novelty, [HISA] as constructed stays within current constitutional limitations as defined by the Supreme Court and the Fifth Circuit.”

The HBPA plaintiffs appealed that decision, leading to the Fifth Circuit's reversal on Nov. 18.

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HISA Appeal to be Argued Aug. 30; Judge Denies Contempt Motion

The United States Court of Appeals for the Fifth Circuit will now hear oral arguments Aug. 30–slightly earlier than expected–in the injunction appeal brought by the Horseracing Integrity and Safety Act Authority (HISA) and the Federal Trade Commission (FTC).

Both entities are defendants in an underlying lawsuit that alleges unconstitutionality and federal rulemaking procedure violations regarding HISA's initial framework of regulations that went into effect July 1.

The Appeals Court docket previously indicated a September oral argument date was being planned.

At issue in the appeal is whether a lower court (U.S. District Court, Western District of Louisiana) erred in preliminarily enjoining HISA regulations that were purportedly harming the plaintiffs, who are led by the states of Louisiana and West Virginia, plus the Jockeys' Guild.

The Appeals Court ordered Aug. 8 that with the exception of three specifically contested HISA rules, HISA's legal authority would once again be valid in the two plaintiff states until that court heard “expedited” oral arguments from the two sides.

What happens in the Appeals Court will affect other actions in the lower court that are currently pending.

One such motion that had been outstanding was the plaintiffs' motion for the defendants to be held in contempt of court for allegedly violating terms of the preliminary injunction.

But on Aug. 15, Judge Terry Doughty of the district court denied that motion on the basis that, “The filing of a notice of appeal confers jurisdiction on the Court of Appeals and divests this Court over their aspects of the case. Once jurisdiction has divested, this Court may not take any action that would alter the status of the case as it rests before the Court of Appeals. Because the appeal involves the Preliminary Injunction at issue, this Court lacks jurisdiction to enforce the preliminary injunction or hold Defendants in contempt.”

Separately, a Tuesday filing in the district court stated that a pending “motion to intervene” involving 14 affiliates of the Horsemen's Benevolent and Protective Association and several other entities that want to join the lawsuit as plaintiffs has been assigned an Oct. 13 court date.

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14 HBPA Affiliates, 4 Tracks Want in on HISA Lawsuit

Led by 14 affiliates of the Horsemen's Benevolent and Protective Association (HBPA) and four racetracks, an alliance of entities seeking protection from the alleged harms of the Horseracing Integrity and Safety Act Authority (HISA) have asked a federal judge to allow them to participate in an existing lawsuit that claims HISA and the Federal Trade Commission (FTC) violated the Fourth and Seventh Amendments to the U.S. Constitution, plus the process by which federal agencies develop and issue regulations.

On Friday, the anti-HISA parties filed what is known as a “motion to intervene” in United States District Court (Western District of Louisiana). If accepted by the judge, it would grant the petitioners status in the case alongside the lead plaintiffs from the states of Louisiana and West Virginia.

An “intervenor” designation allows outside parties who have a personal stake in the outcome of a civil suit to participate in a case, even if their interests don't align exactly with those of the original plaintiffs.

“[Our] interests will be seriously impaired if Defendants prevail in their effort to enforce the enjoined HISA Rules beyond Louisiana and West Virginia,” the movants wrote in their Aug. 12 court filing. “Intervenors are not adequately represented by the parties to this action. Intervenors therefore respectfully request that this Court grant their motion to intervene as plaintiffs to protect their and their members' interests.

“Specifically, Intervenors seek to ensure that HISA does not kneecap the horseracing industry as a whole or themselves with the implementation and enforcement of defective HISA Rules,” the filing continued.

HISA and the FTC have consistently denied the allegations listed in the underlying June 29 lawsuit, which was filed two days before the federally mandated July 1 start date for HISA's first set of rules.

“Plaintiffs' eleventh-hour challenge to those rules on the eve of the statutory deadline [is an] emergency of their own making,” the defendants wrote in court documents just after the complaint was filed, noting that the plaintiffs waited a full three months after the approval of the rules to challenge them in court as being immediately harmful.

The HBPA affiliates wanting in on the suit are Arizona, Arkansas, Illinois, Iowa, Indiana, Kentucky, Minnesota, Nebraska, Ohio, Oklahoma, Pennsylvania, Washington, Charles Town and Tampa Bay Downs. The Colorado Horse Racing Association, which is that state's statutorily recognized horsemen's group for all racing breeds, also wants to be an intervenor.

Three of the four opting-in racetracks are in Nebraska: Fonner Park, Horsemen's Park, and the recently approved racino that will go by the name Legacy Downs. The fourth is Arizona's Turf Paradise.

The North American Association of Racetrack Veterinarians, plus the state of Oklahoma and its racing commission, round out the list of potential intervenors.

“Intervenors seek to join this action to protect their interests and those of their members or citizens in avoiding severe economic harms to the horseracing industry generally and to Intervenors specifically through the enforcement of HISA Rules that suffer from fatal procedural and substantive defects,” the Aug. 12 filing stated.

“Intervenors further seek intervention to address HISA's exercise of regulatory power against Intervenors and the threat of severe sanctions that HISA is currently imposing on Intervenors,” the filing continued.

“Intervenors interests may not–indeed, will not–be adequately represented by the existing parties because they have a different ultimate objective from the [existing plaintiffs] by covering a different portion of the United States and of the horseracing industry,” the filing stated.

Beyond the states of Louisiana and West Virginia, the Jockeys' Guild and various Louisiana-based “covered persons” under HISA rule are the existing plaintiffs.

Friday's motion to intervene asked for “expedited” consideration. But that might not be possible because aspects of the underlying lawsuit have been appealed to a higher court.

When cases go under appeal, the lower-court judge has limited power to change anything in the underlying case until the appeals process has been completed. The movants in Friday's filing wrote that they recognized that fact.

“Of course, Intervenors understand that though this Court's preliminary injunction order is on appeal to the Fifth Circuit, which partially stayed the injunction pending the outcome of an expedited appeal,” the filing stated. “At a minimum, the Court could hold the motion to intervene in abeyance, pending the resolution of the appeal.”

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