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Notice2026-18505

Horseracing Integrity And Safety Authority Proposed 2027 Budget

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Published

September 10, 2026

Issuing agencies

Federal Trade Commission

Abstract

The Federal Trade Commission publishes the 2027 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 91 Issue 174 (Thursday, September 10, 2026)</title>
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[Federal Register Volume 91, Number 174 (Thursday, September 10, 2026)]
[Notices]
[Pages 57597-57616]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-18505]

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FEDERAL TRADE COMMISSION

[File No. P222100]

Horseracing Integrity And Safety Authority Proposed 2027 Budget

AGENCY: Federal Trade Commission.

ACTION: Notice of publication of Horseracing Integrity and Safety
Authority 2027 proposed budget; request for public comment.

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SUMMARY: The Federal Trade Commission publishes the 2027 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 24, 2026.

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 2027 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), Special

[[Page 57598]]

Counsel for HISA, Office of the General Counsel, Federal Trade
Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580.

SUPPLEMENTARY INFORMATION: The Horseracing Integrity and Safety Act of
2020 \1\ (the ``Act''), enacted on December 27, 2020,\2\ and amended on
December 29, 2022,\3\ directs the Federal Trade Commission (the
``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 August 3, 2026, the Authority forwarded to the Commission a
Notice of Filing of HISA Budget, together with appendices furnishing
detailed information pertinent to its 2027 budget proposal (as required
by 16 CFR 1.150(c)). The Notice of Filing of HISA 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 2027 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 2027 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 24,
2026. Write ``HISA 2027 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 2027 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 <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 24, 2026. 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

[[Page 57599]]

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 Act and the Commission's rule on Oversight of the
Horseracing Integrity and Safety Authority,\5\ notice is hereby given
that on August 3, 2026, the Authority filed with the Commission the
Authority's proposed 2027 Budget (the ``Proposed Budget''). This Notice
of Filing of the Proposed 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 Budget, along with a draft version of the
Authority's Notice of Filing of HISA's 2027 Budget, were posted on the
HISA website <a href="https://hisaus.org">https://hisaus.org</a> on July 17, 2026. A press release was
issued simultaneously inviting the public to submit comments to the
Authority on any aspect of the Proposed Budget no later than 12:00 p.m.
ET on July 27, 2026.\6\ The Authority received thirteen (13) comments
regarding the Proposed Budget. All comments received by the Authority
were posted to the HISA website and reviewed in accordance with Rule
1.150(b).\7\

