Two Iowa horse owners have filed a federal lawsuit against the Horseracing Integrity and Safety Authority challenging its ability to assess fees on horsemen and the methodology used to determine those fees. The suit, which was filed on Monday in the U.S. District Court for the Southern District of Iowa with Joseph Kelly and Douglas Anderson as plaintiffs, is the latest horsemen-led challenge to HISA, the private company created by federal legislation to devise and enforce a nationwide system of rules governing Thoroughbred racing. The Iowa suit “is solely about whether the [enabling legislation’s] delegation of authority to a private entity to levy and collect a tax or a fee is [c]onstitutional,” the complaint says. Other suits, all of them initiated or joined by affiliates of the National Horsemen’s Benevolent and Protective Association, have argued that the delegation of authority itself is unconstitutional, and the Iowa suit is the first to directly challenge HISA’s ability to levy assessments. A spokesperson for HISA said that the authority “will vigorously defend our ability to implement HISA's safety and integrity rules.” :: Gain a competitive edge at Saratoga with DRF's premier handicapping data — purchase our meet packages today and bet with confidence. The suit lays out a series of discussions between HISA officials, the Iowa Horsemen’s Benevolent and Protective Association, and Prairie Meadows Racetrack, Iowa’s only Thoroughbred track, over the efforts by both sides to resolve a dispute over the fees. According to the suit, Prairie Meadows and HISA decided that the fees, roughly $1 million in each of 2023 and 2024, prior to credits, should be split evenly between the track and horsemen. The suit states that horsemen did not agree to the split, and it acknowledges that the Iowa HBPA has not paid any fees for 2023 or 2024. Prairie Meadows has paid its portion of the fees for both years, the suit said. Purses at Prairie Meadows are heavily subsidized by mandatory contributions from casino gambling at the track. HISA’s enabling legislation gives the authority the power to collect its annual assessment directly from the state’s racing commission. If the racing commission declines to submit the assessment, from whatever sources it identifies, the legislation gives HISA the power to seek the fees directly from racetracks and so-called “covered persons,” or horse racing licensees. Some state racing commissions have reached agreements with HISA to collect the assessments and receive credits for work related to HISA’s regulations that the commissions perform. Other states, such as Florida, have successfully lobbied their legislatures to provide the assessment funding from the state budget. Some others have reached the same arrangement being sought by HISA in Iowa, in which the racetracks in the state and the horsemen’s group agree to split the assessment. The Iowa suit argues that HISA “has not promulgated any rules for how it will equitably allocate an assessment against covered persons in the state.” Although the suit acknowledges that a current HISA rule gives it the power to determine whether the allocation is equitable, the rule “contains no definition, formula, or guidance, or any detail whatsoever about how or what an ‘equitable’ assessment is.” The suit also contends that HISA has not properly defined the term “horsemen” when negotiating with Iowa entities on the assessments. The suit was filed three and a half weeks after a three-judge panel of the U.S. Fifth Circuit Court of Appeals ruled that HISA’s enforcement powers “violate the private nondelegation doctrine” by giving HISA broad powers to enforce its rules without initial guidance from the Federal Trade Commission, its overseer. The Iowa suit references that ruling to support its own contention that Congress cannot give HISA the power to collect fees. Late last year, the U.S. Sixth Circuit Court of Appeals issued a ruling contrary to the Fifth Circuit’s more recent decision that upheld HISA’s power to devise and enforce racing rules. The split between the two Circuit Court decisions is expected to lead to a petition to the Supreme Court to decide the issue, a process that could take up to 18 months. In the meantime, the Iowa suit asks the court to “permanently enjoin” HISA from enforcing its funding mechanisms or, alternatively, declare the mechanism “not equitable” and beyond HISA’s legal power. In April of last year, the president of the Iowa HBPA, along with the president of the Arkansas HBPA, filed a lawsuit in the U.S. Eighth Circuit arguing that HISA is unconstitutional. Oral arguments were heard in June, and both the plaintiffs and HISA have responded with additional filings since the U.S. Fifth Circuit issued its opinion on July 5. :: Want to learn more about handicapping and wagering? Check out DRF's Handicapping 101 and Wagering 101 pages.