Notice2024-19468
HISA Proposed 2025 Budget
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 29, 2024
Issuing agencies
Federal Trade Commission
Abstract
The Federal Trade Commission publishes the 2025 proposed budget of the Horseracing Integrity and Safety Authority and seeks public comment on whether the Commission should approve, disapprove, or modify the proposed budget.
Full Text
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<title>Federal Register, Volume 89 Issue 168 (Thursday, August 29, 2024)</title>
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[Federal Register Volume 89, Number 168 (Thursday, August 29, 2024)]
[Notices]
[Pages 70183-70189]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-19468]
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FEDERAL TRADE COMMISSION
[File No. P222100]
HISA Proposed 2025 Budget
AGENCY: Federal Trade Commission.
ACTION: Notice of publication of Horseracing Integrity and Safety
Authority 2025 proposed budget; request for public comment.
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SUMMARY: The Federal Trade Commission publishes the 2025 proposed
budget of the Horseracing Integrity and Safety Authority and seeks
public comment on whether the Commission should approve, disapprove, or
modify the proposed budget.
DATES: Comments must be filed on or before September 12, 2024.
ADDRESSES: Interested parties may file a comment online or on paper by
following the instructions in the Comment Submissions part of the
SUPPLEMENTARY INFORMATION section. Write ``HISA 2025 Budget, Matter No.
P222100'' on your comment and file it online at <a href="https://www.regulations.gov">https://www.regulations.gov</a> by following the instructions on the web-based
form. If you prefer to file your comment on paper, mail your comment to
the following address: Federal Trade Commission, Office of the
Secretary, 600 Pennsylvania Avenue NW, Mail Stop H-144 (Annex H),
Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Sarah Botha (202-326-2036), Attorney
Advisor and Acting HISA Program Manager, Office of the Executive
Director, Federal Trade Commission, 600 Pennsylvania Avenue NW,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION: The Horseracing Integrity and Safety Act,\1\
enacted on December 27, 2020,\2\ and amended on December 29, 2022,\3\
directs the Federal Trade Commission to oversee the activities of a
private, self-regulatory organization called the Horseracing Integrity
and Safety Authority (``HISA'' or the ``Authority''). In March 2023,
the Commission issued rules setting forth the procedure whereby the
Commission approves, disapproves, or modifies the Authority's proposed
annual budget.\4\ Under these rules, the Authority must first publish a
proposed budget on its own website and invite public comments. See 16
CFR 1.150(b). Thereafter, the Authority must forward the budget to the
Commission, along with all public comments received and an assessment
of those comments, and must identify any changes made to the proposed
budget in response to the comments received. 16 CFR 1.150(c). The
Authority's submission must also include (a) a statement of the vote by
the Authority's Board of Directors approving the proposed budget; (b)
information about revenues, including how fees are calculated and
apportioned; (c) information about expenditures, broken down by program
area, e.g., the racetrack safety program, the anti-doping and
medication control program, etc.; (d) sufficient information about
individual line items for the Authority's Board of Directors to
exercise their fiduciary duty of care; and (e) information comparing
actual revenues and expenses against the approved budget and explaining
variances of greater than 10 percent. Id.
After the Authority submits its proposed budget and supporting
materials to the Commission, and if the Secretary determines the
submission comports with the requirements of the 16 CFR 1.150(c), the
Secretary publishes the Authority's proposed budget in the Federal
Register and invites public comment for a period of 14 days. 16 CFR
1.150(d). After taking into consideration the comments submitted, the
Commission either approves or disapproves the budget. 16 CFR 1.151(a).
The Commission will approve the proposed budget if ``the Commission
determines that, on balance, the proposed budget is consistent with and
serves the goals of the Horseracing Integrity and Safety Act in a
prudent and cost-effective manner and that its anticipated revenues are
sufficient to meet its anticipated expenditures.'' 16 CFR 1.151(c). The
Commission may also modify the amount of any line item. 16 CFR
1.151(d).
Request for Comments
On July 31, 2024, the Authority forwarded to the Commission a
Notice of Filing of HISA Budget, together with appendices furnishing
detailed information pertinent to its 2025 budget proposal (as required
by 16 CFR 1.150(c)). The Notice of Filing of HISA
[[Page 70184]]
Budget is reproduced below. The appendices to which it refers have been
collected and reproduced as a supporting document on the docket for
this publication at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
The Secretary concluded that the Authority's proposed 2025 budget
submission complies with the requirements of 16 CFR 1.150(c), and
therefore issues this document and invites comments from the public on
the Authority's 2025 budget. Comments should address the decisional
criteria set forth in 16 CFR 1.151(c) and whether any line items should
be modified. See 16 CFR 1.150(d).
