The Federal Trade Commission (FTC) has endorsed a revised funding formula proposed by the Horseracing Integrity and Safety Authority (HISA). This adjustment modifies how states contribute to support HISA’s operations, reflecting a more nuanced approach to financial contributions based on racing activities and other revenue sources.

Revolutionizing Horseracing Finance: A New Era of Transparency and Fairness

Understanding the New Assessment Methodology

The updated assessment methodology now ties state contributions directly to their annual budget projections and the anticipated number of racing starts. Each state's contribution is calculated as a proportion of HISA's approved annual budget. Importantly, this new framework also accounts for alternative revenue streams available to HISA, ensuring a balanced and fair distribution of costs.This recalibration aims to address previous concerns over equitable funding. By incorporating additional revenue sources such as foal registration fees, sales contributions, starter fees, and track fees, the revised method offers a more comprehensive view of each state's involvement in horseracing. The inclusion of these factors ensures that no single entity bears an undue burden, fostering a collaborative environment within the industry.

State Racing Commissions' Role in Fee Collection

State racing commissions have been granted the flexibility to collect and remit the required fees on behalf of HISA. If a commission opts to participate, it must adhere to a schedule established by HISA and approved by the FTC. This arrangement allows states to manage their contributions efficiently while maintaining compliance with regulatory standards.Moreover, states can choose to discontinue fee collection with one year’s notice, providing a safeguard against long-term commitments. This provision ensures that states retain control over their financial obligations without compromising the integrity of HISA's operations. It reflects a balanced approach to governance, acknowledging the diverse needs and capacities of different states.

Legal Challenges and Regulatory Oversight

The approval of this modification comes amidst legal challenges from prominent stakeholders like Churchill Downs Inc. and the New York Racing Association. These entities argue that the previous funding formula was implemented illegally and unconstitutionally. Despite these challenges, the FTC has reaffirmed its commitment to upholding the Horseracing Integrity and Safety Act (HISA).Under the act, HISA must submit all proposed rules or modifications to the FTC for review. The commission evaluates whether these proposals align with both the act and its own regulations. In this case, the FTC reviewed public comments and determined that the proposed changes were consistent with legislative requirements. This rigorous oversight ensures that any adjustments made are transparent, fair, and legally sound.

Historical Context and Future Implications

The original assessment methodology rule took effect in April 2022, with subsequent amendments approved in January 2023. The latest modification, set to take effect on January 22, 2024, marks a significant milestone in the evolution of horseracing finance. It underscores the ongoing efforts to refine and improve the system, ensuring it remains responsive to the industry's changing dynamics.By adopting a more inclusive and adaptable funding model, HISA positions itself to better serve the horseracing community. This shift not only enhances transparency but also promotes greater accountability among stakeholders. As the industry continues to evolve, the ability to adjust and refine funding mechanisms will be crucial for sustaining long-term growth and stability.