For the second time the Fifth Circuit Court of Appeals will consider the constitutionality of the Horseracing Integrity and Safety Act after a federal judge shot down efforts by the National Horsemen’s Benevolent and Protective Association, as well as state and local HBPA affiliates, to derail the legislation.
On May 17 the HBPAs filed a notice of appeal after multiple rulings adverse to its legal efforts issued by federal judge James W. Hendrix in United States District Court for the Northern District of Texas.
The case first came before Hendrix last year. He decided HISA was constitutional, but a Fifth Circuit panel reversed the ruling and declared HISA facially unconstitutional for failing to grant sufficient power to the Federal Trade Commission to oversee the Horseracing Integrity and Safety Authority. The authority is a private corporation formed to regulate the horse racing industry for compliance with nationwide safety and medication rules.
Hamelback: “Rather than strengthening our industry or protecting horses, this law is a threat to our rights and Thoroughbred horseracing”
Private corporation given legislative, executive powers to govern horseracing goes on trial in federal court
Thoroughbred horse owners, trainers sued to block the illegal power shift
LUBBOCK, Texas (April 26, 2023) — Today, in a bench trial in the U.S. Court for the Northern District of Texas, Judge James Wesley Hendrix heard evidence and arguments on whether Congress can grant lawmaking and law enforcement power to a private corporation to govern a nationwide industry. The National Horsemen’s Benevolent and Protective Association (HBPA) and 12 of its affiliates are suing the Federal Trade Commission and the Horseracing Integrity and Safety Authority, a private corporation invested by Congress with governmental powers to write rules, conduct searches and seizures, and levy fees and fines, and issue lifetime suspensions from involvement in the horseracing industry.
The National HBPA filed a federal lawsuit to stop the Horseracing Integrity and Safety Act (HISA) on March 15, 2021. In the subsequent two years of litigation, the U.S. Court of Appeals for the Fifth Circuit has already declared the Act unconstitutional once. The National HBPA and its affiliates are represented by attorney Daniel Suhr and Fernando Bustos.
“We appreciate the opportunity today to fully outline how this law undermines not only 125 years of horseracing governance but also the governing power of Congress as laid out by our founders in the Constitution,” said National HBPA CEO Eric Hamelback. “Rather than strengthening our industry or protecting horses, this law is a threat to our rights and Thoroughbred horseracing. The courts have previously ruled in favor of horsemen’s efforts to stop this illegal law and we hope to be successful again.”
The stakes in National Horsemen’s Benevolent and Protective Association v. Black are incredibly high. Congress passed HISA as part of a Covid aid package in 2020. Congress granted a brand-new private corporation unparalleled governmental power without the democratic transparency and accountability required for government agencies. While Congress tasked the Federal Trade Commission with overseeing the Authority, it handcuffed the FTC by preventing it from exercising pervasive surveillance and control over the Authority.
“This law directly undercuts the principles of federalism and democratic accountability that are core to our constitution,” said Daniel Suhr, lead attorney for the National HBPA and its affiliates. “Congress empowered an unelected, private cooperation to police an entire industry. If left unchecked by the courts, Congress opens the door for more powerful special interest groups to gain unfettered control over other industries. This is a threat to democracy and free enterprise.”
States are also challenging HISA in the courts. The State of Texas joined National Horsemen’s Benevolent and Protective Association v. Black and Oklahoma, Louisiana, and West Virginia are fighting HISA in other federal courts. The states argue HISA ends over a century of state regulation of horseracing and applies top-down standards from a private corporation, rather than politically accountable state officials in cooperation with horsemen.
Founded in 1940, the National Horsemen’s Benevolent and Protective Association is the world’s largest Thoroughbred horsemen’s organization, representing approximately 30,000 owners and trainers throughout the United States and Canada. The responsibilities of the NHBPA and its affiliates have greatly expanded as the racing industry has become more complex. In addition to its original general benevolence mission, the HBPA is the leading voice for horsemen as well as working towards the advancement of the horseracing industry through safety and integrity initiatives, promoting racing and assisting in the development of aftercare programs for retired racehorses.
Daniel Suhr is lead attorney for the plaintiffs in National Horsemen’s Benevolent and Protective Association v. Black. He is senior legal fellow at the National Opportunity Project, a nonprofit government watchdog and education organization, and president of the National Center for Justice and Liberty, a nonprofit law firm.
Six weeks after the United States Court of Appeals for the Sixth Circuit upheld the constitutionality of the Horse Racing Integrity and Safety Act (HISA), the losing plaintiffs/appellants in a case led by the states of Oklahoma, West Virginia and Louisiana have petitioned for a rarely granted “en banc” procedure that asks for a rehearing before all 28 of that court’s judges instead of just the panel of three that issued the Mar. 3 decision.
“A panel of this Court [held] that the [HISA] Authority’s ability to issue federal regulations over the Federal Trade Commission [FTC]’s objection does not violate the private non-delegation doctrine because, since the [December 2022] statutory amendment, the FTC can modify those rules after the fact,” the Apr. 17 filing stated.
“The panel also refused to decide whether the Authority’s exclusive power to bring enforcement actions in federal court was unconstitutional, and it concluded that HISA’s fee-collection regime does not unconstitutionally coerce the States to administer a federal regulatory program,” the filing stated.