Comment Submissions
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before September 12,
2024. Write ``HISA 2025 Budget, Matter No. P222100'' on your comment.
Your comment--including your name and your state--will be placed on the
public record of this proceeding, including the <a href="https://www.regulations.gov">https://www.regulations.gov</a> website.
Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we strongly encourage you
to submit your comments online. To make sure the Commission considers
your online comment, you must file it at <a href="https://www.regulations.gov">https://www.regulations.gov</a>,
by following the instructions on the web-based form.
If you file your comment on paper, write ``HISA 2025 Budget, Matter
No. P222100'' on your comment and on the envelope, and mail your
comment to the following address: Federal Trade Commission, Office of
the Secretary, 600 Pennsylvania Avenue NW, Mail Stop H-144 (Annex H),
Washington, DC 20580. If possible, please submit your paper comment to
the Commission by overnight service.
Because your comment will be placed on the publicly accessible
website at <a href="https://www.regulations.gov">https://www.regulations.gov</a>, you are solely responsible for
making sure your comment does not include any sensitive or confidential
information. In particular, your comment should not include any
sensitive personal information, such as your or anyone else's Social
Security number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. You are also
solely responsible for making sure your comment does not include any
sensitive health information, such as medical records or other
individually identifiable health information. In addition, your comment
should not include any ``any trade secret or any commercial or
financial information . . . which is privileged or confidential.'' 15
U.S.C. 46(f); see 16 CFR 4.10(a)(2). In particular, your comment should
not include competitively sensitive information such as costs, sales
statistics, inventories, formulas, patterns, devices, manufacturing
processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with 16 CFR 4.9(c). In particular,
the written request for confidential treatment that accompanies the
comment must include the factual and legal basis for the request and
must identify the specific portions of the comment to be withheld from
the public record. See 16 CFR 4.9(c). Your comment will be kept
confidential only if the General Counsel grants your request in
accordance with the law and the public interest. Once your comment has
been posted publicly at <a href="https://www.regulations.gov">https://www.regulations.gov</a>, as legally
required by 16 CFR 4.9(b), we cannot redact or remove your comment,
unless you submit a confidentiality request that meets the requirements
for such treatment under 16 CFR 4.9(c), and the General Counsel grants
that request.
Visit the <a href="https://www.regulations.gov">https://www.regulations.gov</a> to read this document. The
FTC Act and other laws that the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. The Commission will consider all timely and responsive
public comments it receives on or before September 12, 2024. For
information on the Commission's privacy policy, including routine uses
permitted by the Privacy Act, see <a href="https://www.ftc.gov/site-information/privacy-policy">https://www.ftc.gov/site-information/privacy-policy</a>.
The text that follows is the Notice of Filing of HISA Budget that
the Authority submitted to the Commission. The appendices to which it
refers have been collected and reproduced as a supporting document on
the docket for this publication at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Notice of Filing of HISA Budget
Pursuant to the Horseracing Integrity and Safety Act of 2020 \5\
(the ``Act'') and the Federal Trade Commission's (the ``Commission'')
Procedures for Oversight of the Horseracing Integrity and Safety
Authority's Annual Budget,\6\ notice is hereby given that on July 31,
2024, the Horseracing Integrity and Safety Authority (``HISA'' or the
``Authority'') filed with the Commission the Authority's proposed 2025
budget. This Notice of Filing of HISA Budget (the ``Notice'') provides
the contents of the submission as set forth in 16 CFR part 1 Subpart U.
I. Information Concerning Rule 1.150(b). The Authority's proposed
2025 budget was posted on the HISA website (<a href="http://hisaus.org">hisaus.org</a>) on July 11,
2024. The Authority received one comment regarding the budget. Section
VI contains a further discussion of the comment. The Authority did not
make any revisions to the proposed budget in light of the comment.
II. Information Concerning Rule 1.150(c)(1). The Authority's
proposed 2025 budget was approved by its Board of Directors by a vote
of 9 to 0 before the proposed budget was posted on the HISA website and
was approved by the Board of Directors by a vote of 9 to 0 after
reviewing the comment submitted by Mr. Cohen. Therefore, the
requirements of 15 U.S.C. 3052(f)(1)(C)(iii) and Rule 1.150(c)(1) have
been satisfied.
