Paulick Report

NHBPA, State Horsemen’s Groups File Suit To Halt HISA

March 15, 2021

(Paulick Report)—The National Horsemen’s Benevolent and Protective Association, together with state affiliates in Arizona, Arkansas, Indiana, Illinois, Louisiana, Nebraska, Oklahoma, Oregon, Pennsylvania, Washington and West Virginia (Mountaineer) have filed a federal civil suit in an attempt to put the brakes on the Horseracing Integrity and Safety Act (HISA). The suit, filed in the U.S. District Court for the Northern District of Texas, names the Federal Trade Commission and several of its employees, as well as the people tasked with forming the Nominating Committee for the new federal authority.

The suit seeks to have HISA and a number of its elements declared unconstitutional, to enjoin defendants from taking any action to implement HISA, as well as nominal damages of $1 and compensatory damages of any fees charged to horsemen by the new authority.

The lawsuit is being handled by The Liberty Justice Center, a non-profit legal center “that represents clients at no charge and was founded to fight against political privilege,” according to its press release about the case.

The crux of the suit is that plaintiffs believe HISA delegates legislative authority to a private organization and private individuals in violation of the U.S. Constitution. Although the new federal authority established by HISA will be overseen by the Federal Trade Commission, the suit points out that the FTC has the authority to reject or request modification to rules made by the authority but isn’t allowed to draft its own rules and is not involved in enforcement of those rules.

Additionally, the nominating committee is tasked with picking the members of the new authority’s boards, rather than the FTC. The nominating committee is comprised of Dr. Jerry Black, Katrina Adams, Leonard Coleman, Jr., Dr. Nancy Cox, Joseph Dunford, Frank Keating, and Kenneth Schanzer. According to the suit, Black is a professor at the Texas Tech University School of Medicine; Adams is a past president of the United States Tennis Association; Coleman is a former president of the National League of Major League Baseball; Cox is dean of the College of Agriculture, Food, and Environment at the University of Kentucky; Dunford is a former chairman of the Joint Chiefs of Staff; Keating is a former Governor of Oklahoma; Schanzer is a former president of NBC Sports.

The suit claims that allowing the new authority’s board to be appointed by a private group of individuals is unconstitutional because the U.S. Constitution requires the president, head of a department, or court of law to appoint officers in such circumstances. Not only that, the suit claims, “this private nominating committee was hand-picked by a small group of owners and trainers within the horseracing[sic] industry who supported passage of HISA, over the objections of thousands of owners and trainers, represented by plaintiffs, who will be regulated by HISA.”

The suit also points to what it calls a lack of “intelligible principle” for the FTC to guide the new authority.

“HISA gives the FTC no standards upon which to base its decision to approve or disapprove rules proposed by the Authority. Its guidance is completely circular and unintelligible: it is told to look to rules proposed by the Authority and approved by the FTC to determine whether to approve rules proposed by the Authority.”

Read the full lawsuit here.

The Jockey Club, which for years pushed for passage of the Horseracing Integrity and Safety Act and its predecessors, issued the following statement:

“We are not at all surprised by the lawsuit filed against HISA today by a number of affiliates of the National HPBA. We are confident that the law is constitutionally sound and legal, as it is patterned precisely after other long standing law.

“It’s a shame that the National HPBA has chosen this expensive and time consuming path, but it is consistent with their well known pattern of conduct that has served to block or water down needed reforms that the vast majority of the equine industry and animal welfare organizations support.

“It is worth noting that this suit is also brought by state HBPA affiliates that are the greatest beneficiaries of the earlier federal legislation, the Interstate Horseracing Act of 1978, which confers upon them virtually unlimited authority over interstate wagering on Thoroughbred races,” The Jockey Club’s statement concludes.

The NHBPA said the inclusion of some state affiliate and exclusion of others was based on which were able to vote on the issue.

“This lawsuit is about protecting horsemen’s interests nationwide and challenging an illegal law,” said Peter Ecabert, general counsel to NHBPA. “HBPA’s Executive Committee voted unanimously to move forward with the lawsuit. Some affiliate organizations did not have votes in time to join the lawsuit. Accordingly, National together with the Affiliates who were able to quickly secure formal approval moved expeditiously as named plaintiffs to save horsemen from the irreparable harm that this illegal law will cause.”

“All Americans should be concerned when Congress gives power to regulate an entire industry to a private group of industry insiders,” said Brian Kelsey, senior attorney at the Liberty Justice Center. “This goes way beyond setting rules for the sport of horse racing. This is not the NBA or the NFL. The ‘Authority’ has the power to make laws, issue subpoenas and effectively tax owners with little real oversight. Placing that power in a private organization is illegal and must be stopped.”

The NHBPA released the following statements regarding the suit Monday:

Peter Ecabert, General Counsel, National HBPA: “The National HBPA has been very vocal in its opposition for HISA, including for the fundamental constitutional flaws the lawsuit addresses.

This is not some last-ditch, Hail Mary effort to prevent legislation we opposed from taking effect. This is about our core mission, ‘Horsemen Helping Horsemen.’ We must do our due diligence to make sure that such a complete restructuring of our industry is not only in its best interests but also is constitutional. Throughout the shameful process of this march to pass this legislation, there was a high degree of HISA’s supporters simply telling owners and trainers to ‘trust us’ without addressing our legitimate concerns. The bill was passed without proper vetting and gives to a private authority broad government powers over our industry with little or no oversight. This legislation was ramrodded through without anyone knowing the costs of creating and maintaining this additional bureaucracy and who would pay for it.

“Not doing our due diligence now could very well have disastrous consequences in the near and long-term future for horse racing, including for owners, trainers and horseplayers. When a bad law is passed, you’re stuck with it. You can’t just run to your state racing commission and explain that real-life consequences hadn’t been anticipated.”

Bill Walmsley, President of the Arkansas HBPA and former President of the National HBPA, former Arkansas Court of Appeals judge, former Arkansas State Senator and founding board member of the National Thoroughbred Racing Association: “There’s a real concern among Thoroughbred horse owners that this could put us out of business. By passing HISA, Congress picked winners and losers and put well-connected owners in charge of horse racing across the country. There was no serious debate or discussion about the costs, let alone the legality of creating a private group to control horse racing.”