(New York, NY and Charlotte, NC)- The Horseracing Integrity & Welfare Unit announced today the launch of its anonymous whistleblower platforms that enable participants in the Thoroughbred industry to submit tips safely and anonymously regarding potential violations of the Horseracing Integrity and Safety Authority’s (HISA) Anti-Doping and Medication Control (ADMC) Program. The text and email platforms are supported through a partnership with RealResponse, the leading provider of safe and secure reporting platform for athletes, teams, and organizations, while the telephone platform is supported by Ansafone.
Using the designated telephone line, text line, or email address, any industry participant can anonymously submit information relating to Covered Horses, barns, trainers, or other Covered Persons for review by HIWU’s Investigations Unit. Submissions are accepted 24/7. Whistleblowers can include their contact information if they are open to potential follow up from HIWU’s investigators. However, this option is voluntary.
“Our anonymous whistleblower platforms will empower concerned individuals to safely and securely alert HIWU to potential violations of the AMDC Program, including situations where the welfare of the horse or integrity of the sport may be compromised,” said Michelle Pujals, HIWU’s general counsel. “We look forward to working with RealResponse, which has a proven track record in administering this type of technology, to facilitate the success of this key component of the ADMC Program.”
“We are honored to work with the leadership of the Horseracing Integrity & Welfare Unit,” said David Chadwick, RealResponse Founder and CEO. “We have seen significant interest from leading integrity agencies who seek a more efficient and effective platform to enhance their investigative process. Working with HIWU as it launches platforms to protect against efforts that compromise the integrity of horse racing, as well as to protect the wellbeing of the equine athletes, is important to us. Our service makes it simple and easy for those in the field to report concerning incidents they witness to ensure fairness and safety across the industry.”
Individuals who would like to submit tips should utilize the following contact options:
Industry participants should note that the HIWU Investigations Unit can only consider tips regarding the ADMC Program and will not respond to potential violations of HISA’s Racetrack Safety Program or other violations or inquiries that fall outside the jurisdiction of the ADMC Program. Potential violations of the Racetrack Safety Program will be forwarded to HISA.
Those with information regarding potential violations of HISA’s Racetrack Safety Program should call (877) 513-2919 or email firstname.lastname@example.org. Submissions will be treated anonymously.
As a young boy, I spent summers mucking out stalls, painting fences, and helping out on my great-uncle’s farm. Early in the mornings, his grandson and I could hear him tapping on the door, telling us to wake up and get moving in Cajun French. “Levez, levez!” We’d jump out of bed and ride down to the track to watch the jockeys breeze the horses as the sun was coming up.
Those are memories I fear the next generation might never experience as we battle the Horseracing Integrity and Security Act (HISA) – legislation slipped into the COVID relief package and passed by Congress in the dark of night to federalize the horseracing industry and give complete regulatory power to a private corporation without consent of the individual states or even input from the horsemen themselves.
Horse racing in Louisiana has its roots in Cajun and Creole culture, where the infamous bush tracks of the 1950s produced some of the finest jockeys in the world. Soon, Acadiana became known as a place where you could start out riding barefoot and work your way up to winning the Kentucky Derby with an entire community to not only cheer you on but also finance the first major racetrack in the region — Evangeline Downs (where the announcer Gene Griffin would say “Ils Sont Partis!”, which means “And they’re off!”).
Fueled by this rough and tumble past, Louisiana horse racing has effectively policed itself for over 200 years, evolving over time to meet modern challenges while maintaining its unique identity. It’s an industry built with our own sweat and blood, supported by a tight-knit group of horsemen, racing fans, and family businesses. As in other states, we know how our horses handle our unique climate, our tracks, and our footing. We know the history of our bloodlines, the traditions of our sport, and the nature of this industry far better than anyone else.
That hard-won knowledge has created an entire culture within Louisiana, one that has grown from an economic impact of $460 million in 1979 to $1.5 billion today. As Attorney General, it’s my job to protect this industry, its culture, and its people. That’s why I have been fighting against HISA from the very beginning, even as political players pressured my office to not get involved. But like most Cajuns, when I stand for what’s right, I don’t back down.
At the core of HISA is this: a handful of wealthy players wish to control the sport through a one-size-fits-all, pay-to-play scheme that will decimate the inclusive culture of horse racing. And while we can all agree that we want integrity and safety in the sport, perhaps it must also be stated that we should never let a few bad actors define the whole. Yet under the guise of “integrity,” the federal government is using the excuse of bad actors to take away the freedoms and liberties of all horsemen while completely ignoring the unique cultures of each individual state and the people who have created it.
As a result, if HISA is successfully enacted, many of those who have been racing horses in their states for generations will be run out of business by ridiculously expensive fees, fines, and other barriers to entry. This will affect breeders, jockeys, farriers, veterinarians, tracks, and supply shops. Entire cultures will be decimated in support of unclear, inconsistent, and oftentimes dangerous new rules designed by political and corporate elites who can’t even decide what kind of shoes a horse should wear.
