Second federal judge dismisses lawsuit challenging Horseracing Integrity and Safety Authority
A federal judge in Kentucky has dismissed a lawsuit filed by a number of state racing commissions and other racing-related parties that had sought to nullify the federal legislation that created the Horseracing Integrity and Safety Authority.
In a ruling issued late on Friday, Judge Joseph Hood of the U.S. District Court for the Eastern District of Kentucky dismissed the lawsuit with prejudice, stating that the plaintiffs had failed to demonstrate that the legislation violated several clauses of the Constitution, including the “nondelegation” and “anticommandeering” doctrines cited in the lawsuit.
Two months ago, a federal judge in Texas dismissed a similar lawsuit filed by the National Horsemen’s Benevolent and Protective Association and other racing-related groups. That lawsuit had made substantially identical claims to the one filed in Kentucky.
The Kentucky lawsuit was filed by racing commissions in West Virginia, Louisiana, and Oklahoma, along with private companies based in Oklahoma, among other plaintiffs. They had argued that the 2020 legislation establishing HISA, a private, non-profit company overseen by the Federal Trade Commission that has the power to draft and enforce national rules for horseracing, illegally granted too much power to a private company.
Quoting liberally from filings in the case and precedents, Hood’s ruling held that the federal legislation creating HISA “sets clear boundaries for what is delegated to the authority.” The ruling drew parallels to several other private regulatory agencies, including the Securities and Exchange Commission and the Financial Industry Regulatory Authority, that had withstood judicial scrutiny, and noted that HISA’s rules are subject to approval and revision by the Federal Trade Commission.
“The FTC retains the ability to control what becomes a binding rule and can contribute to the language of the proposed rule through recommendations that must be made for the Authority to resubmit,” the ruling stated. “Therefore, HISA’s rulemaking scheme does not violate the private nondelegation doctrine.”
The ruling also rejected arguments that HISA’s regulatory scheme would deny racing licensees the protection of federal rights, quoting from a motion filed by the defendants that said “due process is baked into the system.” Hood’s ruling later used a similar argument to dismiss a contention from the plaintiffs that the presence of industry experts on HISA’s board constituted a similar violation.
“Even assuming the authority is, in whole or in part, comprised of self-interested competitors, the authority is subordinate to the FTC in the regulatory process,” the ruling said. “Therefore, the authority is not regulating its competitors in violation of due process.”
HISA will begin its operations on July 1. The FTC has already approved a large tranche of HISA rules applying to safety standards at racetracks that will go into force on that date. On Friday, HISA released another tranche of proposed regulations governing medication use and anti-doping rules, with the goal of having the regulations approved by the FTC so that they can go into effect on Jan. 1.