III. Information Concerning Rule 1.150(c)(2). In accordance with 15
U.S.C. 3052(f) and using the Assessment Methodology Rule approved by
the Commission, the Authority calculated the following:
<bullet> 2025 Assessments by State (attached as Appendix 8).
<bullet> 2025 Assessments by Track (attached as Appendix 9).
Appendix 8 and Appendix 9 display the estimated amount required
from each State Racing Commission as calculated under the Assessment
Methodology Rule.
The 2025 HISA Budget includes the following revenue line items:
<bullet> Racetrack Safety Fines Income--this consists of fines
levied for violations of the Racetrack Safety Program.
<bullet> ADMC Fines Income--this consists of fines paid for
violations of the Anti-Doping and Medication Control Program.
<bullet> Lab Test Income--this consists of the money paid to HISA
to cover the cost of B Sample testing, claimed horse testing, and
clearance testing.
<bullet> Interest Income--This consists of interest income from
HISA's Money Market Savings account.
<bullet> Other Revenue--this consists of payments made by certain
racetracks to reimburse HISA for paying for the cost of Racetrack
Safety Program compliance (there is an offsetting expense).
Please note that no loans are contemplated to be procured by HISA
in 2025.
[[Page 70185]]
IV. Information Concerning Rule 1.150(c)(3). The Authority's
proposed 2025 budget includes the following expense line \7\ items:
<bullet> Rule 1.150(c)(3)(i): Racetrack Safety Program. These
expenditures consist primarily of salaries for staff to monitor and
implement the Racetrack Safety Program, racetrack surface testing, and
vendors and contract employees that support the Racetrack Safety
Program.
<bullet> Rule 1.150(c)(3)(ii): Anti-Doping and Medication Control.
Pursuant to 15 U.S.C. 3054(e), the Authority contracted with the
Horseracing Integrity and Welfare Unit (``HIWU'') to serve as the
independent anti-doping and medication control enforcement organization
for covered horses, covered persons, and covered horseraces. HIWU
implements the Anti-Doping and Medication Control Program on behalf of
the Authority. Expenditures related to this Program include HIWU costs,
lab testing, and professional services. Additionally, 15 U.S.C. 3055(e)
provides that the Authority ``shall convene an advisory committee . . .
to conduct a study on the use of furosemide on horses during the 48-
hour period before the start of a race, including the effect of
furosemide on equine health and the integrity of competition and any
other matter the Authority considers appropriate.'' The costs of this
study are included in the Anti-Doping and Medication Control portion of
the proposed 2025 budget.
<bullet> Rule 1.150(c)(3)(iii): Other programmatic expenses. These
expenditures consist primarily of salaries, professional services, and
technology to support the Authority's veterinary and technological
needs. Additional programmatic expenditures relate to the business and
operational components of the Authority and include expenses such as
salaries, legal (lawsuits and general), and professional services.
<bullet> Rule 1.150(c)(3)(iv): Repayment of any loans. This
expenditure consists of $250,000 in repayment of loans.
<bullet> Rule 1.150(c)(3)(v): No funding shortfall is expected.
V. Information Concerning Rule 1.150(c)(4). The Act recognizes that
the establishment of a national set of uniform standards for racetrack
safety and anti-doping and medication control will enhance the safety
and integrity of horseracing. The 2025 budget allows the Authority to
continue implementation of the horseracing Anti-Doping and Medication
Control Program and the Racetrack Safety Program for Covered Horses,
Covered Persons, and Covered Horseraces.
The proposed 2025 HISA Summary budget (Appendix 1) is a compilation
of the following departmental budgets: Racetrack Safety (Appendix 2);
Veterinary Services (Appendix 3); Anti-Doping and Medication Control
(Appendix 4); HIWU (Appendix 5); Technology (Appendix 6); and
Administration (Appendix 7). A summary of these departmental budgets is
set forth below:
1. The 2025 Racetrack Safety budget funds the implementation of the
Racetrack Safety Program as set forth in Rule Series 2000 and as
originally approved by order of the Commission dated March 3, 2022.\8\
The budget consists of the following items:
a. Salaries/Payroll Taxes/Employee Benefits. The salaries provide
for staffing to support and monitor the Racetrack Safety program,
including those persons necessary to oversee the following components
of the program:
i. Administration
ii. Track Accreditation Services
iii. Stewards' & State Racing Commission Liaison
iv. Jockey Health & Welfare
Salary levels for each position are based on market rates, while
Employee Benefits consist primarily of a HISA contribution to cover a
portion of employee health insurance and a 401(k) match that is
consistent with market practice. The salaries budget provides for six
racetrack safety employees. As of July 31, 2024, the Racetrack Safety
Program has six employees. For all employees of the Authority, the
Director of Operations and Compliance, an individual who does not have
a conflict of interest with regard to the hiring of other open
positions, reviews and documents compensation based on industry norms
for similar positions prior to setting and to offering other open
positions. Where needed, the Director of Operations and Compliance
relies upon an outside search agency to help determine compensation for
other open positions.