For Louisiana and her people, my Solicitor General Liz Murrill and I took on this battle. We stood up for horsemen when it was neither popular nor politically convenient because we knew that it was the right thing to do. We believe that horse racing should be enjoyed by all — not just an exclusive elite. And our fight is now leading to the U.S. Supreme Court, where a disagreement between two federal courts must be decided. That is why it is absolutely vital everyone stand up now for true integrity in horse racing, for state sovereignty, and for the culture of this sport.
I almost feel like my great-uncle is knocking on your door, asking you all to wake up and fight with us. Place the power back into the hands of the people, where it belongs. I cannot guarantee you a win; but I do believe that the greatest advantage we have are our numbers. So, if the attorney general of your state has joined our coalition in the fight against HISA, please thank them; but if your attorney general is not yet involved, please encourage them to file an amicus brief in support of our cause. And if you run an organization affected by HISA, please join us at the U.S. Supreme Court to voice your opposition to this gross federal overreach.
Now more than ever, your voices must be heard. If we are to protect horse racing, we must take action. And so I say, “levez, levez!” Let’s go.
Trainers Talk (from left): Jason Barkley, Ron Faucheux, Bret Calhoun and National HBPA CEO Eric Hamelback. Photo by Denis Blake/National HBPA
The 2023 National HBPA Annual Conference closed with a lively discussion with three prominent horsemen who questioned the need, validity and overreach of federal legislation pitched as the so-called savior of racing while the industry heads into a challenging economic and logistical future.
Bret Calhoun, Ron Faucheux and Jason Barkley participated in the Trainer’s Talk panel moderated by multiple Eclipse Award-winning journalist and media specialist Jennie Rees and talked about everything from the Horseracing Integrity and Safety Authority, challenges facing small to mid-sized stables, finding and keeping help and what gives them motivation in spite of all of racing’s uncertainties.
HISA dominated the discussion – as it did much of the conference this week at The Hotel Monteleone in New Orleans – and the trio pulled no punches when it came to the controversial entity.
“The whole thing is a façade. It’s been all smoke and mirrors,” said Calhoun, a member of the Louisiana HBPA board who also maintains strings in Kentucky and Texas. “They sold this thing as the safety of the horse. It’s absolutely not about safety of horse. It’s a few people, with self-interest and they have their own personal agenda.
“If it was all about the horse we’d be spending a lot more time on racing surfaces. We could probably cure about 50 to 75 percent of the injuries if we had somebody overseeing surfaces on a daily, weekly basis. Not somebody taking soil samples before the meet and at the end of the meet and calling it good.
“They’ve been taking away certain medications, therapy machines, things that are truly beneficial. They’re having the opposite effect of what they’re saying … safety of the horse and rider. They’re doing absolutely the opposite. Like I said, it’s all a façade.”
Faucheux, also a member of the Louisiana HBPA board and just two back of the leader on the Fair Grounds’ leading trainer’s list that he topped for the 2021-2022 meeting, conditions a stable of about 60 horses and hasn’t left his native state since HISA rules went into effect last summer.
“I haven’t signed up and I won’t sign up. I’ll get out of training if I have to sign up,” Faucheux said. “A stable like mine, 55-, 60-horse stable, I couldn’t afford the cost of having to hire somebody to do the paperwork for me. The added expenses of it all, it wouldn’t work financially for me. It’s a struggle to get by the last couple years. Feed costs have gone up 50 percent, hay, shavings, it doesn’t make financial sense for a trainer in Louisiana year-round to sign up and have to take on all those added fees because right now we’re barely making it as it is.”
Barkley maintains a stable of about 30 horses based at Fair Grounds and Oaklawn Park in the winter and in Kentucky the majority of the year. A member of the Kentucky HBPA board and a third-generation horseman, Barkley said he feels the impact of the regulations already and only sees them as potential obstacles for trainers hoping to grow their stables.
“A lot of my smaller clients they don’t want to pay the added cost of a per-start fee, the extra vet checks, and all the added fees they want to put on us,” Barkley said. “There’s added costs and the time to do all the work. Between me and my main assistant, who is my wife, Shelbi, we do the extra paperwork, keeping track of everything. We already kept track of what every horse got every day but to then have to put it into files, that doubles the workload. That is time taken away from actually working with your horses, which is what you should really be focused on.”
Rees steered the discussion away from HISA at several points but the new laws found a way back, much like many of the prior panels during the week-long conference in the French Quarter.
“What is HISA’s ultimate goal? I’m sure there is one,” Faucheux said. “To me it looks like about half the racetracks to close down and about half the people to get out of it. And I think that’s what will eventually happen if it’s implemented across the country, over the span of several years.”
“These are people sitting in offices and coming up with these rules and regulations that really aren’t for the benefit of the horse, the riders, the owner, the industry as a whole,” Calhoun said. “It’s not good for the industry. … To get this bill, to attach it to a Covid bill, an emergency bill, that’s something that should be stopped with every instance. No emergency bill should ever have anything attached to it. That’s how they got this going. … That’s how Congress works, unfortunately.”
The trainers also agreed on that another major challenge they face – finding and keeping good help. That situation was difficult well before the pandemic and exacerbated since.
“I’ve got a family of like 15 that work for me,” Barkley said, joking that his 2-year-old daughter was back at the barn mixing feed while he attended the panel. “A lot of it’s you get good people that know good people, and hopefully keep pulling them in that way.”
Calhoun called it an “impossible task” he and his colleagues face nationwide.
