Response from NTRA’s Alex Waldrop to HPBA Lawsuit regarding HISA

Horse racing tips and best bets this weekend on eve of CheltenhamIn 2020, the U.S. Congress overwhelmingly passed, and the President signed into law, the Horseracing Integrity and Safety Act (HISA). Through this landmark legislation, HISA recognizes and empowers the Horseracing Integrity and Safety Authority (Authority) to protect the safety and welfare of Thoroughbred horseracing’s most important participants—its horses—by delivering commonsense medication reforms and track safety standards.

 

HISA has broad support from the Thoroughbred industry, including: organizations such as the Breeders’ Cup, National Thoroughbred Racing Association, The Jockey Club, The Jockeys’ Guild, American Association of Equine Practitioners and the Thoroughbred Owners and Breeders’ Association; the nation’s leading racetracks, including Churchill Downs, Del Mar Thoroughbred Club, Gulfstream Park, Keeneland, The Maryland Jockey Club, Monmouth Park, The New York Racing Association and Santa Anita; leading horsemen’s organizations such as the Thoroughbred Horsemen’s Association and the Thoroughbred Owners of California; prominent Thoroughbred owners Barbara Banke, Antony Beck, Arthur and Staci Hancock, Fred Hertrich, Barry Irwin, Stuart S. Janney III, Rosendo Parra and Vinnie Viola; leading Thoroughbred trainers Christophe Clement, Neil Drysdale, Janet Elliot, Claude “Shug” McGaughey, Bill Mott, Todd Pletcher and Nick Zito; grassroots organization Water Hay Oats Alliance, with more than 2,000 individual members; international organizations the International Federation of Horseracing Authorities and The Jockey Club of Canada; and prominent animal welfare organizations American Society for the Prevention of Cruelty to Animals, Animal Wellness Action and the Humane Society of the United States.

 

The National Horsemen’s Benevolent and Protective Association (HBPA), along with several of its state affiliates, seeks to upend this historic and bipartisan effort to protect Thoroughbred horses and ensure the integrity of horseracing. The HBPA has recently filed a baseless lawsuit in federal court in Texas, seeking to declare HISA unconstitutional on its face. Setting aside its fatal threshold deficiencies—including the lack of any concrete or imminent harm—the HBPA’s lawsuit is meritless. HISA is constitutionally and legally sound. On behalf of a broad spectrum of organizations underlying the sport of Thoroughbred horseracing, we offer the following responses to the various claims by HBPA.

1. HBPA Claim: HISA violates the constitutional “non-delegation doctrine.”

Reality: HISA does not violate the non-delegation doctrine because the United States Supreme Court has long recognized that Congress may rely on private entities so long as the government retains ultimate decision-making authority as to rules and enforcement. HISA recognizes and empowers the Authority to propose and enforce uniform national anti-doping and equine safety standards, but only upon review, approval and adoption by the Federal Trade Commission (FTC). Though this is a first for the Thoroughbred horseracing industry, HISA’s structure is not new. HISA follows the FINRA/SEC model of regulation in the securities industry, and, like that model, is constitutional because any action the Authority undertakes is subject to the FTC’s approval and oversight.

 

2. HBPA Claim: The HISA runs afoul of the Appointments Clause.

Reality: The Authority is a private entity, independently established under state law, and recognized by HISA. As such, it is simply not subject to constitutional restraints on appointments (or removal) of its Board members. Indeed, any such claim is at war with HBPA’s non-delegation theory premised on the fact that the Authority is a private entity. On the one hand, the HBPA claims that the Authority cannot take action because it is private entity, but then argues, on the other hand, that the Authority cannot appoint its own Board members because it is effectively a public entity. These two HBPA arguments are in conflict, but have one important thing in common: they are both wrong.

