HISA Is Unconstitutional, Federal Appeals Court Rules

Written By Marian Rosin on December 16, 2022 - Last Updated on February 6, 2023
West Virginia horse betting affected by HISA ruling

Hold your horses, West Virginia, with horse racing — and betting on it. As popular as West Virginia horse betting is, anything that impacts the equine sport nationally is echoed in the Mountain State.

And now, in a national legal saga that also has involved West Virginia specifically, a federal appeals court has reversed a previous lower court decision on the constitutionality of the Horse Racing Integrity and Safety Act (HISA).

The US Court of Appeals for the Fifth Circuit ruled on Nov. 18 that the Horse Racing Integrity and Safety Act — the objective of which is right there in its name — was facially unconstitutional. The appeals court said that the Act “delegates unsupervised power to a private entity” in violation of the private nondelegation doctrine.

On the way to this decision, West Virginia has been among the plaintiffs opposing HISA. In a July suit brought alongside Louisiana, its main complaint was the financial burdens HISA’s stringent testing regulations would place upon state racing commissions.

The two states won a preliminary injunction to keep from implementing the HISA Authority’s rules. That federal court ruling did not, however, address HISA’s constitutionality. The injunction did not last long.

HISA and its nominal oversight agency, the Federal Trade Commission (FTC), successfully appealed, and the injunction received an administrative stay in August. The result of the Nov. 18 ruling lifted that stay.

Going back to last spring, West Virginia Racing Commission (WVRC) chairman Ken Lowe Jr. hasn’t held back on his thoughts on HISA. He has portrayed the law as a “federal statute crafted by elitists within the racing industry whose interests aren’t aligned with the realities of small-circuit racing in West Virginia,” according to the Thoroughbred Daily News.

What happened in the courts with HISA?

November’s ruling followed the appeals court hearing oral arguments in August on legal challenges to HISA’s constitutionality. Those legal challenges were brought by:

  • National Horsemen’s Benevolent and Protective Association (NHBPA),
  • Affiliates against the HISA Authority, and
  • The FTC.

Before this appeal, the US District Court (Northern District of Texas) had found that HISA did not violate any constitutional provisions. However, it acknowledged that the NHBPA had “legitimate concerns.”

November’s three-judge panel disagreed, however. They held that “a cardinal constitutional principle is that federal power can be wielded only by the federal government.” And HISA is not part of the federal government.

However, private entities such as the HISA Authority can wield federal power if subordinate to a government agency. But while the FTC is a government agency, the Authority could restrict the FTC’s review of proposed rules and policy choices, according to the panel.

This would make the FTC subordinate to the Authority, rather than vice versa. And it would violate a “basic safeguard” by “vesting government power in a private entity not accountable to the people,” the panel decided.

“The Constitution forbids that,” the appeals court wrote.

Finally, the appeals court remanded the case back to the district court. From there, HISA can request an “en banc” (all judges present) hearing before the full court of appeals.

It can even appeal the case to the Supreme Court. Whether either court will hear the case remains to be seen.

What are the Horseracing Integrity and Safety Act and Authority?

HISA aims to make uniform horse racing regulations across the country. At the time of its bipartisan passage, those varied in patchwork fashion from state to state. It was set to take effect on July 1, 2022.

Originally, it was part of the omnibus Consolidated Appropriations Act and was signed into law in 2020.

It came as a response to track tragedies, like the 40 horse deaths at Santa Anita Park in a little over a year, as well as doping scandals, like the 2020 investigation that led to charges against 27 people. Those included trainers, veterinarians, and drug distributors.

The Horseracing Integrity and Safety Authority created through HISA would have certain duties. Those included developing rules for:

  • Anti-doping
  • Medication control
  • Racetrack safety

To accomplish its duties, the Authority would have two standing committees:

  1. A racetrack safety standing committee
  2. An anti-doping and medication control standing committee

The Act applies to thoroughbreds only, although the Authority may approve rules to include other breeds. And HISA looks to protect jockeys as well as horses.

As HISA’s CEO, Lisa Lazarus, put it in a Dec. 6 speech to the Jockey Club, “The biggest threat to jockey safety is an unsound horse.”

Some, however, like Bennett Liebman, a former acting co-chair of the New York State Racing and Wagering Board, have criticized the FTC’s involvement on grounds other than constitutionality. “The FTC has much bigger business to pursue than just racing,” he said. He also pointed out that the FTC has no expertise in animal welfare.

But Marty Irby of Animal Wellness Action expressed satisfaction with limited oversight. He warned, though, that if HISA didn’t prevail, “horse racing in the US may quickly go the way of greyhound racing and the Ringling Bros. and Barnum & Bailey Circus.”

HISA timeline:

  • 2020: HISA is passed as part of the omnibus Consolidated Appropriations Act.
  • March 2022: The US District Court for the Northern District of Texas upholds HISA’s constitutionality.
  • July 2022: West Virginia and Louisiana win an injunction against HISA.
  • August 2022: HISA and the FTC win a temporary stay of the injunction.
  • November 2022: The US Court of Appeals for the Fifth Circuit rules HISA “facially unconstitutional.” The injunction is lifted.

HISA and West Virginia horse betting from here

HISA has indicated that it will seek further court review. Meanwhile, West Virginia will continue to operate according to the West Virginia Thoroughbred Rules of Racing, WVRC executive director Joe Moore told Play West Virginia.

Also, for now, HISA “will continue its education and outreach efforts to all stakeholders in the Thoroughbred industry,” Ben Mosier, executive director of the Horseracing Integrity & Welfare Unit, told bloodhorse.com this week.

However, this week, they scrapped plans to launch its Anti-Doping and Medication Control Policy in January. “The bedrock principle of the Act is the need for uniformity,”  the FTC wrote in its order.

Somewhat foreshadowing the FTC’s words, Lazarus had spoken of the need for racing industry unity in her speech post-ruling. The industry is “committed to horses at the end of the day,” she said.

And the final — for now — word from the business end may go to attorney Alan Foreman, chairman and CEO of the Thoroughbred Horsemen’s Association. 

“This is a very confusing time, and quite frankly, not a good time for the industry. This kind of instability and confusion are not good for our business,” he told theracingbiz.com.

Photo by PlayWV
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