Thursday, November 10, 2016
Time to Give Federal Regulation Another Look?
A little over a year ago, I took a first look at the Thoroughbred Horseracing Integrity Act of 2015, then newly introduced by Republican Andy Barr of Kentucky and Democrat Paul Tonko of New York, the co-chairs of the Congressional Horse Caucus. At the time, I concluded that the bill had serious flaws and was perhaps beyond redemption. In the event, despite a hearing in April, 2016, featuring a variety of anti-drug activists, the bill failed to advance out of committee, and little was heard of it once election season began.
Now, things have changed. Most importantly, there has been an election that empowered the Republican Party, which will control both the House and Senate when the 115th Congress meets in January and which will not face the same veto threat that it had in President Obama. A bill coming out of the House might well receive favorable treatment in the Senate; Congressman Barr was once an intern for Senate majority leader Mitch McConnell.
Second, the promises of effective state-by-state regulation as an alternative to federal control seem not much closer to being fulfilled. Known "juice" trainers continue to operate in many jurisdictions, and the goal of uniform state rules, while closer, is yet to be achieved.
Third, my own circumstances have changed, leaving me somewhat freer to put forward my own views. After 14 years as a member of the Board of Directors of the New York Thoroughbred Horsemen's Association (NYTHA), including the last two years as its Vice President, I am no longer on the NYTHA Board and hence don't feel honor-bound to support all NYTHA's positions. I still agree with many of those positions -- for example, permitting the continued use of Lasix until some equally effective solution to the problem of Exercise-Induce Pulmonary Hemorrhaging ("bleeding") is available -- but I feel I can take a more nuanced look at some issues. And the first of those is the Tonko-Barr bill, which is expected to be re-introduced in the new Congress.
Briefly, Tonko-Barr would direct the U.S. Anti-Doping Agency (the folks who brought down Lance Armstrong and who police this country’s human Olympic athletes) to create an independent, thoroughbred horseracing-specific, non-governmental and non-profit organization to establish uniform drug rules for thoroughbred racing. The bill would exert control by tying a track's ability to simulcast -- clearly an interstate commerce activity -- to its compliance with the federal drug rules.
In its most recent form, the bill had support from the following organizations:
The Jockey Club: the breed registry,responsible for the American Stud Book in Thoroughbred racing. It is an exclusive private, self-financed and appointed organization composed of some 100-plus of the richest owners and breeders in the sport.
The Water Hay and Oats Alliance (WHOA): formed in 2014 for the sole purpose of eliminating the use of Lasix in Thoroughbred racing. Many of its members are also members of The Jockey Club.
The Breeders’ Cup: the organization originally formed by Kentucky breeders to conduct a championship day of racing in the fall to promote the breeding and sales of American horses and their offspring in the international market.
The Kentucky Thoroughbred Owners and Breeders (KTOB): the Kentucky breeders’ organization.
The Kentucky Thoroughbred Association (KTA): organized as a rival group to the Kentucky HBPA, the group that represents owners and trainers active at Kentucky tracks. It is comprised primarily of Kentucky breeders, and shares the staff, officers and directors of the KTOB.
The Humane Society of the United States (HSUS): responsible for the demise of Greyhound racing in the United States. HSUS is anti-horseracing and supports the elimination of Lasix and further restrictions of the use of therapeutic medications in racing horses. HSUS is not to be confused with the much larger and better known ASPCA.
What's missing from this list? Racing fans and bettors, trainers, blue-collar horse owners, the people who actually, day to day, care for race horses. Unless the rest of us are brought on board, or at least consulted in an open, meaningful way, the bill, if enacted, will seem like just one more piece of elite "we-kow-what's good-for-you" medicine directed at the 99%. As this week's election showed, sometimes the 99% can prevail, in unexpected ways. So, before the bill is reintroduced, how about some meaningful consultation. It could start with open forums in both Barr's district, which includes Lexington KY, and Tonko's, which includes Saratoga. Reach out, through the horsemen's associations and the tracks, and see what the rest of us think.
In addition to that consultation, which would certainly produce more ideas for improving the bill, here are some of my thoughts for aspects of the initial legislation that might merit some rethinking.
For a start, the bill applies only to Thoroughbred racing. If the supporters’ concern really is doping in horse racing, why is the bill restricted to Thoroughbreds, when there is significant Standardbred and Quarter Horse racing in the United States, all regulated by State Racing Commissions, and significant evidence of drug use in those breeds that’s far more prevalent than in Thoroughbreds?
Next, the bill includes a number of “findings,” which are supposed to be facts that Congress takes into account as reasons for the legislation. The only problem here is that a number of these “facts” in Tonko-Barr aren’t, well, all that factual.
