In testimony filed with the House Energy and Commerce Subcommittee on Digital Commerce and Consumer Protection for its June 22 hearing on HR 2651—the Horse Racing Integrity Act of 2017—opponents of the measure characterized it as an unwarranted intrusion into the regulatory authority of the states. As stated by one witness, HR 2651 “strips the states of their ability to control their state legalized and regulated industries…”
This statement is demonstrably false.
Although medication matters have occupied a disproportionately large part of racing industry media attention in recent years, they represent a small fraction of the jurisdiction exercised by virtually every state over horse racing. Their powers generally extend to a wide variety of matters including: taxation; the rules of racing; licensing trainers, jockeys, and others; approval of wagers and the associated takeout; conditions of races; location of racetrack facilities; horse ages, weights and equipment; state-bred supplements; simulcasting terms and conditions; rules for advance deposit wagering; the appointment of stewards and other racing officials; and rules related to claiming races. Moreover, for at least two of the three witnesses appearing in opposition to HR 2651, any suggestion that Congressional intervention into matters affecting horse racing is unwarranted is the height of hypocrisy. (One of them even went so far as to endorse the testimony quoted above, stating that his organization’s members “concur with, and endorse those observations and conclusions…”) The same horsemen’s groups opposed to HR 2651 were also opposed to an earlier version of the legislation (HR 3084, filed July 2015) on the grounds it might jeopardize their privileges under the Interstate Horseracing Act of 1978 (“IHA”). The IHA is the law passed by Congress in 1978 to forcefully inject itself into the regulation of horse racing—and it is the only thing that has allowed interstate wagering on horse racing, which would otherwise have been prohibited by other federal laws.
Today the IHA remains the economic backstop for horsemen’s groups such as the THA and HBPA. It legalizes interstate off-track wagers—but only when a number of consents have been obtained from organizations within those states, including the host racetrack. Importantly, the IHA mandates that a host racetrack cannot give its consent unless it has a written agreement with its horsemen’s group which approves of the giving of the consent. The IHA further requires the agreement with the horsemen’s group must be arrived at as a part of the “regular contractual process…on issues relating to the conduct of horse racing by the horsemen’s group at the (racetrack).”
The rest of the story is that the typical horsemen’s agreement by which consent to interstate wagering is provided goes far beyond the economic terms relating to interstate wagers. For example, these agreements typically deal with the amount to be paid out in purses from virtually every revenue stream the track receives, including on- and off-track wagering; conditions of track backside facilities; how the horsemen’s purse account is to be maintained and how winnings are paid; stall applications; and, most importantly, payments to the horsemen’s organization—which are very much in the nature of union check-off dues paid in a closed shop.
In short, the United States Congress granted horsemen’s groups such as the Horsemen’s Benevolent and Protective Association and the Thoroughbred Horsemen’s Association a very big stick in their dealings with racetracks and other industry constituencies, and they wield it every day to extract agreements from racetracks on matters far afield from simulcasting.
In the only reported United States Circuit Court decision that has considered the constitutionality of the IHA, in 1994 the Kentucky affiliate of the National HBPA successfully overcame racetrack arguments that: (i) the “horseman’s veto” authorized by the act violated the 10th Amendment and (ii) that the IHA unlawfully delegated authority to private entities.
The takeaway: horsemen’s groups have welcomed, embraced, and defended Congressional intervention when it has served their interests. It is ironic they object to it now.