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Irwin: Independent Overseer Will Ensure Integrity

What's the big deal about the new racing legislation?

When I called for horseracing to find a way to install the United States Anti-Doping Agency as the overseer of drugs in an Op/Ed for The Blood-Horse back in 2004, I did so with some specific goals in mind. My overriding reason, however, was to have an agency that was independent.

Now that USADA will be given the job, nobody knows whether the hopes and dreams of those who worked so tirelessly to make USADA's presence a reality will be fully accomplished. One thing that everybody in the sport can be sure of is that special interests will no longer be able to tilt the playing fields or the halls of justice.

Over the years people have asked me why special interests fought so hard to keep the legislation from being enacted. The answers are many but they all boil down to unethical participants in racing being stopped from running their games and not paying any price when they get caught.

As I explained to my peers who fought side by side to bring the Horseracing Integrity and Safety Act to fruition, the one thing the bill's opponents dread is that when they or members of their team get caught breaking the rules they will be unable to find a way in a boardroom, steward's stand, men's club or corporate office to obtain a favorable outcome.

Anybody paying the least bit of attention to what is going on right now will know exactly what I am writing about. An unbeaten young stallion's reputation is on the line in an ongoing battle that involved a racing board, a steward's office and selective interpretation of rules. Another case is going through the adjudication process involving a positive for a banned substance and a bonus reportedly worth millions of dollars.

We have all seen horsemen and owners break rules yet escape with favorable rulings or slaps on the wrist.

At the same time we have seen trainers cheat with impunity and watched as those charged with the responsibility of going after them sit on their hands or shrug their shoulders. Why, one may wonder, would racetracks, stewards, medical directors and racing boards protect the guilty?

Well, they all have conflicts of interest. Racetracks all think that it is trainers who bring in owners and racetracks need owners to supply their racing cards. Stewards, by and large, are concerned first and foremost with keeping their jobs and they learn early on in their tenure that the best way to accomplish this goal is not to rock the boat. Racing boards, like racetracks, are loath to bring cheating trainers to justice for fear of tarnishing the sport, as though by the cheating trainers' actions they had not done so already.

I really hate to have to write this next part of this Op/Ed because it is so embarrassing to racing, but I humbly submit to you that some owners at the highest level of the sport only participate because they can game the system and get away with it.

And these people, as well as their trainers, live in mortal fear of not being able to find a get-out-of-jail card after they break the rules. They count on this aspect of the sport. They know the tracks will not turn them in. And plenty of others feel the same way.

So what scares the hell out of these miscreants is an agency like USADA headed by a world-renown sports cop being in charge, because they know Travis Tygart is not going to roll over and play dead.

Owners and trainers who play by the rules in the main understand how important and liberating this concept is and can be, but there have been others—especially trainers—who have fought against the legislation. They don't want trainers held up to scrutiny or caught and adjudicated because these innocent horsemen think that all of them will be unfairly painted with the same brush. It is the same philosophy engaged in by racetracks, who worry racing will be put in a bad light by trainers being exposed as cheats.

Nothing could be further from the truth. It is only when a sport takes itself seriously, like Major League Baseball has done from time to time, that it can thrive and soar to new heights of popularity.

As important as it is for fans and gamblers to believe in the integrity of racing, it is just as important for owners and trainers to believe in it as well. In a sport well-managed and adjudicated, pride of ownership can return in North America and trainers can once again go to restaurants or walk in the front door of their house carrying a Daily Racing Form without fear of embarrassment.

So, yeah, passage of the “Integrity” aspect of the new law is a big deal. It is, in fact, such a big deal that it might very well save our sport.

Passage of the bill, it must be said in closing, is only the beginning. In order for USADA to be successful it must rely on assistance from ethical owners and trainers. So instead of mimicking silent officials in racing who sat by and let cheating take place, we will need owners to report on a new hotline any instances they know of regarding cheating so that Travis Tygart and his team can root out evil wherever they find it.

I have every faith that owners will comply, and some faith that a lot of trainers will comply. I do, however, fear that the code of silence among those of the current generation will prevail and make USADA's job harder. Perhaps as in many things today the next generation will save our sorry asses, because in order to keep this sport on the level and make it fair for everybody, help will be required.

Barry Irwin is founder and chief executive officer of Team Valor International.

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Updated: Horseracing Safety And Integrity Act Attached To Federal Spending Bill Expected To Pass Monday Night

The Horseracing Safety and Integrity Act, appearing as an attachment to massive a federal spending bill, was passed by the U.S. House on Monday evening and will now head to the Senate, which is expected to approve the bill.