b. Meetings. This includes the travel, meals, and materials to
support the following annual meetings:
i. Track Superintendents
ii. Racetrack Safety Committee
These meetings are necessary to promote the health and safety of
both Covered Horses and Riders.
c. Travel. This category covers the travel and meal expenses for
all of the employees previously listed in Salaries (section a) of this
department (excluding the travel and meal expenses for the Meetings
described in section b. and the Track Accreditation Services travel set
forth in section f.). Travel to Covered Racetracks by Authority
employees is often necessary to ensure that Covered Horseraces are run
in accordance with the standards established in HISA's Racetrack Safety
Program.
d. Supplies. This primarily consists of materials to be used in
educational and Continuing Education programs provided and overseen by
the Racetrack Safety Department. These programs ensure that trainers,
jockeys, veterinarians, and stewards are educated in methods and
procedures that promote the health and safety of Covered Horses and
Riders.
e. Professional Services. Several independent contractors and
external service provider companies will partner with HISA on a part-
time basis to provide and/or augment services in the following areas:
i. Data Analysis
ii. Research/Testing
iii. Statistical Analysis
iv. Jockey Concussion Tracking
v. National Medical Director
vi. Study on the causes of Exercise-Associated Sudden Death (EASD) in
racehorses
Pay rates are based on market rates for similar positions. All of
these independent contractor relationships will increase the knowledge
base and/or education level of participants in Covered Horseraces.
f. Track Accreditation Services. Pursuant to 15 U.S.C. 3056 and the
Racetrack Safety rules, the Authority is responsible for implementing
an evaluation and accreditation program that ensures that Covered
Racetracks meet certain safety and performance standards. Both the Act
and the Racetrack Safety rules require that tracks be accredited, and
the rules mandate site visits to determine the extent of compliance
with the rules. The accreditation visits afford HISA staff the ability
to conduct an in-depth and in-person review of a racetrack's operations
to determine its level of compliance with the Racetrack Safety Program
and to provide training on how best to meet ongoing reporting
requirements. This category includes the costs of compensating teams of
employees and independent contractors to perform these site visits, and
the costs of covering the travel and meal expenses for this team.\9\
The accreditation site visits are conducted by teams of three to four
individuals. The costs included in this category are based on the
actual cost of accreditation site visits in 2023 and 2024.
g. Racetrack Surface Testing. This category includes the cost of
pre-meet track surface testing of tracks that run
[[Page 70186]]
Covered Horseraces. Testing is performed to ensure that track surfaces
comply with the Racetrack Safety Program. This testing is performed by
the Racing Surfaces Testing Laboratory.
2. The 2025 Veterinary Services budget ensures that the veterinary
care component of the Racetrack Safety Program is effectively
implemented and administered nationally.
a. Salaries/Payroll Taxes/Employee Benefits. This category
contemplates four HISA full-time employees that cover the
administration of veterinary rules, compliance with those rules, and
veterinary medical records. Salary levels for each position are based
on market rates, while Employee Benefits consist primarily of a HISA
contribution to cover a portion of employee health insurance and a
401(k) match that is consistent with market practice. As of July 31,
2024, the Veterinary Services department has four employees.
b. Meetings. This includes the travel, meals, and materials to
support the Equine Safety Directors Meeting. This meeting is necessary
to promote the health and safety of both Covered Horses and Riders.
c. Travel. This includes the costs of travel by veterinary
employees to racetracks to meet with regulatory veterinarians,
attending veterinarians, and other practicing equine veterinarians and
their staff. This also includes travel to training seminars and
veterinary conferences. Participation by veterinary employees in these
meetings and seminars will result in a more effective and efficient
program that better meets the needs of HISA's constituents.
d. Supplies. This primarily consists of materials to be used in
educational and Continuing Education programs provided and overseen by
the Veterinary Services department. These programs ensure that
trainers, jockeys, veterinarians, and stewards are educated in methods
and procedures that promote the health and safety of Covered Horses and
Riders.
e. Professional Services. Several independent contractors will
partner with HISA on a part-time basis to provide and/or augment
services in areas including veterinary consulting and data entry.
