HISA gets new funding formula approved by federal government

The Federal Trade Commission issued an order Monday approving a proposed modification from the Horseracing Integrity and Safety Authority to its assessment methodology rule. The modification includes changes to the methodology the authority uses to determine assessments to fund its programs.

The amount each state pays “shall be based on the annual budget of the authority for the following calendar year as approved by the board and the projected amount of covered racing starts for the year in each state” and “take into account other sources of authority revenue,” according to the new rule.

Once a state’s proportionate share of fees is calculated, state racing commissions have the option to collect and remit the amount required from their state if they notify the authority of their election to do so. This option requires the state racing commission to remit fees “according to a schedule established in rule developed by the authority and approved by the commission,” the rule says, although a state can elect to stop remitting with one year’s notice.

States may factor in “foal registration fees, sales contributions, starter fees and track fees and other fees on covered persons shall be allocated, assessed and collected,” the rule says.

Friday’s FTC announcement came a little more than three weeks after Churchill Downs Inc. and the New York Racing Association filed a federal lawsuit against the FTC and HISA. They said a formula based 50% on race starts and 50% on purses was put into effect illegally and unconstitutionally.

The Horseracing Integrity and Safety Act requires the authority to submit proposed rules or rule modifications to the FTC for approval. The act requires the FTC to approve submitted rules if it finds that they are “consistent with” the act and the FTC’s rules governing such submissions.

On Oct. 23, the FTC published the proposed rule modification in the Federal Register and provided the public an opportunity to comment. Under the act, the FTC has 60 days from the date of publication to approve or disapprove the proposed rule modification. The commission considered the comments received, and by the order announced Friday, found that the proposed modification is consistent with the act and the FTC’s rules.

The original assessment methodology rule went into effect in April 2022 and was amended after proposed modifications by the authority under an FTC order approved on Jan. 9, 2023. The modification approved by the commission and announced Friday will take effect Jan. 22.

The commission voted 5-0 to approve the assessment methodology rule modification.