5th Circuit strikes down Horse Racing Integrity Act
 

You want to dunk on me for being wrong, here's your chance- I NEVER thought any major federal court would do it.

I will discuss this in detail later.

https://t.co/rn9D5cX1qo

Why? On its face it seems blatantly unconstitutional.

I'm getting the popcorn ready for this one!

This is the critical part of the opinion:

But the Authority is not subordinate to the FTC. The reverse is true. The Authority, rather than the FTC, has been given final say over HISA’s programs.

I'll leave it to others here. I'm just a highly experienced person.

Pat Cummings tweeted this out earlier - pointing back to the rulings in the spring raising issues:

https://twitter.com/PatCummingsTIF/s...Uve5NRqf11MPRg

OK, I'll explain the decision and then provide some substantive comments.

The decision is based on two premises: the statute creates a private body to regulate horse racing (HISA) and the federal government's power to regulate the sport, which would normally be situated in the Federal Trade Commission, is delegated to HISA.

To do this, the Court says, the FTC has to retain "authority" over HISA. The statute provides for such authority by allowing FTC to reject any decision on a rule made by HISA. But that's not enough, says the Court. The FTC at least has to have the authority to also "modify" HISA rules.

You will notice this is a VERY narrow ruling. I.e., Congress could probably pass a fix that conferred on the FTC the power to modify HISA rules, and that would make the statute constitutional. While some here might see HISA as "obviously" unconstitutional, this ruling basically rules it unconstitutional based on a pretty technical aspect of the regulatory framework.

Now what do I think about this? First of all, the Court is basically foreclosed from precedent from striking this statute down on broader grounds. That's because the Supreme Court, the Fifth Circuit, and other federal courts have held that various other delegations of authority to private agencies are constitutional. Specifically, FINRA, which is the securities regulation corporation under SEC authority, has been repeatedly held to be constitutional. (Full disclosure: one of the cases against FINRA was mine. I petitioned the Supreme Court for review and was denied.) The only difference between FINRA and HISA is that the FTC doesn't have the power to modify HISA rules; BTW, I suspect the reason Congress did it this way is that while the SEC is full of experts regarding financial markets, the FTC is full of people who know nothing about horse racing. So they figured more deference to HISA was appropriate.

The 5th Circuit had also recently upheld a delegation of the power to set Medicare payment rates to a private company. So again, they couldn't repudiate that decision here. That left the "power to modify" as the only ground left for a ruling against HISA.

I will say that this entire thing is kind of suspect. The Supreme Court has only ever ruled that a delegation of power to a private agency was unconstitutional ONCE, 86 years ago, in a case whose holding was limited just a few years later when the Court upheld a very similar delegation of power in the same subject area. So this isn't some viable, consistently applied doctrine. Most commentators would have said that the 86 year old Supreme Court case, the Carter Coal case, is an orphan that doesn't really stand for any larger doctrine.

So this is a really weird ground to invalidate the statute. Having said that, it might stick, especially if Congress does not amend the statute to add FTC power to modify rules. The Supreme Court these days is conservative and is looking for ways to constrain federal power; as long as they can do this here without endangering FINRA (which I suspect the Court sees as very important to the financial markets), they might decide to strike down a horse racing statute they don't care very much about.

It was blatantly unconstitutional and the lawyers who say otherwise should be fired and new ones that know what they are doing should take their place. No need appealing it to SCOTUS as they will uphold the verdict.

Imagine a world that is this black and white. Agree or disagree, right or wrong, one thing is clear, they found the most conservative court possible that was, obviously, the most likely to take this opinion. Other courts likely would not have.

I'm not agreeing or disagreeing with HISA, or the decision, just shedding some truth to your incorrectly definitive opinion.

And you did that very well.

Thank you.

Sounds like this is but a temporary respite from the ultimate fate.

Hopefully
 

Hopefully the best of HISA survives, and the worst is improved

For the future of the sport, it likely needs something like HISA to survive in this country, not just as badly implemented as it has been

Too many trainers like Baffert, Ness and Jacobson while stocks decline is a bad trend

I'm always someone who thinks solutions come from the positive side of the equation while those who spot trouble usually start with fingerpointing and negativity

What we could really use are federal level incentives to encourage breeding, higher purses, efforts to raise the profile of the sport to the general public through local meetings and fairs, give people and families a good day out

Build on what's working and make it stronger

Remove unnecessary regulations, but put strong ones in place to stop cheating

Of course, that would require adults to be in charge...

Totally agree in every way!

dilanesp- thanks for your detailed explanation of the ruling. I saw TDN refer to the ruling as “shocking” and when I read that, I wondered how conceptually different HISA is from PASPA. Would the view for constitutional viability of HISA be based on the commerce clause? I’m not a lawyer, but I believe the viability of the Interstate Horseracing Act would follow this logic also?

Thanks again

The commerce clause arguments against this sort of regulations were always losers under current precedent.

Let's consider the BEST case for a commerce clause horse racing regulation argument. Let's say a state bans interstate simulcasting of its races and betting on the Internet. The only way you can bet a race at Alaska Downs is if you are at the track or in a simulcast facility in Alaska. There's no interstate wagering. Heck, it would be pretty ware to even see folks traveling from other states to Alaska to bet the races. That's as non-interstate as you could probably get.

And yet, even THAT would be within Congress' power to regulate under Wickard v. Filburn, Raich v. Ashcroft, and other commerce clause precedents. Raich held that growing a marijuana plant on your windowsill with your own seeds and smoking joints from it could be regulated by Congress. Why? Because you look at the enterprise as a whole- marijuana production- and not the single act. And marijuana production is interstate.

Well, horse racing is interstate in the same way. There's an interstate market for stallions, horses often ship from state to state, trainers and jockeys move their business from state to state, out of state owners own horses, etc. That's clearly enough under Wickard and Raich.

And of course, that's an idealized state. In the real world, we have congressionally authorized interstate and international wagering. Obviously, Congress has the power to regulate the integrity of the interstate betting markets, even if that means applying regulations to a local racetrack to do it. There's no commerce clause violation here.

Exactly right.
100%.

Interesting to me- as a layperson- why PASPA wouldn’t survive under similar logic.

PAPSA was struck down because it commandeered state resources. This may seem like a silly distinction, but our constitutional doctrines treat a law that tells state regulators what to do differently than one that just directly sets up a federal apparatus. So for instance, in the gun control area, Congress can direct ATF to perform background checks, but it can't tell the state governments or local sheriffs to do the checks. That's Printz v. United States.

HISA doesn't tell the states how to regulate- it sets up a federal corporation just like FINRA in the securities area.