Pay rates are based on market rates for similar positions. All of
these independent contractor relationships will increase the knowledge
base and/or education level of veterinarians and other participants in
Covered Horseraces.
3. The 2025 Anti-Doping and Medication Control budget supports the
implementation of the ADMC Protocol. The budget consists of the
following items:
a. Travel. This line item covers the travel and meal expenses that
are expected to be incurred by HISA personnel to support and achieve
the goals of the ADMC Program.
b. Supplies. This line item sets forth the cost of materials
utilized by the Authority to support and achieve the goals of the ADMC
Program.
c. Professional Services. Independent contractors have partnered
with HISA on a part-time basis to provide and/or augment services in
the following areas:
i. Arbitration--this covers the fees to be paid to arbitrators who
preside over cases involving positive tests for banned substances.
ii. Independent Adjudication Panel (IAP)--this covers the fees paid
to members of the IAP, who hear cases involving positive tests for
controlled medications.
iii. Furosemide Study--this covers the fees to be paid in 2025 for
the furosemide study that is required by the Act.
d. HIWU. As set forth above, the Act requires that HISA contract
with an independent enforcement agency to oversee the components of the
ADMC Program. HIWU, a division of Drug Free Sport (``DFS''), was
retained by the Authority as the independent enforcement agency. The
HIWU line items in the ADMC budget consist of the following:
i. Salaries/Payroll Taxes/Employee Benefits. All HIWU employees are
employed by DFS. The salaries account for a staff (expected to total 43
full-time individuals) that will carry out all of the responsibilities
of the enforcement agency, including those persons necessary to oversee
and complete the following components of the program:
1. Testing Operations
2. Testing Strategy
3. Compliance & Policy
4. Collection Personnel Recruitment, Training, & Certification
5. Support Line Management
6. Science
7. Laboratory Accreditation
8. Equine Medical Resources
9. Intelligence & Strategy
10. Investigative Operations
11. Education
12. Communications & Outreach
13. Legal
14. Litigation
15. Results Management
16. Information Technology
17. Human Resources
18. Finance
HIWU shares 7 staff with DFS in the areas of Information
Technology, Finance, and Human Resources. This arrangement produces
cost savings, obviating the need for HIWU to retain full-time employees
to provide these services.
ii. Rent. HIWU has procured 3,000 sq. ft. of office space for its
employees. HIWU is paying $32/sq. ft., which is consistent with market
rates in the Kansas City area. The cost of basic office equipment is
also included in this category.
iii. Office Expense. This consists of common office expenses such
as utilities and maintenance costs and is based on historical costs for
similar businesses.
iv. Telecommunications. This consists of the cost of office phones,
mobile phone service at $65/month/employee (a commercially reasonable
rate), and portable hot-spot wi-fi services to be used in test barns.
v. Travel. This is the travel expense necessary for full-time
employees to perform functions such as meetings with State Racing
Commissions and track associations, training and continuing education
sessions with sample collection personnel, conducting investigations,
arbitration hearings, laboratory visits, meetings with HISA personnel,
and participation in industry meetings and conventions. Travel expenses
include airfare, hotel rooms, rental cars, fuel costs, mileage for
personal vehicles used for business purposes, parking, and meals. The
amounts for each expense component were based on estimated market
average costs.
vi. Supplies. This consists of drug testing supplies needed for
sample collections and sample collection personnel training.
vii. Professional Services. This consists largely of consulting
fees paid to experts in the areas of:
1. Results Management
2. Investigations and State Racing Commission Relations
3. Laboratory Accreditation
The guidance provided by these subject matter experts will result
in a safer sport run on a more level playing field.
viii. Technology. This consists of the cost of all software,
hardware, licenses and continued technological development needed to
perform HIWU's work.
ix. Insurance. The expense consists of the cost of all of HIWU's
insurance policies, including liability insurance with an Umbrella
policy, cyber-risk insurance, property insurance, and workers'
compensation insurance.
x. Resources and Education. This includes Training and Continuing
[[Page 70187]]
Education, registration fees for industry conferences, accounting fees
for state tax filings, and dues and subscriptions to industry
publications. All of these are necessary for HIWU to properly conduct
its business.
xi. Taxes--Other. Estimated taxes based on historical experience.