First, the bill says that the Interstate Horse Racing Act of 1978 applies to Thoroughbred racing. Wrong. The 1978 Act, which authorizes interstate betting and gives horsemen’s groups (except at NYRA tracks, but that’s another story) the right to bargain collectively with track owners, applies to all racing – Thoroughbred, Standardbred, quarter-horse, even greyhounds. The Interstate Horseracing Act of 1978 was not enacted to protect the Thoroughbred industry.It was designated to facilitate wagering on all racing in the United States, regardless of breed. It was designed to protect the horsemen and small tracks from the predatory practices of large tracks -- still, or even more now, an issue, as recent anti-horsemen actions by Churchill Downs Inc. amply demonstrate -- to protect the horsemen and the tens of thousands of workers in racing from unregulated wagering via simulcasting (an emerging phenomenon in the late 1970s). The Act was a product of total consensus by the entire racing industry of all breeds. The doping issue and the predatory practices of track owners and wagering platforms are an issue in all kinds of racing, not just, and not even mostly, in Thoroughbred racing.
The preamble to the Bill states that the adoption of uniform standards will “promote full and fair disclosure of information to purchasers of breeding stock and the wagering public.” That may well be the case, but it would be good if the bill contained implementation provisions to ensure that this information was actually made available to the public. In its current version, Tonko-Barr does not provide for such implementation.
The Bill as currently drafted also states that uniform standards will “improve the marketplace for domestic and international sales of the American Thoroughbred, will provide a platform for consistency with all major international Thoroughbred horseracing standards, address growing domestic concerns over disparitieswith international rules…” There is in fact only one significant difference between the U.S. and international racing – the raceday administration of Lasix. That seems to be what this bill is all about – concocting a mechanism by which The Jockey Club and the breeders can force their position on the elimination of Lasix upon an industry that generally opposes them. It gives USADA the power and authority to eliminate the use of raceday Lasix. If that is not the intention of the Bill's sponsors, then the Lasix issue should be clearly set off to the side. Many of us in the industry would support uniform standards, tough enforcement, and high-quality drug testing, but, for reasons that have been well explored over the past dozen years, we believe that continuing third-party-administered Lasix use on raceday is an appropriate action given the specific conditions of US racing -- horses stabled on track in urban areas, most racing on dirt, not grass, etc. In fact, in those jurisdictions where conditions most closely mirror those in the US – Hong Kong and Singapore – bleeding rates are even higher than in the US.
It is indisputable that most Thoroughbreds suffer from EIPH – the disease that causes respiratory bleeding in racing or breezing. Lasix is recognized as the most effective medication in the treatment of EIPH. The industry has strict regulatory controls on the administration of Lasix, including time, dose and means of administration. To date, there is not a single scientific study to substantiate the claim that Lasix is detrimental to the horse.
The Bill states that the US has been unable to adopt a uniform anti-doping and drug-testing program. This is only partially true. The industry is in the midst of implementing a uniform medication and drug testing program. in a generation. While the National Uniform Medication Program has been adopted by jurisdictions representing more than 70% of the national handle, there are still states that lag well behind, including those that continue to harbor the most egregious violators. I can understand the urge to force these states' hand by adopting federal rules.
The Bill could build on the emerging consensus in the industry by specifically incorporating the ARCI (Association of Racing Commissioners International) Model Rules and Prohibited Substance listing and by adopting the standards for drug labs of the Racing Medication and Testing Consortium (RMTC). These standards are accepted by most honest horsemen and using them as the foundation of federal regulation would go far toward allaying fears of the unknown.
Another significant problem is that the bill effectively empowers the US Anti-Doping Agency (USADA), an agency with no experience with equine athletes, to control equine drug rules. The Bill's preamble sets up a false standard by referring to a UNESCO Convention: “By ratifying the UNESCO Convention, the United States agreed to adopt appropriate measures consistent with the principles of the World Anti-Doping Code and to take appropriate action, including legislation, regulation,policies or administrative practices to implement that commitment.” True, but once again misleading. The UNESCO Convention applies to people, NOT to horses. There are equestrian events in the Olympics. Equestrian sport internationally is governed by private governing bodies in each country. In the United States, the governing body is the US Equestrian Federation. It is a private organization. It regulates itself and has its own rules. USADA has no involvement whatsoever. It has no expertise in the equine sport and equine drug testing. USEF has its own laboratory, and cooperates with other international equestrian bodies through the Federation Equestrienne Internationale (FEI). USADA has no involvement with the FEI.
Those are some of the difficulties with the Bill's preamble and findings of fact. None of them are fatal; with good will, people from all parts of the racing industry could resolve their differences. Can the same be said about the operative provisions of the bill? Let's look at some of the issues.