 

3.  HBPA Claim: HISA violates due process protections.

Reality: The HBPA’s due process theory also falls flat. Though the HBPA complains of equine industry participants regulating their competitors, a strong bipartisan majority of the House and the Senate made clear in HISA that a majority of the Authority’s Board members must be from outside the equine industry. To be sure, a minority of the Authority’s Board members will have industry experience and engagement. But it is difficult to understand how that statutory recognition of the value of informed voices constitutes a deprivation of due process. What’s more, with respect to the minority industry Board members, HISA expressly provides for equal representation among each of the six equine constituencies (trainers, owners and breeders, tracks, veterinarians, state racing commissions, and jockeys). Furthermore, the committee tasked with nominating eligible candidates for Board and standing-committee positions is made up of entirely non-industry members. HISA further imposes broad conflicts-of-interest requirements to ensure that all of its Board members (industry and non-industry alike) as well as non-industry standing committee members (not to mention their employees and family members) are required to remain free of all equine economic conflicts of interest.

 

Beyond these robust safeguards, established precedent confirms what common sense indicates: even when a private entity is engaged in the regulatory process, agency authority and surveillance protect against promotion of self-interest. Under HISA, for example, the FTC has the authority to decline the Authority’s proposed rules and overrule any sanctions—ensuring that neither the Authority nor the individuals making up its Board can use their position for their own advantage in violation of constitutional restraints.

 

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Contrary to HBPA’s hyperbole, HISA is neither unprecedented nor unconstitutional. HISA emulates the long-established FINRA/SEC model, with even greater protections for all stakeholders. It is disappointing that the HBPA—an entity whose mission is supposedly the welfare of horses and horsemen—would seek to undo much needed reforms to protect the industry’s participants.

Source: NTRA.com

Statement from KyHBPA on passage of SB 120, protecting Historical Horse Racing in Kentucky

ky kentucky sealSource: Kentucky HBPA

“Horsemen across Kentucky, and those across the nation who race in the Commonwealth, should be so proud of the Republican and Democratic leadership in the Kentucky House for shepherding passage of SB 120. As Rep. Adam Koenig and others so eloquently expressed, Sen. John Schickel’s bill is imperative to securing the future for a signature Kentucky industry and the tens of thousands of jobs and billions of dollars it preserves and creates in economic development, agribusiness and tourism for our state. With this clarification of what constitutes parimutuel wagering and resulting protection for Historical Horse Racing, Kentucky racing can continue its upward trajectory as America’s premier racing circuit – and thanks to SB 120 we will have a strong year-round circuit. Passage of this bill not only protects the livelihoods of countless Kentuckians, but also avoids what would be a devastating loss in business to the thousands of small business owners and vendors who directly and indirectly benefit from the horse and racing industries.”

About the Kentucky HBPA

The Kentucky division of the Horsemen’s Benevolent & Protective Association is one of the country’s largest horsemen’s groups, representing more than 6,000 owners and trainers at Kentucky’s five thoroughbred tracks. As an affiliate of the National HBPA that represents 30,000 horsemen in the United States and Canada, the Kentucky HBPA’s responsibilities have greatly expanded as the racing industry has become more complex. In addition to its original general benevolence mission, the HBPA is the leading force for horsemen in negotiating contracts with tracks as well as the advancement of the sport through safety and integrity initiatives, promoting racing and assisting in the development of aftercare programs for retired racehorses.

3729 S. Fourth St., Louisville, KY 40214-1712
(502) 363-1077
Kentuckyhbpa@gmail.com

Sports betting front and center in Georgia legalized gambling debate

ATLANTA — Advocates for bringing legalized gambling to Georgia will be back under the Gold Dome next month, pitching the financial benefits of casinos, horse racing and sports betting together and separately.

But legislation authorizing online sports betting in the Peach State may have the best odds to advance.

“It’s the easiest one to pass,” said Georgia Rep. Ron Stephens, R-Savannah, chairman of the House Economic Development & Tourism Committee. “It clearly does not require a constitutional amendment. … It’s just a matter of us giving the [Georgia] Lottery Commission direction and authority they already have.”