These taxes are minimal in amount and are commercially reasonable.
xii. ADMC Collection Costs. This includes wages paid to sample
collection personnel in all states that conduct Covered Horseraces. The
wage amounts were initially based on rates paid to sample collection
personnel in each state prior to HIWU assuming these sample collection
functions and have been adjusted where necessary to reflect rates
currently being paid. Additionally, to cover travel expenses
specifically related to sample collection, this includes airfare, hotel
rooms, rental cars, fuel costs, mileage for personal vehicles used for
business purposes, parking, and meals. The amounts for each expense
component were based on estimated market average costs.
xiii. Management Fees. This is the profit amount to HIWU for
administering the program. It is a negotiated amount of 8% of the total
expenses incurred for services that HIWU provides directly and 4% for
everything else.
e. Lab Testing. Once the samples to be tested have been collected
by HIWU personnel, they are shipped to one of five accredited
laboratories located in the United States. All of the laboratories have
many years of experience in the testing of blood, urine, and hair
samples taken from thoroughbred racehorses. HIWU has conducted
extensive negotiations with each of these laboratories in order to
ensure that competent testing is performed at the lowest price
possible. One way HIWU has successfully reduced costs is by utilizing
only five laboratories to perform testing, instead of the nine
laboratories previously used by various State Racing Commissions across
the country. This allows the five laboratories to spread their fixed
costs (salaried employees, testing equipment, etc.) over a larger
number of samples, resulting in a lower charge per test.
It is important to note that the ADMC Collection Costs and Lab
Testing line items represent 47.96% of the total budget of the
Authority.
4. The 2025 Technology budget supports the building and development
of all IT systems needed to properly and efficiently manage the
Racetrack Safety and ADMC programs. The budget consists of the
following items:
a. Salaries/Payroll Taxes/Employee Benefits. This contemplates nine
HISA full-time employees in areas including programming, field support,
internal support, external support, project administration, and third-
party developer coordination. Salary levels for each position are based
on market rates, while Employee Benefits consist primarily of a HISA
contribution to cover a portion of employee health insurance and a
401(k) match that is consistent with market practice. As of July 31,
2024, the Technology department has seven employees.
b. Travel. This includes the costs of travel by IT employees to
racetracks to meet with customers/users, to Lexington, Kentucky and
Montclair, New Jersey for HISA meetings, and to training seminars and
technology summit meetings. Participation by IT employees in these
meetings and seminars will result in a more efficient program that
better meets the needs of the constituents and will ensure alignment
between the functionality of the system and the published regulations.
c. Supplies. This includes the purchase of laptops for all HISA
employees, the provision of workstations for those employees located in
the Lexington office, and the hardware/software/3rd-party services
needed for image processing. These items are necessary for HISA to
efficiently perform its duties under the Act.
d. Technology. This item includes the costs of cloud computing and
other specialized applications that together form the foundation of
HISA's technology system. This includes the cost of Palantir, Amazon
Web Services, and other vendors relating to the HISA website and
technology systems. In order to be as cost-effective as possible, HISA
has chosen not to invest in centralized computing assets. This keeps
total cost of ownership low and infrastructure stability high, and it
enables solution flexibility as HISA is engaged in meeting its mandate.
e. Professional Services. This item budgets for outsourced
technology delivery provided by third-party system integrators and
software factories. Given the need for cost-effective, round-the-clock
services, the necessary software and technology systems were procured
internationally from development resources in the US, Europe, and Asia;
this allowed for the implementation of a 24-hour code and test
development cycle. This is the most cost-effective method of building
and maintaining technology systems/portals to facilitate program
reporting to and monitoring by HISA.
5. The 2025 Administration budget consists of the general and
administrative staff and expenditures that are needed to conduct HISA's
business. This budget consists of:
a. Salaries/Payroll Taxes/Employee Benefits. This contemplates 13
employees including executive-level personnel (the CEO and CFO) and
employees in Legal, Communications, Operations/Compliance, Public
Affairs, and Administrative Services. Salary levels for each position
are based on market rates, while Employee Benefits consist primarily of
a HISA contribution to cover a portion of employee health insurance and
a 401(k) match that is consistent with market practice. As of July 31,
2024, nine employees make up the Administration Department.
b. Board and Committee Travel. This consists of travel, hotel, and
meal expenses for the one annual board meeting that is held with in-
person attendance by the board members.
