During a detail-crammed 90 minutes, representatives from the Horseracing Integrity and Safety Act (HISA) and Horseracing Integrity and Welfare Unit (HIWU) took to a virtual town hall Thursday to talk some of the what, how and whys of the federal program's budget processes since its inception in 2022 and on into next year's yet-to-be projected cost sheet.
As HISA CEO Lisa Lazarus summed up the event, “HISA operates as a service to the industry. We owe a tremendous fiduciary obligation to our stakeholders, and we take that very seriously.”
The following is a round-up of some of the key points raised during the town hall, a link to which can be found here.
Overall Costs, Per-start Costs up
In terms of racetrack safety and anti-doping costs, HISA represents a roughly 20% increase in spending to the industry compared to pre-HISA days.
“And that really represents a delta between where we believe safety and integrity needed to be and where they were,” said Lazarus, alluding to the marked decrease in race-day equine fatalities under the new federal program.
The average per-start costs have also increased year-on-year. In 2023, the per-start fee was about $198. In 2024, it was about $265. This year, it's estimated to be as high as $342, though Lazarus stressed how the actual number for this year will likely be smaller.
As to the reasons behind the increased spending, Lazarus said that the programs instituted under HISA are congressionally mandated, like racetrack accreditation teams and a larger enforcement footprint.
Then comes the costs of building out the technology required to facilitate some of these programs. HISA's technology budget, noted one stakeholder, has almost doubled since its inception.
“It's increased since we've had to build them out over time. Same on the HIWU side,” explained Lazarus about the various digital portals built for inputting things like veterinary records, racetracks surface data, and licensee information.
“Maybe most importantly, one of our most effective tools for reducing fatalities has been leveraging our AI technology. Leveraging some of the products that we've modeled out. Partnering with companies like AWS [Amazon Web Services] that have allowed us to support the regulatory veterinarians in being more efficient and more effective in their pre-race exams,” said Lazarus.
In the Q&A portion of the town hall, one question concerned how, as the number of starts has fallen under HISA's purview, the costs to the industry have increased.
In response, Lazarus pointed to credits issued to jurisdictions that agree to continue paying for key personnel (which reduce HISA's overall budget footprint), as well as the cost savings from economies of scale.
“We have national programs that we have to build and deliver no matter how many horses are involved and how many starts,” said Lazarus, who added how other factors like purse increases had also affected costs.
“Whenever we have, like in 2023, significant safety issues that we had to invest in, that also obviously has an impact and carries over to 2024,” said Lazarus.
HISA Trying to Find Additional Financial Help
Right now, HISA's methodology for assessing the costs to individual jurisdictions is one based evenly between projected number of starts and the projected average purses for the year.
Last year, the Federal Trade Commission (FTC) approved a methodology change to one based solely on the percentage of annual racing starts, to start in 2026.
This is expected to hit some of the nation's smaller tracks harder than its bigger pocketed cousins. Indeed, the president of Washington State's Emerald Downs recently told the Seattle Times that the anticipated fee increases put next year's meet in doubt.
According to Bethany Erb, HISA director of public affairs, HISA through her team is in discussions with state policy makers about ways to possibly mitigate the financial burdens on struggling tracks.
As to what these steps could be, Erb outlined three possible scenarios: tax incentives, direct appropriations, or increases in existing fees (like those imposed on ADWs).
Florida has already passed legislation that affords tracks a tax credit equal to their owed HISA fees. Similar legislation failed in the Washington state legislature due to budget constraints, though Erb suggested the legislation could be revisited for next year.
In Minnesota, the governor's budget proposes an ADW fee increase from 1% to 2% to cover a portion of HISA's costs.
Another possible way to mitigate overall costs, said Lazarus, could be to “leverage our technologies by serving other countries, using some of the data we have, anonymized, to basically bring in additional revenue funding.”
Just don't expect any help from the federal government.
“I think as most of you know, HISA does not get any federal tax relief, and the current political environment is not really an attractive one for us to lobby for that at this time,” Lazarus said. “Right now, we're focused on states who want our help in order to see whether there's state budget money, even if it's just an offset to help defray the costs.”
Supreme Court Decision Instrumental
Later this year or in 2026, the U.S. Supreme Court is expected to decide upon HISA's constitutionality–a decision that, either way, will have profound ramifications for the sport.
“We're either not going to be around, so this will become irrelevant,” said Lazarus. “Or we're going to have all of the states that export their signal within HISA. And that's going to allow us to operate to scale. And when we operate to scale, we realize a lot of cost savings.”
What kind of cost savings?
According to HISA's calculations, if Louisiana, Texas and West Virginia were to fall under the HISA umbrella, the anticipated starts under HISA's purview would increase from 2024's known number of 179,354 to approximately 220,856 in 2026.
This would translate to a per-start fee reduction from a possible $342 this year (a maximum anticipated cost) to roughly $293 next year (though still higher than 2024's actual cost of $266).
“Once the Supreme Court decides and that issue is resolved, we'll have some movement there and likely increased participation,” said Lazarus, striking a note of optimism.
Other Details
Among some of the other interesting details shared Thursday was info related to how annual budgets are a projected “worst case scenario” built around a doomsday premise that no jurisdiction will opt-in and continue performing many of the key day-to-day tasks themselves–a dynamic that sees them credited for the work by HISA.
How does this play out in numbers? In 2024, for example, HISA's approved gross budget was $77.5 million. After credits earned, the actual net budget was $57.8 million.
In terms of economies of scale, Lazarus said the attrition of HIWU-contracted laboratories (to now just four facilities) has led to cost savings and improved performance.
“In operating those four labs,” said Lazarus, “we get more consistency. We get better collaboration. Better research. And to me that's one of the biggest values and best outcomes for HISA.”
To help launch HISA, the program borrowed operational funds from organizations like the National Thoroughbred Racing Association, The Jockey Club and the Breeders' Cup.
“Before HISA launched its first program in 2022, we had to have some funding to actually operate HISA. We weren't collecting any fees at that point in time,” said Lazarus. “The act made clear we could not receive any funding from any covered person, which is a pretty broad category.”
Lazarus said HISA has paid some of the loans back, and that they were hoping some of the existing loans would be forgiven.
According to Jim Gates, HISA's chief financial officer, HISA has $2.8 million in outstanding loans and another $1.25 million outstanding in the form of a line of credit.
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