“Since Covid, there’s now a reduced number of employees that you can find,” Calhoun said. “That’s part of issue. Then you add HISA costs to this and our labor costs are through the roof. It’s the highest bidder and eventually you’re losing significant money to stay in business.”
The trainers still possess great passion for racing – and the horse – despite all the challenges lumped on them from the boardrooms and from lingering economic issues stemming from the pandemic.
“When I realized quite early that I wasn’t going to be the quarterback for the New Orleans Saints I said I want to do this,” Faucheux said. “This is probably second to that. But all jokes aside, I love it. I love being a trainer. I love my horses, the staff and I love the lifestyle. … There’s a lot that goes along with it that can sour you up. Recently, with HISA brought about, and the price increases of everything, it makes it hard to go on and do it the way you want to do it.”
Calhoun acknowledged that winning 20 percent of the time – which very likely might get a trainer consideration for the Hall of Fame over a long career – still meant losing bunches of races along the way. But it’s the winning that makes it worth it, he said.
“That’s what drives me,” Calhoun said. “And the horse is what makes you want to get up every morning and do it.”
Barkley agreed, and echoed sentiments of one of his colleagues with a large stable spread out in multiple states.
“I just love the action. It’s all fun to me,” Barkley said. “I heard Mike Maker say, ‘they’ll run out of stalls before I run out of horses,’ and that’s kind of how I think. Bring them on, we’ll fight the fight as well as we can for as long as we can. … It’s all fun for me.”
Fixed odds on racing at U.S. sports books and more?
Albeit not as dramatically as sports betting is sweeping the country, fixed-odds wagering on horse racing is coming to America and should be embraced as well as understood by horsemen.
That was the advice of two heads of major horse-racing content distributors and two executive directors of horsemen’s associations. They spoke on a closing-day panel at the National Horsemen’s Benevolent & Protective Association conference, which was held in conjunction with the Association of Racing Commissioners International at the Hotel Monteleone.
The panelists addressed both the growth of U.S. tracks sending their race product to legal bookmakers overseas and the possibilities and challenges of introducing bookmaker-style fixed odds as a wagering option at U.S. tracks, whether at the actual track, another bricks-and-mortar facility or online.
“We’ve really had a mantra to educate our members on what’s coming,” said National HBPA CEO Hamelback when introducing what has become an annual panel. “Whatever you decide as a state — to bring it in, not to bring it in, or if you’re fortunate enough to have a sports-wagering license — I believe sports wagering and fixed odds are in our future. But it’s up to us to continue to educate everyone properly on the pros, the cons and the nuances of what’s going on.”
Panel moderator Michele Fischer offered some stats: A total of $44.3 billion globally was wagered in 2022 through legalized fixed odds on horse racing. That’s led by Australia at $19.1 billion and the United Kingdom at $12.9 billion. Sports betting in the United Stakes is predicted to gross $10.2 billion this year and be up to $16 billion in 2026, according to Fischer’s research. The point being: Fixed odds on horse racing is popular around the world, and American tracks need to get into the sports-book action igniting around the country.
American horse racing for more than a century has been based on pari-mutuel wagering — where players are betting against each other and final odds aren’t determined until after wagering closes on a race. With fixed odds betting, players can lock into a price and the competition is against the house, not only for sports betting but for wagering on horses.
Sports betting is now being offered in some form in 36 states and Washington D.C., with the enabling legislation in place in several others and before lawmakers in a few more. Presently only New Jersey and Colorado have implemented fixed-odds wagering on horse racing.
Offering the same structure as sports betting, with its fixed odds, has the potential to grow horse racing’s market, the panelists agreed. But they stressed it will take some time for the industry to reap the full benefits, with the betting public potentially reacting in unexpected ways.
“There are ways in which a low-percentage margin can turn into huge amounts of profitability. But to believe you’re going to know exactly what is happening from Day One is completely unrealistic,” advised Richard Ames, the CEO at the British-based Sports Information Services (SIS) and president of SIS Content Services, the largest horse-racing content supplier to global bookmakers/sports books. “Starting is important. Transparency of the data is important, and then move forward. Not having long-term deals on Day One, or having some flexibility to adapt to the way consumers want to play, that’s the way to approach this challenge.”
The risk of cannibalizing the existing pari-mutuel pools if fixed odds are also offered was discussed at length.
“I think everybody in this room agrees we want to get our racing product in front of the sportsbook customers,” said Scott Daruty, president of U.S.-based Monarch Content Management, the simulcast purchase and sales agent for more than a dozen premier North American tracks. “…. But it’s important that we introduce it in a way that doesn’t hurt our pari-mutuel pools. We have some pretty definitive thoughts on what that means. First and foremost: we believe fixed-odds wagering should be offered on a win and place basis only.”
That brought pushback from Ames, a former executive with Ladbrokes, a market leader in retail bookmaking.
“Going in (saying) we’re going to restrict what you can do misses the point in terms of the sports books’ attitude to horse racing,” Ames said. “We have to remember these sports books are generating huge amounts of revenue, and horse racing comes in late to the party. Those sports books need to want to do it…. It will cost them money to get ready to be able to bring these props into the market, and those props will be competing against other sports. I do recognize the challenge around cannibalization. But I think going into sportsbooks with the attitude, ‘we’ll restrict you from the beginning’ is not going to get them to buy into the production and do it in a way that will maximize the profitability for all.”
