Appeals court strikes down challenge to HISA from three states

A U.S. court of appeals has ruled that a constitutional challenge to the Horseracing Integrity and Safety Authority is “unlikely to succeed on its merits,” striking down a request for preliminary injunction that would have removed the states of Arkansas, Iowa, and Minnesota from HISA’s jurisdiction.

A three-judge panel of the U.S. Eighth Circuit Court of Appeals ruled that the plaintiffs in the case would be unlikely to win challenges to HISA’s constitutionality by citing earlier rulings by both the Fifth Circuit and Sixth Circuits in which major elements of earlier challenges to HISA were rejected. The challenges have centered on the so-called non-delegation clause of the constitution, in which Congress is restricted in how it can delegate powers to private companies.

HISA was given broad rule-making and enforcement powers under the oversight of the Federal Trade Commission by legislation initially approved late in 2020. The act was amended late in 2022 to address rulings in the Fifth District that upheld several challenges.

:: Bet the races with a $200 First Deposit Match + FREE All Access PPs! Join DRF Bets.

“We join the other two circuits in concluding that the authority is subordinate to the [FTC] such that the rule-making structure of the act does not violate the private nondelegation doctrine,” the panel wrote.

However, one of the Eighth District judges issued a dissenting opinion on one major aspect of the case centering on the enforcement powers of HISA. In an opinion issued earlier this year, the Fifth Circuit had also focused on the enforcement powers in ultimately striking down HISA’s constitutionality, despite its agreement on the constitutionality of other aspects of the enabling legislation and HISA’s relationship with the FTC.

The dissent relied heavily on the language of the Fifth Circuit decision, which rejected comparisons between other private companies that have been set up to regulate or oversee commercial activity, such as the Financial Industry Regulatory Authority. Supporters of HISA have said that the enabling legislation was modeled on the act establishing FINRA.

“Even though Congress may have purportedly modeled HISA on a regulatory scheme in the securities industry that has been widely approved as constitutional, the inclusion of some similar language in HISA alone does not make the Authority’s enforcement role identical or even substantially similar to the role of FINRA in the securities context,” the dissent contended.

The divergence in opinion between the Fifth Circuit and Sixth Circuit has led most legal observers to believe that the U.S. Supreme Court will consider the issues during its next docket, which will begin to be laid out in October. Despite the difference in opinion, HISA continues to operate in nearly all major U.S. racing states, with the exception of Louisiana and West Virginia.

The Eighth Circuit case was brought by horsemen in the states of Arkansas and Iowa. The U.S. District Court in the Eastern District of Arkansas had previously denied the request for a preliminary injunction, and the plaintiffs then appealed to the Eighth Circuit, which covers Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota.

:: Bet the races with a $200 First Deposit Match + FREE All Access PPs! Join DRF Bets.