The Bill would cover owners [§3(9)], trainers[§3(20)], veterinarians [§3(21)], agents of these individuals and all backstretch workers. Each of these persons would be subject to investigation and penalties for rule violations. Breeders are not covered; why not? In the past, the doping of horses at yearling and two-year-old sales has been a major concern. Shouldn't the breeders who have been promoting this legislation be willing to adhere to the same standards as the rest of us?
This long list of covered persons weaken, if not eliminate, the longstanding trainer-responsibility rules by putting all owners, veterinarians, trainers, and others working with a horse in the same category. Anyone involved with the horse would be exposed to sanctions at the direction of the "Authority," the regulatory entity being created by this legislation. As private entity, the Authority would not be publicly accountable in the formation or execution of rules assigning liability to covered persons. Why would anyone own race horses if that meant the owner would be subject to sanctions because a trainer did something illegal without the owner's knowledge?
The Bill would effectively remove state racing commissions from their regulatory role, at least with respect to drug rules and enforcement. When the Bill becomes effective, the Anti-Doping Authority created under the Bill would have exclusive jurisdiction for anti-doping matters for all covered horses, persons and races in Thoroughbred racing. The State RacingCommissions will be completely stripped of their authority in medication and drug testing matters,policy and regulation.
It would be difficult, if not impossible, for State Racing Commissions to regulate under this Bill. Many commissions regulate both Thoroughbred and Standardbred racing and some regulate Thoroughbred, Standardbred and Quarter Horse racing. Each breed has the same issues. Testing is done for all three. How do you calculate who pays for that testing and who doesn’t? How will the labs be properly funded? How do you avoid what will be an onslaught of litigation? In addition, the Bill needs to address how the drug regulation functions of the new Authority will mesh with the ongoing functions of the state commissions -- licensing participants, overseeing racing, and such.
The Bill would create a new, quasi-public Authority, to be composed of the CEO of USADA, five USADA Board members and five individuals from the Thoroughbred industry, none of whom can (1) have a financial interest or provide goods or services to covered horses (i.e., no owners or trainers); (2) be an officer, official or serve in any management capacity for any Thoroughbred industry representative (i.e., nobody from track management or from horsemen’s associations); or (3) be an employee or have a business or commercial relationship with any such individuals or organizations. Given these limitations, which eliminate anybody who might know anything, I have no idea who could serve on the Board. Perhaps a retired track executive. But owners and trainers don't retire; they usually die with their boots on. Thus, the Bill virtually eliminates anyone with any knowledge and expertise of horse racing from serving on the Authority. If there's a concern about conflicts of interest, how about ex officio spots for owner and trainer representatives. And perhaps a spot reserved for fans and bettors, through HANA, the Horseplayers Association of North America?
Majority control of the proposed Authority is vested in the U.S. Anti-Doping Agency. USADA starts with six of the 11 spots on the Authority's Board, and non-USADA Board members are to be selected by USADA. It is important to note that USADA has no experience with equine welfare matters, which is vital to striking a balance between humane horse treatment and ensuring the integrity of each racing contest.
USADA starts out with a six-member majority on the new 11-member Authority Board. The remaining five members are to be chosen by USADA from people nominated by various racing constituencies, but if USADA doesn’t like any of the nominations, it can just go ahead and pick whomever it likes as the additional Board members. If an independent authority with federal enforcement powers is to be set up, more thought needs it be given to its composition.
As for the substance of the medication rules, the Bill provides that the Anti-Doping Program must include: (1) a list of therapeutic and prohibited substances; (2) a schedule of sanctions for violations; (3) programs relating to anti-doping research and education; (4) testing procedures, standards and protocols for both in-competition and out-of-competition testing; (5) procedures for investigating, charging and adjudicating violations for enforcement of sanctions; and (6) laboratory standards for accreditation, testing requirements and protocols. This is largely duplicative of how the industry is currently regulated. Why not incorporate the existing standards, some of which are referenced above, rather than re-inventing the wheel?
State and federal laws and regulations already govern the practice of veterinary medicine and substances available for proper veterinary care. The Bill would put the Authority in the role of regulating the practice of veterinary medicine. Moreover, a list of prohibited substances and methods already exists in the RCI Model Rules and prohibited substance standards.
Investigation and adjudication procedures already exist and are governed by laws governing such regulatory matters in the applicable states. All major racing laboratories are accredited to the international ISO17025 standard and participate in the quality assurance program of the International Association of Official Racing Chemists. In addition, the Racing Medication and Testing Consortium has an accreditation program and developed lab standards which have been adopted by the ARCI and relied upon by State regulatory agencies when procuring laboratory services. Again, this is something that already exists and could be incorporated into the federal standards rather than being recreated from scratch.