c. Rent. In the fall of 2024, HISA anticipates moving its office
location to a 1,798 sq. ft. office space in Lexington, Kentucky. HISA
expects to pay $18/sq. ft., which is consistent with market rates in
the Lexington area. The costs of basic office equipment and furniture
are also included in this category.
d. Phones. This is the cost of an office phone system in HISA's
corporate office, necessary for HISA to conduct its business.
e. Meetings. This is the cost of miscellaneous meetings of HISA's
corporate staff as are necessary for HISA to conduct its business.
f. Travel. This includes airfare, car rental, mileage, and meals
for HISA's corporate staff in the course of traveling to Covered
Racetracks, industry meetings, HISA meetings (strategic planning
summits, board meetings, etc.), and meetings with industry
stakeholders. Travel to these events allows HISA's corporate staff to
conduct its business more efficiently and to perform its duties under
the Act.
g. Membership and Subscriptions. This is the cost of professional
membership dues and subscription fees. These memberships allow HISA
staff to meet with industry stakeholders and carry out its duties under
the Act.
h. Bank and Credit Card Fees. This includes the cost of bank fees
and credit card fees. These fees are necessary to efficiently and
effectively conduct business.
i. Supplies. This includes the cost of office supplies, including
printer/copier paper, printer/copier ink and toner,
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postage, shipping, and other miscellaneous office supplies.
j. Postage. This includes the cost of postage and shipping for
communications to Covered Persons. While HISA primarily conducts
business via electronic communications, U.S. Mail is required where the
recipient does not utilize an electronic means of communication.
k. Accounting Services. This consists of the cost of a contract
bookkeeping service that books accounting entries, produces financial
statements, manages and processes Accounts Receivable, manages and
processes Accounts Payable, and drafts/files HISA's annual IRS Form
990. Contracting this work out to a company with expertise in these
areas is much more cost-effective than if HISA were to hire staff to
perform these functions in-house. Additionally, this includes the cost
of an annual independent audit of HISA.
l. Public Relations Services. This is the cost of a contract public
relations service to manage HISA's website, issue press releases,
assist with the production and distribution of information to industry
stakeholders, and provide continuing education information for industry
stakeholders. The public relations firm that HISA is working with has
many years of expertise in P/R for thoroughbred racing enterprises. The
firm can perform the aforementioned tasks more efficiently and
effectively than if HISA were to hire staff to perform these tasks in-
house.
m. Legal--General and Lawsuits. This includes the cost of outside
legal counsel for the creation, management, and updating of Racetrack
Safety and ADMC rules as well as the cost of outside counsel that is
working on the various lawsuits in which HISA is a party. Additionally,
this includes the cost of outside legal counsel that handles
enforcement actions brought under the Racetrack Safety Program. Doing
all of these tasks requires a decentralized group of lawyers with
varied skill sets. At present, it is much more efficient and effective
to utilize outside counsel than for HISA to hire a large in-house legal
team to handle these issues.
n. Insurance. This includes the following insurance policies for
HISA:
i. Directors & Officers insurance.
ii. Workers' Compensation insurance.
All of these policies were competitively shopped by a broker to get
the lowest rate possible.
o. Payroll Services. This includes all costs of HISA's relationship
with Resource Management, Inc. (RMI), a Professional Employer
Organization (PEO). RMI provides Human Resources administration
(handbook and policy management resources, new employee onboarding,
labor law assistance, etc.), benefits management, compliance services
(workers' compensation claims management and annual reporting,
unemployment claims management, etc.), and payroll administration
(payroll processing, W2 management, vacation tracking, etc.). The
relationship with RMI allows these functions to be performed in a more
cost-effective manner than if HISA hired employees to perform those
functions.
p. Printing and Publication. This includes the cost of printing and
publishing various educational and communication materials.
q. Professional Services. This account consists of:
i. Consulting fees to independent contractors assisting HISA with
consulting projects and board and executive functions.
ii. $100,000 to fund the preparation of a white paper on the
benefits provided by security cameras in shedrows.
iii. $150,000 contingency fund set aside for unexpected expenses.
These items will ensure that HISA has high-quality employees who
are well-trained to properly serve its constituents.
Please note that the 2025 HISA budget contemplates the repayment of
$250,000 of loans; it does not assume that any funding shortfall will
be incurred.
VI. Information Concerning Rule 1.150(c)(5). Attached as Appendix
10 is a comparison of the approved HISA 2024 Budget to actual revenues
and expenditures. A variance has been calculated for each line item,
and a narrative explanation has been provided for all variances >10%
and at least $100,000.
