Additionally, the Authority created by HISA recently had sent financial assessments seeking more than $72.5 million from racing states for its 2023 budget. More than $18 million of that amount would come from Mid-Atlantic states.

“Today’s unanimous ruling clearly states the entity constructed under HISA is an unconstitutional body and should not hold governing power over our industry, a position we have long supported,” said HBPA president Eric Hamelback. “On behalf of the NHBPA, I can assure you that we will be following this development closely and support the power reverting back into the hands of the State Racing Commissions.”

Hamelback’s group was joined in the suit by state HBPA affiliates from Arizona, Arkansas, Indiana, Illinois, Louisiana, Nebraska, Oklahoma, Oregon, Pennsylvania, and Washington, as well as local affiliates from Tampa Bay Downs and Mountaineer Park. The State of Texas and Texas Racing Commission also intervened in the case on the horsemen’s side.

[Read the 5th Circuit decision here]

But HISA board of directors chairman Charles Scheeler sounded a defiant note. “While HISA is disappointed by the Fifth Circuit’s decision, we remain confident in HISA’s constitutionality and will be seeking further review of this case,” he said in a statement.

The 2020 passage of HISA was the culmination of dogged, multi-year efforts by The Jockey Club and other organizations to obtain federal law synthesizing medication rules nationwide and forbidding the raceday use of the anti-bleeder medication Lasix. The Jockey Club’s efforts had long been opposed by many rank and file horsemen.

The law empowered a newly created private entity, the Horseracing Integrity and Safety Authority, to regulate the sport in almost granular detail. To avoid significant outlay of federal dollars while allaying constitutional concerns, the law places the Authority under the Federal Trade Commission, and its rules become federal regulations.

But in the court’s 35-page opinion, judge Stuart Kyle Duncan wrote that HISA is “facially unconstitutional” and violates what is known as the private non-delegation doctrine.

“A cardinal constitutional principle is that federal power can be wielded only by the federal government,” he wrote. The HISA structure, he said, violates that principle.

Under the law, it is the Authority that writes the regulations, while the FTC is limited to reviewing them to determine whether they are “consistent” with the purposes of the Act. If the FTC determines the rules are not consistent, it can make “recommendations” to the Authority on how to modify them but cannot require the Authority to make changes. The FTC cannot add to, delete from, or modify any Authority regulation.

“The FTC’s limited review of proposed rules falls short of the ‘pervasive surveillance and authority’ an agency must exercise over a private entity” to meet constitutional muster, the judge wrote.

Advocates of HISA pronounced themselves “extremely disappointed” in the decision.

“Over the course of three Congresses, the most brilliant legal minds on Capitol Hill addressed the Horseracing Integrity and Safety Act’s constitutionality and ultimately decided that the Federal Trade Commission’s limited oversight was sufficient,” wrote Animal Wellness Action executive director Marty Irby. “The only way for the industry to survive is for the new law to prevail in protecting our iconic American equines, and if it doesn’t, then horse racing in the U.S. may quickly go the way of greyhound racing and the Ringling Bros. and Barnum & Bailey Circus.”

Prior to the passage of HISA, all regulatory authority over racing was vested in state racing commissions. The Association of Racing Commissioners International, which represents racing regulators, convened an “emergency meeting” of regulators Friday afternoon in response to the decision.

The case is National Horsemen’s Benevolent and Protective Association v. Black.