The Bill provides that the Authority must take into consideration international anti-doping standards when creating the list of permitted and prohibited substances and other rules for lab testing in-competition and out-of-competition testing and sanctions. This effectively means the Authority must eliminate raceday Lasix, which is on the WADA list of banned substances. If the Bill's sponsors are not intending to ban Lasix, the Bill needs to say so.
The Bill would shift State drug testing programs to the Authority and eliminate the need for the existing programs or personnel of State regulatory Commissions. As this language only applies to Thoroughbred racing, those states regulating Standardbred or Quarter Horse races will need to keep a drug testing, investigative, and adjudication infrastructure in place, and current costs currently allocated across all breeds will need to be absorbed by Standardbred and Quarter Horse racing activity. The Bill also shifts investigations and the responsibility for adjudicatory hearings associated with medication rule violations in Thoroughbred racing to the Authority. There is no provision for appeals beyond the Authority. Whatever we think of the absurd length of time that it currently takes for courts and commissions in the various states to hear appeals, there’s clearly a due-process issue here. Some avenue of appeal beyond the Authority is necessary. As a example, in a tax dispute with the IRS, a taxpayer dissatisfied with the administrative decision may appeal either to Tax Court or the federal District Court and then to the Circuit Court of Appeals. The Bill should incorporate a similar appeal route for Thoroughbred drug violations.
The funding provisions of the Bill are also a cause for concern. The Authority will be initially funded by loans (The Jockey Club, Breeders’ Cup, WHOA, etc.).Thereafter, the Authority will access a per-start fee to repay its loans and cover its costs. The State Racing Commissions will be responsible for collection the fees and paying them to the Authority by the 20th day of each month. This will amount to a significant tax on each owner and trainer in addition to all of the other currently assessed licensing fees, workers’ comp payments, etc. In essence, the horsemen will be required to pay for this program. The States have to implement the assessment. The tracks initially opposed the Bill because they said they would not pay. The coalition supporting the Bill certainly doesn’t want it to come from takeout, which is prohibited under the Bill, and they're probably right; takeout is too high already, so they are taxing the owners and trainers. Horse ownership is already a losing business, whatever public perception may be, and the addition of an unknown future assessment certainly won’t help recruit new owners. The Bill itself makes no attempt to calculate what this Authority will cost and sets no limits. State Racing Commissions will be responsible for collecting fees, but how much will the fees be, and who will pay them? There is no telling how much of a financial burden this Authority would place on horsemen. The horsemen will be required to fund the Authority while having no input as to how much it will cost or how the monies will be spent. Bear in mind that the average Thoroughbred race horse earns less than 75% of the cost of keeping it in training. Imposing an additional tax on owners for the privilege of losing money doesn't seem like the greatest idea.
In addition, there is not one dime of federal assistance in the Bill to combat instances of horse doping in Thoroughbred racing. Congress currently allocates approximately $9,000,000 each year to the White House Office of Drug Policy to support anti-doping activities in sport. This proposal does not require that any of those funds be used to assist efforts in horse racing. Sharing would be a virtue.
Unlike a government agency, whose financial support is reviewed, transparent and publicly accountable, the proposed Authority is permitted to accept private donations not disclosed to the public, creating the possibility that certain “covered persons” could exert undue influence by virtue of monies they have contributed or loaned to the Authority. Under this construct the independence of the entity is undermined as it is financially beholden to private individuals or organizations and not part of a public process as state agencies are.
Under this proposal, the Authority also determine sits own budget shielded from public and industry review, accountability and input. An assessment is then levied on the states to fund operations and debt service on whatever private loan arrangements theyhave made. In essence, the Authority is given a blank check. This problem could be fixed through an open budgetary process, involving disclosure and public hearings.
As I said at the outset, a good case can be made for federal regulation. It could enhance our sport's credibility in the eyes of the public, it could resolve the problem of those few states that are lagging behind in getting rid of the cheaters, and it could even reduce the total cost of drug enforcement through economies of scale. But for a federal bill to be both acceptable and workable, it needs to go through a wider consultation process, it needs to clearly lay the Lasix issue off to one side, and it needs to resolve some of the substantive issues raised here. The vast majority of us in racing want the sport to be clean; we just want a way of getting there that's fair and workable.
One final note: as long as we're talking about amending the Interstate Horseracing Act, how about getting rid of the provision that bars collective bargaining by horsemen at NYRA tracks -- and only NYRA tracks. At all other racing venues, horsemen and track management must have an agreement in place before the track can simulcast its signal. The NYRA exception was placed in the bill at the behest of the Jockey Club grandees who then controlled New York racing. With NYRA due to return to private ownership, it's about time to get rid of this anachronism.