VII. Information Concerning Rule 1.150(c)(6). The Authority
received one public comment after posting the proposed budget on its
website. The comment was submitted on July 22, 2024 by Andrew Cohen, a
columnist for the Paulick Report, a horse racing publication. Mr. Cohen
submitted his article titled, ``Keeping Pace: A Closer Look at HISA's
Proposed Budget'' as a comment regarding the budget. The column is
attached as Appendix 11. The comment was posted on the Authority's
website on the same day that it was submitted by Mr. Cohen. The article
sets forth the following suggestions and questions regarding the
budget: (i) requesting a summary explanation of the budgetary changes;
(ii) question regarding why the lab testing budget went from $21.2
million to $20.5 million; (iii) question regarding revenue reduction
from $3.6 million to $2.4 million; and (iv) question regarding credits
for sample collection and state laboratory services and whether ``HISA
officials expect to charge states and tracks about $2 million less in
2025 than in 2024.''
The Authority's assessment of Mr. Cohen's comment follows: In
future years, the Authority will consider including the Notice with the
budget on its website. The lab testing budget and collection costs
deceased in large part because the 2024 budget included analysis for
Louisiana, West Virginia, and Texas, while the 2025 budget does not. As
it relates to the question regarding revenue reduction, this revenue
line represents revenue from fines. After reviewing the actual fines
collected to date, the Authority believes that the budget should be
based on the fines expected to be collected instead of fines levied.
The larger fines associated with the ADMC program generally accompany a
longer suspension and, in these cases, the covered person is not
motivated to pay the fine until the suspension has been served.
The Authority did not make any revisions to the proposed budget in
light of the comment.
HISA's Conclusion
The proposed budget is consistent with and serves the goals of the
Act in a prudent and cost-effective manner. The proposed budget
allocates the funding necessary for the successful implementation by
HISA of the requirements of the Act. The budget has been carefully
analyzed and is narrowly tailored to the various regulatory activities
of HISA as contemplated by the Act. As demonstrated herein, the
anticipated revenues are sufficient to meet its anticipated
expenditures.
By direction of the Commission.
April J. Tabor,
Secretary.
Endnotes
\1\ Codified at 15 U.S.C. 3051 through 3060.
\2\ Public Law 116-260, 134 Stat. 1182, 3252 (Dec. 27, 2020).
\3\ Public Law 117-328, 136 Stat. 4459, 5231 (Dec. 29, 2022).
\4\ 88 FR 18034 (Mar. 27, 2023). These rules were amended in
February 2024. 89 FR 8530 (Feb. 8, 2024); see 16 CFR 1.150-1.152.
\5\ 15 U.S.C. 3051 through 3060.
\6\ 16 CFR Part 1 Subpart U.
\7\ The Authority notes that it has adopted and implemented a
Conflicts of Interest and Business Ethics Policy (the ``Policy'')
which acknowledges that Authority ``[r]epresentatives involved in
procurement have a special responsibility to adhere to principles of
fair competition in the purchase of products and services by
selecting vendors based exclusively on standard commercial
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considerations, such as quality, cost, availability, service and
reputation, and not on the receipt of special favors.'' The Policy
requires, among other things, transactions to be supported by
appropriate documentation; no entry be made in our books and records
that intentionally hides or disguises the nature of any transaction
or of any of our liabilities, or misclassifies any transactions as
to accounts or accounting periods; HISA Representatives comply with
our system of internal controls; no cash or other assets be
maintained for any purpose in any unrecorded or ``off-the-books''
fund; no HISA Representative may take or authorize any action that
would cause our financial records or financial disclosures to fail
to comply with generally accepted accounting principles or other
applicable laws, rules, and regulations; and all HISA
Representatives must cooperate fully with our finance staff, as well
as our independent public accountants and legal counsel, and respond
to their questions with candor and provide them with complete and
accurate information to help ensure that our records are accurate
and complete. Any HISA Representative who becomes aware of any
departure from these standards has a responsibility to report his or
her knowledge promptly to the CEO or Chair of the Board. A copy of
the Policy is available to the public on the Authority's website.
\8\ A modification of the Racetrack Safety Rule was approved by
the Commission by Order dated June 7, 2024.
\9\ In 2023, the HISA Accreditation Team completed accreditation
visits at 21 racetracks.
[FR Doc. 2024-19468 Filed 8-28-24; 8:45 am]
BILLING CODE 6750-01-P
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</html>Indexed from Federal Register on August 29, 2024.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.