Efforts going back the better part of a decade to legalize casino gambling and pari-mutuel betting on horse racing in Georgia have been unable to muster the two-thirds majorities in the state House and Senate required to approve constitutional amendments and put them on the statewide ballot…

Horseracing Integrity Act Re-introduced

WASHINGTON, D.C. — Congressman Andy Barr (R-KY) and Congressman Paul Tonko (D-NY) on Thursday reintroduced the Horseracing Integrity Act (H.R. 1754), which establishes an authority to create and implement a national uniform medication program with input from the horse industry.

“As the Representative for the Horse Capital of the World, I have the distinct honor of fighting for the future of this great American sport,” said Congressman Barr in a release. “I continue to believe the prosperity of Kentucky’s signature horseracing industry depends on national uniform medication standards and testing procedures. I am proud to reintroduce this legislation with my friend and colleague, Congressman Tonko, and I look forward to building upon the great bipartisan work we secured last Congress, including more than 100 cosponsors, to ensure the safety and integrity of this sport is preserved for years to come.”

Under existing law, the American horseracing industry labors under a diverse patchwork of conflicting and inconsistent rules governing medication policies and practices across dozens of different racing jurisdictions. According to the release, the lack of uniformity in the rules of horseracing has impaired interstate commerce and undermined the public confidence in the sport.

Report Supports Online Poker Legalization in Australia

Only after Comprehensive Research is Completed

Some of the submissions in the inquiry have argued that online poker is a game of skill or at least one that represents a mixture of skill and chance and that players can spend longer period of time playing with without spending too much.

Source: Report Supports Online Poker Legalization in Australia but Only after Comprehensive Research

Top 10 US states likely to pass iGaming legislation in 2017

Top 10 US states likely to pass iGaming legislation in 2017 Casino City Times (press release)

Though the New York Senate’s budget proposal included online poker, the Assembly’s did not, and there continue to be concerns over the status of poker as a game of skill .

Source: Top 10 US states likely to pass iGaming legislation in 2017

Trump administration asked to support N.J. sports betting appeal

Washington DCWASHINGTON — In his quest to legalize sports betting in New Jersey, Rep. Frank Pallone Jr. is seeking help from President Donald Trump’s administration. Pallone (D-6th Dist.) is asking Acting Solicitor General Jeff Wall in a letter to be sent Tuesday to request that the U.S. Supreme Court to hear New Jersey’s appeal of the latest… [Read more…]

Instant horse racing terminals may be limited by new bill

BOISE, Idaho (AP) – A northern Idaho lawmaker is off to the races after proposing new legislation that would limit Idaho’s lucrative slot-like machines known as instant horse racing terminals. Republican Sen. Bob Nonini of Coeur d’Alene is looking to limit instant racing to just three locations in Idaho – Les Bois Park in Boise, Greyhound… [Read more…]

Sign the Petition for the Issue on Pari-Mutuel Taxable Winnings

NTRA, KEY MEMBERS OF CONGRESS PUSH TO CLARIFY REGULATIONS REGARDING TAX REPORTING AND WITHHOLDING FOR PARI-MUTUEL CUSTOMERS

NEW YORK CITY (Tuesday, June 3, 2014) – The National Thoroughbred Racing Association (NTRA) today released a copy of a bipartisan letter from key members of Congress asking the Department of Treasury to clarify regulations regarding the way pari-mutuel winnings are calculated for tax purposes.

The NTRA is also calling on horse racing industry participants and customers to express their support of the effort by signing a Change.org petition available here: http://chn.ge/RXZ6DW.

The letter to the Secretary of the Department of Treasury was co-authored by Rep. Charles Boustany (R-LA) and Rep. John Yarmuth (D-KY) and co-signed by more than a dozen other congressmen.