Dave Basler, Executive Director of the Ohio HBPA, and Louisiana HBPA Executive Director Ed Fenasci stressed that horsemen need to be informed and part of the decision-making process.
“There’s a strong possibility (fixed odds) could bring a lot more volume in, and any cannibalization is minimal because it brings additional pari-mutuel wagering in through the new volume,” Basler said. “But I don’t know…. If you’re doing $250,000 a day in total handle, you don’t have a lot of downside to trying fixed odds. It’s going to be a different equation to what deal you approve than a Santa Anita that’s betting $10-12 million a day, a lot of it on track.”
Ames and Daruty differed on what deal structure would most benefit American tracks and horsemen. Ames said the industry seems to be settling on a set-up based on a percentage of the revenue, whether on the gross or net.
“Either way, the bookmaker pays a percentage share of the revenue they take” as opposed to a flat per-card fee, he said. “The reason we would generally favor that is because it would mean everybody has the same interest: how do we maximize the value of the content?
“One of the challenges with the economics of fixed-odds betting is that the numbers look quite different than they do on pari-mutuel. The idea of ‘takeout’ in the teens or 20 cents versus the expectation of a share of the turnover (betting) that might be 2 percent. Those numbers look very different. It doesn’t mean they can’t deliver more money in the long run, but in the short run they’re quite difficult to get your head around. It needs to be incremental. I’d recommend in general having a shared approach with the bookmaker. That means everybody is talking the same language.”
Daruty offered a different perspective. “I think it’s important that you don’t get too caught up in taking a little tiny piece because it’s going to be a big, big pot,” he said. “That’s great, and maybe you do in a new market. But again, if you’re cannibalizing your parimutuel pools, you end up losing money in the long run.
“What we want to make sure never happens is our horse racing is used as a loss-leader product. You take a horse that should be 5-1, and the sports books are competing so one book offers 6-1 and one offers 7-1. Ultimately they’re not making any money on that race, but they’re using it to attract customers. And guess what? You get a share of their profit on that, which is zero. All you’ve done is move people out of your parimutuel pools and into fixed odds.”
Fischer, a Louisville-based industry consultant who serves as vice president of SIS Content Services, asked why not just add pari-mutuel wagering to U.S. sportsbooks? Daruty said that might be the answer.
Daruty — whose corporate ownership includes Santa Anita and Gulfstream Park in its racetrack portfolio — said the biggest form of betting in the United States is the lottery “which is a form of pari-mutuel wagering.
“I’m not saying we’re opposed to fixed-odds racing, but we look at it very cautiously and very carefully,” he said. “I think if there’s one thing we’d all agree is that we need to get our racing product in front of all these sports-betting customers. Our company is very open to fixed odds, but only if we can do it in a controlled, measured way that doesn’t undercut our business.”
Back to Ames: “Everything going on in those sports books is fixed odds. The idea you will try to force those consumers, who are a big incremental opportunity, to have to learn to bet in a different way, that seems to me to be counterintuitive… I think to really take the opportunity of these sports books there has to be a fixed-odds solution. That doesn’t mean there can’t be a parimutuel solution as well.”
Meanwhile, the American racing product is coveted by content distributors because they are trying to provide betting products around the clock to their global clients.
Daruty said his company’s initial foray into the international market was “an utter failure.” Success came when they started offering the odds to the overseas books and tailoring the packaging to individual markets overseas. That included hiring a team to call the races in the local language on a second audio feed.
Fenesci said he was surprised to find out last summer that Louisiana Downs’ best overseas outlet was Spain, saying, “When I’m looking at these contracts, it was very important for horsemen to get the feedback exactly where the product is going and what is the volume that is being generated in those markets, so that you can continually evaluate and make good decisions.”
The Ohio and Louisiana horsemen have been at the forefront of ensuring their purses benefit from overseas betting on their races.
“It is imperative that your product get into as many bookshops as you can,” Fenasci said. “…. When you’re dealing with distribution, you want to work with reputable companies that have the relationships around the world to get your content the widest distribution. We’ve had long-term agreements with our racetracks that our purses will share in revenue generated directly from horse racing.”
Basler said the Ohio horsemen handle it through their domestic simulcast approvals. “They are very specific that in order to sell U.S. content within the U.S. or outside the U.S., all sites have to be disclosed to us and approved and we have to receive our share of that revenue,” he said.
Honoring Don Stemmans, Claiming Horse of the Year Kitodan
Earlier at the conference, Don Stemmans, whose family has raced horses in south Louisiana for eight generations, was honored Wednesday as an HBPA Living Legend, a distinction that in its third year has fast become a tradition. Stemmans and his wife, Janet, opened their first tack shop in 1968. His capacities in racing include being a starter at Evangeline Downs and serving on the board of the Louisiana Thoroughbred Breeders Association for more than 20 years. He also would shoe horses on his days off from working on oil rigs. Louisiana HBPA board member Kevin Delahoussaye feted Stemmans as part of a luncheon program. Now a banker, Delahoussaye recalled his first line of credit coming at age 13 from “Mr. Don” to buy tack for a racehorse.
