Another Day, Another New Anti-HISA Federal Lawsuit

For the second time in five days-and for the seventh time in three years-individuals or entities under the control of the Horseracing and Safety Integrity Act (HISA) have filed a lawsuit in a federal court alleging that the law and its enforcement are unconstitutional.

This latest legal action took the form of a July 29 complaint in United States District Court for the Southern District of Iowa (Central Division) filed by Thoroughbred owner Joseph A. Kelly and owner/trainer Douglas L. Anderson against the HISA Authority, the Federal Trade Commission, and executives of both organizations.

“There have been several legal challenges to the Act's delegation of power to HISA,” the complaint stated. “The United States Court of Appeals for the Fifth Circuit has twice declared that portions of the Act are unconstitutional under the private non-delegation doctrine; the Eighth Circuit currently has the issue under consideration; and the Sixth Circuit has upheld the Act over broad constitutional challenges. None of these cases, however, has directly addressed the Act's grant of authority to HISA to assess taxes or fees on industry participants.

“This case is solely about whether the Act's delegation of authority to a private entity to levy and collect a tax or a fee is constitutional and whether this private organization is even complying with the Act's requirement that any assessment be 'allocated equitably,'” the filing stated.

“This Court should declare that the Act's funding mechanisms is unconstitutional and permanently enjoin the defendants from enforcing it. Or, in the alternative, the Court should declare that HISA's assessment against Iowa horse owners is not equitable and thus [beyond legal power or authority],” the filing stated.

Asked to comment Tuesday on the Iowa lawsuit, a HISA Authority spokesperson relayed the same quote that the organization issued last Friday when news broke about a related unconstitutionality lawsuit initiated against HISA by eight horsemen in Oklahoma: “As with other litigation making similar claims, we will vigorously defend our ability to implement HISA's safety and integrity rules,” the spokesperson emailed.

At issue are the HISA Authority's annual assessments to Iowa for 2023 (originally $1,040,576 but later reduced by the Authority to $953,400) and for 2024 ($1,187,942).

According to the complaint, “on June 20, 2023, HISA President and CEO Lisa Lazarus notified Prairie Meadows Racetrack and Casino, the only horseracing track in Iowa, that HISA determined that the proposal Prairie Meadows submitted to HISA for the allocation of the assessment 'among Covered Persons' had 'allocated equitably' the assessment [and that] this 'equitable allocation,' as determined by HISA, 'splits the assessment 50-50 between the track and horsemen.'”

The complaint stated that Lazarus's letter “did not define 'horsemen,' nor did it explain how the allocation was equitable.”

A footnote in the complaint stated that the Authority's “Assessment Methodology Rule does provide a formula for how HISA will divide up the total assessment among the states, but it does not provide how HISA will equitably allocate that assessment among covered persons within the state.”

The complaint then stated that, on Oct. 31, 2023, Lazarus sent a letter to the Iowa Racing and Gaming Commission regarding the 2024 assessment, in which she “urged the Iowa governmental body to voluntarily pay that sum.”

Then, according to the complaint, “Starting in the spring of 2024, HISA began to put significant pressure on the Iowa Horsemen's Benevolent and Protective Association (HBPA) to voluntarily pay half of the assessment. HISA representatives told Prairie Meadows representatives that they were frustrated and angry that the Iowa HBPA had not yet paid the 2023 or 2024 assessment and that Iowa HBPA Executive Director Jon Moss had not spoken to HISA about it.”

Moss is a lead plaintiff in the anti-HISA federal lawsuit that is currently awaiting judgment in the Eighth Circuit Court of Appeals. That case, initiated in a lower court on Apr. 6, 2023, involves leaders of the HBPA affiliates in Arkansas and Iowa seeking to reverse the lower court's denial of a preliminary injunction that sought to halt HISA and its Anti-Doping and Medication Control program.

Moss, the complaint stated, wrote to Prairie Meadows as far back as June 2023 to make it known that, “the Iowa HBPA believes the passage of HISA and the corresponding creation of a non-governmental authority to govern horseracing is an unconstitutional delegation of government authority to a private entity and an unconstitutional encroachment of authority on the power of the State of Iowa.”

The complaint stated that, “HISA's decision to allocate the 2023 and 2024 Iowa assessment '50-50 between the track and horsemen' was not based on any evidence or objective factors but was instead arbitrary, capricious, and an abuse of discretion.”

The complaint stated that, “Plaintiffs are now forced to bring this lawsuit to stop HISA's assessments, which violate the Constitution's structure, the Due Process Clause, and the Act's requirement that assessments among covered persons be 'equitable.'

The complaint continued: “These unconstitutional and unlawful actions are bad enough, but Plaintiffs' injuries are made worse by the fact that HISA has assessed and will continue to assess Plaintiffs and other industry participants for the millions of dollars in legal fees that HISA has unnecessarily incurred and will continue to incur to defend against HISA's unlawful actions and the unconstitutional Act.”