The request for clarification urges the inclusion of a bettor’s entire investment in a single pari-mutuel pool to determine the amount reported or withheld for tax purposes, as opposed to only the amount wagered on the correct result. This issue typically arises in the context of increasingly popular exotic wagers.

For example, under the proposed clarification, the amount wagered by a Pick 6 player who hits with one of 140 combinations on a $1-minimum wager would be $140, which is the total amount bet into the Pick 6 pool. Currently the amount wagered is calculated using only the $1 bet on the single winning combination. By understating the amount wagered in this manner, the Internal Revenue Service is erroneously imposing significant additional reporting and withholding obligations on horseplayers. The clarification would directly benefit pari-mutuel customers by reducing burdensome tax obligations and allowing them to retain more of their winnings, some of which will likely be reinvested through increased handle.

The proposal also aims to lessen racing’s competitive disadvantage against other forms of gaming that have never been subject to such an aggressive tax ruling.

“Under an archaic IRS ruling currently in place, players’ winnings are being erroneously reported or withheld without regard for how much they actually wagered,” said NTRA President and CEO Alex Waldrop. “If granted, the clarification will allow horseplayers to keep more of their winnings, reduce the administrative burden on tracks and ADWs and ultimately generate more revenue for tracks, horsemen and government.

“We applaud congressmen Boustany, Yarmuth and others for their leadership and their awareness of the significant economic contributions that horse racing and breeding make in their states. We look forward to working with them on this important issue.”

Current guidelines regarding the calculation of pari-mutuel winnings for tax purposes are based largely on a 1978 ruling by the IRS that pre-dates the expansion of simulcasting and exotic wagering. However, that ruling, which was issued in response to an inquiry over a “box” wager totaling $6, is in conflict with Treasury regulations stating that wagers in the same pool shall be treated as one bet.

“This ruling appears to ignore the fact that even though the $6 box ticket represented the placing of a $1 bet on each of six different combinations, all of those wagered amounts were part of a single pari-mutuel pool,” the letter states.

Boustany and Yarmuth go on to explain the impact current regulations have on the racing industry:

Statistics show that each pari-mutuel dollar returned to the bettor in the form of winnings is re-bet seven times throughout the course of the day. Tax withholding reduces the amount of re-betting, which not only has an effect on the bettor and the track but also serves to reduce the collection of additional tax revenues that are paid by each racetrack operator on its net revenues. The ultimate adverse impact is a downward economic spiral for the industry with reduced purses, less wagering, less tax and economic benefit to localities and states and job losses at tracks, farms, breeding operations and related entities.

A copy of the full Boustany-Yarmuth letter, which is expected to attract additional signatures from Democrats and Republicans alike, can be accessed here: http://www.ntra.com/media/8717067/Treasury%20Pari-Mutuel%20Ltr.pdf

Horseplayers May Be Affected with Fiscal Cliff Negotiations

From the NTRA News Desk:

As part of the fiscal cliff negotiations, members of Congress and President Obama have recently proposed capping or otherwise limiting itemized deductions in an effort to raise revenue for the U.S. government. Some horseplayers may be negatively impacted if they are unable to fully deduct pari-mutuel wagering losses as itemized deductions.

Under current tax law, winnings from pari-mutuel wagering are fully taxable and must be reported on the taxpayer’s federal tax return. For most horseplayers, losses from pari-mutuel wagering in any tax year are only deductible as a miscellaneous itemized deduction and only up to the amount of their winnings in the same tax year. This is already a very burdensome requirement for horseplayers.

Senator Bob Corker (R-TN) recently proposed a $50,000 maximum on total itemized deductions. Other proposals include limiting itemized deductions to a value of no more than a tax rate of 28 percent. Any of these proposals could be harmful to horseplayers unless all wagering losses are eligible to be deducted against winnings.

Congress has excluded gambling losses from past limitations on itemized deductions. The NTRA is working to ensure similar treatment in the current situation.