At Tuesday’s luncheon, Ellis Park-based Kitodan, who went from being claimed twice to winning Kentucky Downs’ $750,000 (G3) Big Ass Fans Dueling Grounds Derby, was honored as the 2022 National Claiming Horse of the Year. Doug Miller, who owns Kitodan with Bill Wargel and trainer Eric Foster, was on hand to accept the award.
Louisiana Attorney General Jeff Landry. Denis Blake/National HBPA photo
Louisiana Attorney General Jeff Landry and Daniel Suhr, managing attorney for the Liberty Justice Center, told an assembly of racehorse owners, trainers and racing regulators Tuesday that they expect the Horseracing Integrity & Safety Act (HISA) to wind up before the U.S. Supreme Court — and they also believe America’s highest court will strike down the legislation as unconstitutional.
While the room at the Hotel Monteleone was populated with folks concerned how HISA will impact their industry, Landry and Suhr said the four legal challenges before the Fifth and Sixth Circuits have much broader implications for the country. HISA, originally passed by Congress when slipped into the 2020 Covid relief bill, sets up a private corporation, also known as HISA or the Authority, with broad powers to create, implement and enforce safety rules and drug and medication policies with the Federal Trade Commission providing some measure of oversight.
Landry, who brought suit against HISA in U.S. District Court in the Western District of Louisiana, was the keynote speaker Tuesday on the first of three days of panel discussions and presentations at the National Horsemen’s Benevolent & Protective Association (NHBPA) conference being held in conjunction with the Association of Racing Commissioners International (ARCI), which represent pari-mutuel racing regulators.
“If we don’t get this thing struck down, you better have this meeting in probably the dining room – and I mean the small dining room here at the Monteleone,” Landry said. “It will be a bunch of folks who have more money in their pockets than they know what to do with. And they’re going to control the tracks and horse racing, and the rest of us really won’t be able to enjoy the sport… This law is actually designed to eliminate the very fabric of horse racing. And so we stood up.
“I said, ‘We are going to keep filing suits, and we’re going to find a way to bring this thing to the U.S. Supreme Court if we have to. Guess what? We are there. And I’m glad we’re there. I know the Sixth Circuit decision (upholding HISA, in contrast to the Fifth Circuit’s appellate court ruling) was not all that great for us. But quite frankly, I think it was. Because it is going to absolutely force this case before the United States Supreme Court.
“This in my opinion, outside of horse racing, is actually one of the most important cases that will go before the Court this century. If this law is upheld, there is nothing that is out of reach of the federal government. There is no industry. There is no activity. There is nothing those boys in Washington can’t lay their hands on… I don’t believe horse racing is one size fits all. I’m not about to tell folks in Florida or New York or Kentucky how they should conduct their horse racing. And I don’t want them to come down to Louisiana and tell me how we should.
“… The fellows that are writing the (HISA) laws don’t even know how to shoe a horse, yet they want to regulate a horse shoe. Then to add insult to injury, this law is paid for on the backs of you all – those who labor the hardest and sometimes receive the least. The jockeys, trainers, vets, the owners. You paid for it. Uncle Sam says, ‘We like this law. You’ve got no opportunity to debate whether you think the provisions were right, wrong or indifferent. We signed this into law. We’re going to regulate you, and you’re going to pay for it.’ How do y’all like that?
“… This basically creates an opportunity for a handful of elite people to dictate the rules of the game. For those of you who have helped us and joined us, I want to say ‘thank you.’ From where we started to where we are today is a much different place… I really do believe that we can affect a minimum of five of those justices on the Court…. I believe there’s a better option for us than this law. I’m going to tell you, when this is all over with, we’re going to give you a case and we’re going to give you a decision from the United States Supreme Court that is absolutely going to make you happy.”
‘What we’re fighting about is accountability, transparency and fairness’
The non-profit Liberty Justice Center is representing the National HBPA pro bono in what became the first challenge to HISA’s constitutionality filed in the Fifth Circuit, whose Court of Appeals ruled 3-0 in favor of the horsemen. Those judges remanded the case back to the lower District Court for reconsideration.
“I believe this case is important not just for this industry,” Suhr said. “I know it is. But I’m here because I believe it’s important for our country and our democracy, and I don’t say that lightly. Because fundamentally what we’re fighting about is accountability, transparency and fairness, which are core guarantees of our Constitution to all of us as citizens. When the government exercises power in our lives, when it comes into our business, our families, it is accountable to voters, it is transparent to the stakeholder community, to the news media and to all of us as citizens. And it is neutral. It is independent and it is fair when it exercises that power.”
Suhr said, based on their written SCOTUS opinions, that he believes there are enough justices to strike down HISA. “There’s no such thing as a slam dunk in my business,” he said. “It’s a lot like yours. Everything is a little bit of a gamble. But I do this for a living and I can tell you, we brought this case because we believe when it gets to the Supreme Court, those fundamental principles we’ve been talking about are actually going to decide the day. I think we have a really great shot at this.”
Suhr said the Sixth District, in upholding HISA, got the application wrong but the principle right.
“‘ … the government may not empower a private entity to exercise unchecked legislative or executive power,” he said, reading from the ruling. “Those who govern the people must be accountable to the people. Completely transferring unchecked federal power to a private entity that is not elected, removable or impeachable undercuts representative government at every turn.’