The text of the $1.4 trillion federal spending bill was released on Monday afternoon, paired with a $900 billion coronavirus relief package, reports CBSnews.com. Included in the 5,593-page legislation is the Horseracing Safety and Integrity Act, as Section FF, Title XII, commencing on page 5,488 of the bill.

The full text is available here.

Temporary federal funding measures passed this weekend only extend the government's funding through Monday night, and news outlets reported that the Senate's vote was expected to drag on late into Monday night.

The Horseracing Integrity and Safety Act would designate the Horseracing Integrity and Safety Authority to design and implement uniform national horse racing medication and racetrack safety standards, overseen by the Federal Trade Commission with the enforcement of the U.S. Anti-Doping Agency.

For more information about the Horseracing Integrity and Safety Act, the Paulick Report archive including the bill's history, op/eds, and analyses is available here.

The Friday Show Presented By Woodbine: Coming Soon – Horseracing Integrity And Safety Authority

Earlier this week, the Horseracing Integrity and Safety Act sailed through the U.S. House of Representatives with bipartisan support and is awaiting action by the Senate, whose majority leader, Mitch McConnell of Kentucky, is co-sponsor along with Kirsten Gillibrand of New York.The House version of the bill was co-sponsored by Reps. Andy Barr of Kentucky and Paul Tonko of New York.

McConnell has said he intends to get the legislation passed before the end of the year.

If that happens, what is the timeline for implementation of a new national Horseracing Integrity and Safety Authority the legislation would create to oversee all of the medication and safety policies for Thoroughbred racing in the U.S.? Who would comprise the governing body and how will those individuals be chosen? How will medication policy enforcement and drug testing overseen by the United States Anti-Doping Agency differ from the current methods employed by state racing commissions?

In this week's edition of the Friday Show, publisher Ray Paulick and editor in chief Natalie Voss try to answer some of the most frequently asked questions about this major development in the horse racing world.

Watch the Friday Show below:

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Jockey Club Says USTA ‘Grasping At Straws’ With ‘Underwhelming’ Legal Attack On Horseracing Integrity And Safety Act

The Jockey Club on Wednesday released a response from its general counsel, Marc Summers, to the United States Trotting Association's (USTA) recent assertion that the Horseracing Integrity and Safety Act (HISA) is unconstitutional.

In a recent press release, the USTA touts a secret “white paper” purportedly concluding that the HISA is “possibly” unconstitutional. Of course, no one else has set eyes on this white paper. But it is hardly surprising that — after months of USTA opposition to any bill like HISA — the USTA's hired-gun law firm would come up with the USTA's preordained conclusion.

The USTA's unwillingness to release its legal analysis is telling: In reality, HISA is carefully crafted and constitutionally sound. The bill has been rigorously vetted. Many attorneys from different sectors (including Supreme Court and constitutional experts from Akin Gump Strauss Hauer and Feld LLP) have thought through the very issues the USTA raises, because we anticipated that those who oppose the bill for other reasons would lob this type of unfounded attack. In the face of decades of precedent supporting the proposed statutory scheme, none of the USTA's four constitutional arguments withstands scrutiny.

HISA does not violate the non-delegation doctrine. The USTA is correct, of course, that there are important limits on Congress' ability to “grant regulatory authority to private entities.” But that doctrine does not bar private entities from “help[ing] a government agency make its regulatory decisions, for '[t]he Constitution has never been regarded as denying to the Congress the necessary resources of flexibility and practicality' that such schemes facilitate.” Ass'n of Am. Railroads v. United States Dep't of Transp., 721 F.3d 666, 671 (D.C. Cir. 2013) (quoting Pan. Ref. Co. v. Ryan, 293 U.S. 388, 421 (1935)), vacated on other grounds, 575 U.S. 43 (2015). As long as a government agency has discretion to approve, disapprove, or modify a private party's proposed regulations, longstanding Supreme Court precedent makes clear that Congress is free to formalize the party's role in the regulatory process.

The Horseracing Integrity and Safety Authority (Authority) designated in HISA is subject to the oversight and approval of the Federal Trade Commission (FTC) in at least two critical respects. On the front end, the Authority must file any proposed rules (or rule changes) with the FTC, which must subject the rules to proper notice-and-comment and agency-approval procedures. Without the FTC's approval, the rules cannot take effect and have no binding legal force. On the back end, all sanctions imposed by the Authority “shall be subject to review by an administrative law judge” appointed by the FTC, subject to yet further review by the commissioners. Far from the “exalted brooding” the USTA criticizes, these statutorily mandated constraints ensure the FTC's ultimate responsibility for any meaningful action carried out under the HISA.