II. Information Concerning Rule 1.150(c)(1)

The initial draft of the Proposed Budget was approved unanimously
by the Authority's Board of Directors before it was posted on the HISA
website for public comment. After the initial draft of the Proposed
Budget was posted on the HISA website, the Authority identified the
following changes: reduction of the salary and payroll tax expense line
items in the Veterinary Services budget; reduction of the travel line
item in the Administration budget; and an increase in the professional
services line item in the Administration budget. The net effect of
these changes is a $14,000 increase of the Proposed Budget (gross).\8\
These changes were incorporated into the final Proposed Budget
circulated to the Board of Directors for approval. No other changes
were made to the Proposed Budget. The final budget was approved
unanimously by the Board of Directors after the public comment period
expired on July 27, 2026. 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 Methodology for
Determining Assessments (Rule Series 8500) approved by the Commission,
the Authority calculated the following:
<bullet> 2027 Assessments by State (attached as Appendix 1).
<bullet> 2027 Assessments by Track (attached as Appendix 2).
Appendix 1 displays the estimated gross amount required from each
State Racing Commission as calculated under the Methodology for
Determining Assessments. Appendix 2 displays the estimated gross amount
required from each racetrack as calculated under the Methodology for
Determining Assessments.\9\ Of note, the States and racetracks located
in West Virginia and Louisiana are not included in Appendix 1 and
Appendix 2 due to the preliminary injunction issued by the United
States District Court for the Western District of Louisiana preventing
implementation of the Authority's rules in Louisiana and West Virginia.
If the injunction is dissolved, and the Authority begins operations in
Louisiana and West Virginia in 2027, the Authority requests approval to
assess the racetracks conducting Covered Horseraces on a pro rata basis
in accordance with the total budgeted amount approved by the
Commission. This would result in a lower assessment for other States/
racetracks conducting Covered Horseraces.
Similarly, it is possible that one or more racetracks operating in
the State of Texas may conduct Covered Horseraces in 2027. Accordingly,
the Authority requests approval to assess any racetrack conducting
Covered Horseraces in Texas on a pro rata basis in accordance with the
total budgeted amount approved by the Commission. Like the addition of
West Virginia and Louisiana, this would result in a lower assessment
for other States/racetracks conducting Covered Horseraces.
The Proposed Budget includes line items for the following other
sources of revenue: \10\
Racetrack Safety Fines Income. This line item consists of fines
levied for violations of the Racetrack Safety Program. As set forth in
the Act, ``fines imposed by the Authority shall be allocated toward
funding of the Authority and its activities.'' 15 U.S.C. 3052(f)(4).
Between January 1 and June 30, 2026, the Authority levied $200,637 in
fines assessed in connection with the Racetrack Safety Program. Based
on historical data, the Authority anticipates approximately $400,000 in
fines will be levied in 2027 and that approximately $330,000 will be
collected in 2027 (which includes fines assessed in previous years but
projected to be collected in 2027). Accordingly, the Authority has
budgeted $330,000 for Racetrack Safety fines income in 2027.
Anti-Doping and Medication Control Fines Income. This line item
consists of fines paid for violations of the Anti-Doping and Medication
Control (``ADMC'') Program. As set forth in the Act, ``fines imposed by
the Authority shall be allocated toward funding of the Authority and
its activities.'' 15 U.S.C. 3052(f)(4). Between January 1 and June 30,
2026, the Authority levied $543,500 in fines assessed in connection
with the ADMC Program. Based on historical data, the Authority
anticipates approximately $1,087,000 in fines will be levied in 2027
and that $180,000 will be collected in 2027 (which includes fined
assessed in previous years but projected to be collected in 2027).\11\
Accordingly, the Authority has budgeted $180,000 for ADMC fines income
in 2027.
Laboratory Test Income. This line item consists of money paid to
HISA to cover the cost of testing that is conducted at the election of
the Covered Person, including B Sample testing, claimed horse testing,
and clearance testing. In 2025, the Authority collected $309,465 in
Laboratory testing income. Between January 1 and June 30, 2026, the
Authority collected $197,275 in Laboratory testing fees. Based on
historical data, the Authority has budgeted $395,503 for Laboratory
testing income in 2027.
Other Revenue. This line item consists of payments made by certain
Covered Racetracks to reimburse the Authority for paying for services
in connection with Racetrack Safety Program compliance. One example
involves States without a voluntary implementation agreement with the
Authority. In some cases, the Authority will pay veterinarians and
stewards directly to enforce relevant rules established in the
Racetrack Safety Program. These costs will be charged back to the
racetracks where the veterinarians and stewards are performing the
services. Because the revenue generated offsets the costs to the
Authority, the net effect of this line item is zero. That said, the
Authority has budgeted $398,000 for this line item, which is based on
historical data.

IV. Information Concerning Rule 1.150(c)(3)

The Authority is committed to being a good steward of industry
funds. Over the last few years, the Authority has reduced its gross
budget by prioritizing efficiencies, identifying cost-saving measures,
and leveraging economies of scale and diminishing start-up costs--all
while maintaining a high level of

[[Page 57600]]

service and a decreasing equine fatality rate. In developing the
Proposed Budget, the Authority worked collaboratively with the
Commission to conduct a comprehensive review of expenditures and
identify further opportunities for cost savings. Through this effort,
several line-item reductions were identified and incorporated into the
Proposed Budget, contributing to a gross budget reduction of more than
$4.4 million compared to the 2026 Budget (a decrease of approximately
5.75%). Since 2025, the Authority's gross budget has decreased by
approximately 9.50%. These reductions underscore the Authority's
commitment to cost discipline and operational efficiency, demonstrating
that the Authority is actively working to lower the financial demands
on the industry while sustaining robust and impactful safety and
integrity programs.
In accordance with Rule 1.150(c)(3), the Proposed Budget includes
the following expenditures:
<bullet> The Racetrack Safety Program. These expenditures are
outlined in Appendix 4 and further line-item descriptions in accordance
with Rule 1.150(c)(4) are included in Section V of this Notice.
<bullet> The Anti-Doping and Medication Control Program. These
expenditures are outlined in Appendices 5 and 6 and further line-item
descriptions in accordance with Rule 1.150(c)(4) are included in
Section V of this Notice.
<bullet> All Other Programmatic Expenses. These expenditures are
outlined in Appendices 7, 8, and 9, and further line-item descriptions
in accordance with Rule 1.150(c)(4) are included in Section V of this
Notice.
<bullet> Repayment of any loans. This expenditure consists of $0 in
repayment of loans.
<bullet> Any funding shortfall incurred. The Authority does not
anticipate a funding shortfall.