“… We’re not going to let the government pick individual parts of industries and give them power over the rest of the industry.”
The Authority has said repeatedly that it plans to start enforcing its Anti-Doping and Medication Control rules on March 27 if approved by the FTC. Suhr said should the FTC grant approval, the Liberty Justice Center is prepared to go to court immediately to seek emergency relief aand an injunction to bar enforcement of those rules.
Joining Suhr on a Tuesday morning panel updating the audience about the four court cases were attorneys John Duvieilh, Pete Sacopulos and National HBPA General Counsel Peter Ecabert, who all represent plaintiffs in the HISA cases.
Comparisons to financial-services industry are flawed, lawyer says
Suhr said proponents of HISA incorrectly compare having the Authority regulating horse racing to the Financial Industry Regulatory Authority (FINRA) regulating the financial-services industry under the Securities and Exchange Commission (SEC).
“You’ll hear this line, ‘Well we’re just doing for horse racing what Congress has already done for the financial-services industry, that there’s this self-regulatory industry organization and the SEC will oversee them and it’s the exact same model,’” he said. “It is not the exact same model.
“Everybody who is licensed by FINRA gets to vote as to who sits on the board. HISA, the Authority, is a self-perpetuating oligarchy. They pick themselves and they pick their successors. Does anybody in this room think if there were an open election … on who would sit on the board of HISA, that we’d have the same board we have today? Not going to happen. The second big difference is that if enough people didn’t like FINRA, the law allows them to set up their own alternative.”
Another difference, Suhr said, is that the SEC is composed of experts in that industry, which is not the case with the FTC and horse racing. “They’re just going to rubber-stamp it,” he said of the rules. “That’s very different from the SEC model, where you have truly independent, truly expert checks and balances on FINRA.”
Duvieilh — who represents the Louisiana HBPA, the Louisiana Racing Commission and others who joined Louisiana and West Virginia in Landry’s lawsuit — said of HISA: “There are some parts of it that are good. But the bad parts outweigh the good parts, so we have no choice but to pursue what we’re doing. Which hopefully someday will get us to the table. We have to get in there and have a voice. And if we don’t, we’re going to get run over.”
Alternatives to HISA: Compacts, master cooperative agreements
A Tuesday afternoon panel offered concepts that could lead to uniformity without vesting so much control and power in one entity and still utilizing the existing racing commissions.
“As we all look through a different lens now, something has to be established for uniformity,” said National HBPA CEO Eric Hamelback. “We want to make it constitutional and we want to make sure the right participants are helping to make the decisions. I see it as the right participants are in this room…. We want uniformity based on science. We want it based on peer-reviewed research. We feel the way the (HISA) legislation was drafted, it doesn’t lean toward being based on science. I think there’s a lot of opinion in there.”
How future of Lasix could be determined by an opinion, not science
Mike Tanner, the executive vice president and CEO of the U.S. Trotting Association, provided a stark example of how a decision fundamentally changing the industry could be based on a personal whim and not science.
“We can see in the plain language of the HISA statute that the HISA Authority will prefer arbitrary authority to science in making its decisions,” Tanner read from remarks prepared by USTA President Russell Williams, who was unable to attend. “The study group is given three years to come up with a report that will include recommended changes, if any, to the 48-hour ban. The board of the HISA Authority may modify the ban based on the study report, but only by a unanimous vote. Section 3055(e)(3)(B) goes on to require that the unanimous vote must unanimously adopt the following findings: the modification is warranted, the modification is in the best interests of horse racing, furosemide has no performance enhancing effect on individual horses, and public confidence in the integrity and safety of racing would not be adversely affected by the modification.”
Williams’ remarks continued: “So HISA calls for a study conducted by a group that the HISA Authority puts together, with no requirement of scientific methods or validity. Even so, the study results can be invalidated by the opinion of any one member of the HISA Authority. No explanation is required for this opinion. Nothing, for example, could be more arbitrary than the opinion of one HISA Authority board member about public confidence in racing. It is simple authoritarianism, the opposite of accountability, that sets up a rigged and unscientific study and then, in case the study recommends an exception for furosemide, to provide for a unilateral veto on the basis of any one of four measures. This part of the HISA statute spells out in its own words that science will have no part to play in HISA regulatory decisions. Arbitrary opinion will rule, even if it is the opinion of a single board member.”
One alternative path forward is adopting an interstate compact, where states opt-in to agree to the same rules. Ecabert, the National HBPA’s General Counsel, said compacts are “basically a vehicle where states get together and agree to act cooperatively. It allows for responsive and quick resolution.”
Ed Martin, the President and CEO of the ARCI, said a compact could be a workable alternative “so as not to bankrupt an industry by replicating things already in place.
“… ARCI has proposed interstate compacts in the past as a way to avoid the federal government getting into something that has been handled by the states,” he said. “It’s welcome that the HBPA now has interest in this.”
Martin: ‘The Sixth Circuit pretty much diminished HISA (Authority)’
In the Sixth Circuit case’s recent ruling, the appellate court upholding the legality of HISA seemed satisfied that a two-sentence “fix” passed in late December as part of the must-pass omnibus bill addressed constitutional questions by giving more power to the Federal Trade Commission. However, Martin said that ruling comes with a downside for HISA supporters.
