FTC approves new funding formula for HISA

The Federal Trade Commission has unanimously approved a rule change sought by the Horseracing Integrity and Safety Authority that will equalize the assessments charged to a state’s racing constituents by basing the dues solely on the number of starts made by horses in those states.

The present formula, which is used to raise roughly $80 million for HISA annually, uses both the number of starts and purse distribution to arrive at assessments in which tracks with higher average purses pay far larger fees to HISA than tracks with lower purses. The discrepancy led Churchill Downs and the New York Racing Association to file a suit last month alleging that the weighted formula violated HISA’s enabling statutes.

In addition to the new assessment methodology, the rule approved by the FTC contains a provision stating that the new formula will not go into effect until the start of 2026. That will give racing constituencies slightly longer than 12 months to figure out how to adjust their obligations. It will also likely initiate a new round of criticism for HISA as constituencies in states facing higher dues scramble to come up with the money to meet their new obligations.

HISA fees are typically paid by a variety of racing constituents, depending on the state. In Florida, the fees are paid out of the state budget, under legislation passed in recent years. In many other states, horsemen and tracks split the fees, with the horsemen’s share generally coming out of the purse account. In some states, racing commissions contribute as well, either directly or through credited work.

According to the FTC, the commission approved the rule change by a 5-0 vote. The FTC posted the proposed rule change in late October for public comment. In a release, the FTC said the change was “consistent” with HISA’s enabling legislation.

When HISA launched its operations in 2022, the authority initially based the assessments solely on starts. But under pressure from horsemen’s groups and lower-tier tracks, HISA amended the rule to include purse distribution in the formula, adopting a progressive system in which the highest-tier tracks contribute substantially more toward HISA’s operations.

It was that change that led Churchill and NYRA to file suit against the authority. According to documents filed in the lawsuit, the two racing associations are currently $5.8 million in arrears to HISA because of their objections to the formula. In 2024, the assessments on the two racing companies amounted to nearly a quarter of HISA’s entire budget.

The FTC approval of the rule change is not expected to alter the company’s positions or lead to the suit being immediately withdrawn, as each is seeking a modification of the formula for assessments that the companies have already accrued.

In response to the lawsuit being field, HISA had said that it intends to “aggressively defend itself.” The suit was filed in a U.S. District Court in Louisville, where Churchill Downs is headquartered.

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