V. Information Concerning Rule 1.150(c)(4)

In accordance with Rule 1.150(c)(4), Section V of this Notice
provides sufficient information regarding the Authority's expenditures
included in the Proposed Budget, by line item, as would be required for
members of the Authority's Board of Directors to exercise their
fiduciary duty of care. The line-item expenditure information begins
with the Racetrack Safety Program, followed by the ADMC Program (with
separate line items shown for the budget for the Horseracing Integrity
& Welfare Unit (``HIWU'')), and other programmatic expenses for
Veterinary Services, Technology Operations, and Administration.

A. Racetrack Safety Program

The Act directs the Authority to develop and implement a racetrack
safety program applicable to all Covered Horses, Covered Persons, and
Covered Horseraces (the ``Racetrack Safety Program''). 15 U.S.C.
3056(a)(1). The Act specifies that the Racetrack Safety Program
include, among other things, a set of training and racing safety
standards and protocols, a racing surface quality maintenance system,
programs for injury and fatality data analysis, the undertaking of
investigations related to safety violations, procedures for charging
and adjudicating violations, programs related to safety and performance
research and education, an evaluation and accreditation program that
ensures that racetracks in the United States meet the Racetrack Safety
Program standards, and development of a nationwide database of
racehorse safety, performance, health, and injury information.
Since July 1, 2022, the Authority has operated--on a 365-day
basis--a Racetrack Safety Program that provides racetrack safety
standards, racetrack accreditation, record reporting and data
management, compliance and equine health monitoring, and more--all on a
national scale. In 2025, the Authority's rules and safety protocols
applied to approximately tens of thousands of Covered Horses; 39,000
Covered Persons; 41 Thoroughbred racetracks located across 19 States;
168,116 covered race starts; and 346,577 recorded workouts. Despite the
broad scope of the Authority's functions, the Authority operates with a
lean organizational structure consisting of only 27 full-time
employees.
The Racetrack Safety Program portion of the Proposed Budget
(Appendix 4) funds the implementation of the Racetrack Safety Program
as set forth in the Rule Series 2000 and as originally approved by
order of the Federal Trade Commission dated March 3, 2022. The
Racetrack Safety Program expenditures include the following line items:
Salaries (5200). The Proposed Budget contemplates $870,768 for this
line item. This line item covers salaries for the six full-time
employees whose work directly supports the implementation and
enforcement of the Authority's Racetrack Safety Program at 41
racetracks across 19 States. These employees are necessary to carry out
the Act's requirement of developing and implementing a racetrack safety
program for Covered Horses, Covered Persons, and Covered Horseraces,
including the elements and activities required under 15 U.S.C. 3056.
Specifically, these staff members oversee compliance with the Racetrack
Safety Program in the areas of administration, track accreditation
services, stewarding, jockey health and welfare, and more.
The Authority has included in the Proposed Budget a cost of living
adjustment to base salary for all staff hired prior to June 1, 2026. In
establishing compensation ranges, HISA considers relevant market
benchmarks, the specialized nature of the positions, geographic
considerations, and the need to compete with opportunities available in
the private sector, regulatory organizations, and other professional
fields.
Payroll Tax Expense (5210). The Proposed Budget contemplates
$67,904 for this line item. This line item is based on historical data
and covers funding for Federal, State, and local payroll tax
obligations associated with Racetrack Safety Program personnel. As
noted above, the staff are necessary to carry out the Act's requirement
of developing and implementing a racetrack safety program for Covered
Horses, Covered Persons, and Covered Horseraces, including the elements
and activities required under 15 U.S.C. 3056.
Health Insurance (5220). The Proposed Budget contemplates $50,964
for this line item. This line item covers funding for the Authority's
paid-portion of the multi-employer health insurance plan offered to
Racetrack Safety employees (2027 will be the first full year that the
Authority has offered a multi-employer health insurance plan). For
employees covered under a different health insurance plan, the
Authority provides a stipend to those employees to cover a portion of
the cost of their own plans. These costs support the recruitment,
retention, and well-being of staff responsible for carrying out the
Act's requirement of developing and implementing a racetrack safety
program for Covered Horses, Covered Persons, and Covered Horseraces,
including the elements and activities required under 15 U.S.C. 3056.
Retirement (5230). The Proposed Budget contemplates $29,817 for
this line item. This line item covers funding for the Authority's match
paid to the accounts of Racetrack Safety employees that participate in
the Authority's 401(k) Plan. These costs support the recruitment,
retention, and well-being of staff responsible for carrying out the
Act's requirement of developing and implementing a racetrack safety
program for Covered Horses, Covered