“The Sixth Circuit pretty much diminished HISA,” Martin said. “The (Sixth Circuit) court believed the regulator is the FTC. That ruling pretty much said that HISA enforcement action is not final. It’s the FTC that makes it final. The Federal Trade Commission all of a sudden getting a lot of clenbuterol positives is not something that is going to go over very well in the internal staff meetings. So that kind of weakens that whole adjudication, arbitration system that HISA hopes to create for themselves. The other thing I got out of reading that thing is that HISA is just advisory and if you don’t like a rule you can go directly to the FTC.
“… So a lot changed with that decision. I’m not sure the people who originally were trying to create HISA expected that it would not be all-powerful. So now there’s a federal agency with no veterinarians, no experience in equine care and limited exposure to racing that supposedly is in total control.
“… There’s not a racing regulator who is not concerned about how this is going to play out… HISA is learning about how complicated and hard it is to regulate this sport. You can’t sit in an ivory tower and think you’ve got all the answers, because you don’t. Then when you go out and start implementing, you start affecting real-life people. And you start impacting on the economics of an industry that was fragile to begin with in many corners.
“They had a golden opportunity to get federal money to pay for (HISA) and mitigate the cost of it. We made a pitch to say, ‘If you’re going to want to do this, put some money in it. Because the cost of this is going to be prohibitive.’ Whomever lobbied Congress just ignored that, and subsequently should this stand, everyone will pay more.”
“This is not rocket science,” says Texas commission vice chair
Equine veterinarian Connie McNabb — who serves as vice chair of the Texas Racing Commission and who was a career military officer in the U.S. Air Force, Texas Air National Guard and elsewhere — said uniformity could be achieved using existing state structures through master cooperative agreements between federal agencies and states. In the case of the National Guard, the federal government provides funding and equipment to the states, which in turn must meet the same strict standards and a high level of accountability.
“Uniform national standards are also highly attainable by another mechanism,” McNabb said. “Our state statute specifically does not allow us to relinquish our responsibility and control over racing — even though we do agree that national standards, more integrity, all of that is very good. But state control and state sovereignty is not on the table, and doesn’t have to be.
“… Why are we inventing a whole new mechanism, when something has been very well road-tested?… This is not rocket science. It does not have to be an independent group that, as the lawyers put out there, very well might be trampling on our rights under the Constitution.”
“Do we want a higher quality of racing? Do we want greater integrity? You bet. Can we do everything that they’re doing to the same standards with the budget we currently have? No. But we are more than willing and excited to meet that level. But it’s all about resources. And we’ll be as accountable as anybody. If you don’t live up to it, there are consequences, if you do, press on. This does not have to be the creation of a new authority that happens in the dark of night.”
Hamelback: ‘We feel as if it’s an answer everybody will appreciate’
Hamelback, the National HBPA CEO, concluded the session saying there are several Congressmen, “bipartisan and bicameral, that are very interested in a repeal of HISA. But they also are just as interested in moving something forward that is driven from the ground up, utilizing the state commission infrastructure.
“Basically, what we are considering is an example of the federal interstate compact. The suggestion is a board of directors made up of nine individuals, five of them set by the states that have the most racing dates. It doesn’t matter what breed. The members of the compact would then elect the other four.
“From there we’ve also suggested emphatically that there be three scientific advisory committees — one for each major racing breed — and a fourth committee, a safety committee. Looking at some of the same sort of structures that we’ve seen with HISA, we think there is a model there. We have recommended that there be funding from the government, funneled through the United States Department of Agriculture and they be involved with equine research…. The ultimate enforcement, we feel like it still comes from the racing commissions and the structure we have now. We don’t have to reinvent the wheel.”
Meanwhile, litigation continues.
“While people look at us and say, ‘What are you going to do next?’ Ultimately it depends on what happens with the litigation,” Hamelback said. “So for us, we feel as if there’s something there. We feel there is an answer. We feel as if it’s an answer everybody will appreciate because all of the participants in the industry will be involved.”
The Houston track steps back from announcement to resume simulcasting Feb. 3.
On the day Sam Houston Race Park intended to resume interstate simulcasting, the Houston racetrack took a step back and has put that plan on hold citing the need for a legal review of the “many complexities” surrounding recent court action and law amendments by Congress related to the Horseracing Integrity and Safety Authority.
“We have determined more time is needed to fully evaluate the many legal complexities surrounding recent court decisions and the HISA amendment enacted by Congress at the end of last year,” said a statement released by Sam Houston Feb. 3.
The decision to resume simulcasting followed a Jan. 31 ruling by the Fifth Circuit Court of Appeals that denied a request by HISA and the Federal Trade Commission to reverse a decision that the HISA is facially unconstitutional. The appellate court had Nov. 18 reversed a decision of the U.S. District Court for the Northern District of Texas that had upheld the constitutionality of the HISA after it was challenged by the National Horsemen’s Benevolent and Protective Association, multiple state HBPA affiliates, the State of Texas, and the Texas Horse Racing Commission. Since the initial Fifth Circuit ruling, Congress amended the language of the Horseracing Integrity and Safety Act to include “clarifying language” that shores up the FTC’s oversight of HISA.
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.
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.
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