This relationship mirrors the enduring and effective model adopted by the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC). FINRA is a private, independent, nonprofit, self-regulatory organization that participates in the regulation of the securities brokerage industry, subject to SEC oversight. As with the proposed Authority-FTC scheme, FINRA rules must be approved by the SEC and FINRA's disciplinary actions are subject to SEC review. Courts considering challenges to FINRA on the non-delegation grounds that the USTA's press release trumpets consistently have held that the contentions have “no merit.”

Grasping at straws, the USTA warns about (undefined) “law-enforcement powers” that “would be free from FTC oversight.” As an initial matter, the predicate for USTA's warning is false: Any powers carried out by the Authority, whether analogized to “law-enforcement powers” or not, would be cabined by specific rules the FTC adopts and specific review the FTC conducts over any resulting sanctions. In any event, the Authority's investigatory powers also parallel those that FINRA routinely carries out with respect to securities brokers and firms. In fact, other statutory schemes — such as Congress' express grant of broad investigatory authority to the U.S. Anti-Doping Agency (USADA), a private entity recognized as the official anti-doping agency for Olympic sports — impose far fewer constraints on self-regulatory organizations than the FINRA-SEC and Authority-FTC models impose.

Hedging its non-delegation challenge, the USTA alleges that the HISA may run afoul of the Appointments Clause and Article II removal restrictions. But the USTA does not acknowledge, let alone resolve, the tension between its two arguments: The non-delegation theory rests on the notion that HISA delegates regulatory authority to a private entity. Meanwhile, the Appointments Clause and removability concerns apply only to federal (i.e., non-private) entities. The fact that the pre-existing Authority designated by HISA is private — as USTA emphasizes to support its non-delegation challenge — dooms any Appointments Clause or removability challenge.
USTA's due process theory fares no better. Ignoring the exceedingly difficult standard for bringing a successful claim under the Due Process Clause, the press release vaguely cautions against “economically self-interested private actors.” But the Authority's only interest is improving the integrity and safety of horse racing. The “capture” theory that the USTA creates out of whole cloth lacks any basis. As the USTA recognizes, the majority of the Authority's board members are “independent” (i.e., from outside the equine industry). To be sure, the remaining board members will have industry experience and engagement. But it is difficult to understand how that statutory recognition of the value of informed voices constitutes a deprivation of due process. What's more, with respect to that minority group of board members, HISA expressly provides for equal representation among each of the six equine constituencies (trainers, owners and breeders, tracks, veterinarians, state racing commissions, and jockeys). And the committee tasked with nominating eligible candidates for board and standing-committee positions is made up of entirely non-industry members. The HISA further imposes broad conflicts-of-interest requirements to ensure that all board members and independent standing committee members (and their employees and family members) are free of all equine conflicts of interest.

All those safeguards mean the Authority's board will be even more constrained from self-dealing than the leadership of other self-regulatory organizations, including FINRA. Regardless, established precedent confirms what common sense indicates: Even when a private entity is engaged in the regulatory process, agency authority and surveillance serve as adequate guards against any promotion of self-interest. See, e.g., Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 399 (1940). The FTC's ability to overrule the Authority's proposed rules and sanctions ensures that neither the Authority nor the individuals making up its board can “use their position for their own advantage — to the disadvantage of their fellow citizens.” Pittston Co. v. United States, 368 F.3d 385, 398 (4th Cir. 2004).

Finally, no part of HISA commands states to do anything to which they don't freely agree. Instead of requiring the states to undertake any particular duties, the bill presents them with genuine choices: They can work with the Authority to effect the anti-doping program or they can relieve themselves of enforcement activity, with the Authority implementing the horse racing anti-doping and medication control program in the state. Further, the weakness in the USTA's anti-commandeering argument is laid bare by its reliance on an incorrect quotation from the bill. Rather than providing that “State law enforcement authorities shall cooperate and share information with the Authority,” the bill directs the Authority “to cooperate and share information” with state and federal law enforcement authorities whenever its investigation into violations of the horse racing anti-doping and medication control program uncovers a violation of state or federal law.

For all its grandstanding, the USTA's bottom line (apparently quoting its attorneys) is underwhelming to say the least: The “enactment would lead to extensive litigation and the possible invalidation of the statute.” Anyone can sue over anything — the mere existence of litigation says nothing about its likelihood of success. These are the facts: The HISA is ground firmly in 70 years of precedent and the Authority-FTC relationship closely parallels the long-running FINRA-SEC model. However, anything is “possible.” It is possible to place a winning trifecta bet six races in a row. But it is not likely. If Congress rejected every bill that could be litigated and “possibly” invalidated, it would never enact a new law.

The HISA is on solid constitutional footing.

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