[[Page 57601]]

Persons, and Covered Horseraces, including the elements and activities
required under 15 U.S.C. 3056.
Other Employee Benefits (5290). The Proposed Budget contemplates
$6,300 for this line item. This line item is based on historical data
and covers funding for employer-provided benefits associated with
Racetrack Safety Program personnel and includes workers' compensation
insurance, and mobile phone stipends. These costs support the
recruitment, retention, and well-being of staff responsible for
carrying out the Act's requirement of developing and implementing a
racetrack safety program for Covered Horses, Covered Persons, and
Covered Horseraces, including the elements and activities required
under 15 U.S.C. 3056. While this line item is reduced compared to the
2026 budget, much of the difference has been reallocated to the Health
Insurance (5220) and Retirement (5230) accounts (both of which are new
for 2027).
Meetings (5430). The Proposed Budget contemplates $24,000 for this
line item. This line item is based on historical data and covers
funding for costs associated with meetings and stakeholder engagement
activities that support the Racetrack Safety Program. Specifically,
this includes funding for an in-person meeting for Track
Superintendents to discuss best practices, emerging trends, and
compliance with the Racetrack Safety Program. Additionally, this
includes funding for an in-person meeting of the Racetrack Safety
Standing Committee. This first ever in-person meeting will enable
committee members and subject matter experts to engage in detailed
deliberations and develop recommendations to enhance the Racetrack
Safety Program. Budgeted costs include meeting facilities, materials,
refreshments, and other reasonable expenses necessary to facilitate
collaboration, communication, training, and the effective
administration of the Racetrack Safety Program.
Travel (5440). The Proposed Budget contemplates $61,000 for this
line item. This line item is based on historical data and covers
funding for travel expenses incurred by Racetrack Safety Program
personnel while conducting company business (excluding Track
Accreditation Services travel set forth below). All business travel-
related expenses are incurred in accordance with the Authority's Travel
Policy. This line item includes transportation, lodging, meals, mileage
reimbursement, parking, and other allowable travel-related costs
associated with inspections, audits, investigations, training,
stakeholder meetings, conferences, and other activities necessary to
support the implementation, oversight, and enforcement of the Racetrack
Safety Program. These expenses enable staff to effectively carry out
Racetrack Safety Program responsibilities at 40 racetracks located
across 19 States. Meeting with and hearing the concerns of industry
stakeholders are critical to the Authority's quality of services
provided and stakeholder satisfaction. Compared to the 2026 budget,
this line item has decreased by 35% based on the number of years of
operation of the Racetrack Safety Program and the need for fewer in-
person meetings.
Staff Development (5460). The Proposed Budget contemplates $2,700
for this line item. This line item covers the expense for an employee
to be accredited by the Racing Officials Accreditation Program (ROAP).
A ROAP-accredited HISA employee brings specialized regulatory expertise
and up-to-date training that helps HISA effectively administer and
enforce the Racetrack Safety Program, particularly stewarding-related
rules and issues.
Supplies (5500). The Proposed Budget contemplates $5,390 for this
line item. This line item includes items such as office supplies,
printing and copying materials, racetrack safety materials, and
training supplies, used in carrying out Racetrack Safety Program
activities. These expenses support the day-to-day functions of
Racetrack Safety Program staff and contribute to the effective
implementation, monitoring, and enforcement of the Program.
Postage (5510). The Proposed Budget contemplates $600 for this line
item. This line item includes postage for mailing racetrack safety
materials and training supplies used in carrying out Racetrack Safety
Program activities. These expenses support the day-to-day functions of
Racetrack Safety Program staff and contribute to the effective
implementation, monitoring, and enforcement of the Program.
Payroll (5840). The Proposed Budget contemplates $4,800 for this
line item. This line item covers a portion of the costs associated with
the Authority's Professional Employer Organization, CoAdvantage, which
includes the cost of running payroll for the Racetrack Safety
employees. Payroll expenses directly further the purposes of the Act by
supporting employees responsible for carrying out the Act's requirement
of developing and implementing a racetrack safety program for Covered
Horses, Covered Persons, and Covered Horseraces, including the elements
and activities required under 15 U.S.C. 3056. Without qualified
personnel, the Authority would be unable to effectively administer and
enforce the Act's requirement to develop and implement a Racetrack
Safety Program.
Professional Services (5890). The Proposed Budget contemplates
$1,294,138 for this line item. This line item covers funding for
specialized professional and technical services obtained from external
consultants, contractors, vendors and subject-matter experts to provide
and/or augment services in the following areas of the Racetrack Safety
Program:

(i) Epidemiology;
(ii) Research/Testing;
(iii) Jockey Concussion Tracking;
(iv) Jockey Mental Health; and
(v) National Medical Director.

These specialized services support the Authority's efforts to carry
out the mandate given to it by Congress: ``exercise independent and
exclusive national authority over--(A) the safety, welfare, and
integrity of covered horses, covered persons, and covered horseraces;
and (B) all horseracing safety, performance, and anti-doping and
medication control matters for covered horses, covered persons, and
covered horseraces . . .'' 15 U.S.C. 3054(a)(2). For example, as part
of the Authority's mandate to provide for the safety and welfare of
Covered Persons, the Authority contracted with the New Lexington Clinic
through its employed physician Dr. Peter Hester, an Orthopedic Surgeon
specializing in Sports Medicine, to serve as the first ever National
Medical Director for the Thoroughbred racing industry. Dr. Hester, as
the Authority's National Medical Director, leads initiatives to support
jockey health and welfare, including mitigating risk of injury,
securing elite medical care, improving and optimizing health care
services, and developing and sourcing affordable medical insurance for
the more than 1,700 Authority-registered Jockeys and their families.
This line item was budgeted at $180,000 in 2026 and remains the same in
the Proposed Budget.
Similarly, the Authority partnered with the digital concussion
management platform HEADCHECK Health to enforce a uniform, national
concussion protocol for Jockeys. Under the protocol, racetrack medical
staff will use HEADCHECK to document medical evaluations, possible
concussion symptoms and written releases permitting a Jockey to return
to riding after being cleared by a qualified medical provider
knowledgeable in concussion management and the skills needed to perform
as a Jockey.

[[Page 57602]]

HEADCHECK's implementation will also ensure that concussion-related
medical records follow a rider from track to track and advance
continuity of concussion care across the country. The Authority has
budgeted $196,388 for this line item in the Proposed Budget (this line
item was $186,000 in 2026; the increase is due to contractual
increase).
This line item also contemplates the Authority contracting with an
epidemiologist to strengthen the Authority's efforts to protect the
health and safety of Covered Horses by using data and scientific
analysis to identify, understand, and prevent injuries and fatalities.
Through the veterinary, training, injury, fatality, and other health
and performance data available in the HISA Portal, an epidemiologist
would expand the Authority's and, in turn, the industry's, ability to
identify risk factors for equine injuries and death, detect trends and
emerging safety concerns, evaluate the effectiveness of safety rules
and protocols, and more. The Authority has budgeted $85,000 for this
line item (this position was not included in the 2026 budget).
Additionally, this line item covers the ongoing costs associated
with the Equine Associated Sudden Death (EASD) Study, a research
initiative aimed at better understanding the underlying causes and risk
factors associated with EASD. During the first six months of 2025, EASD
accounted for approximately 8% of racing fatalities and 18% of training
fatalities at racetracks subject to the Authority's rules. The findings
from the EASD study have led to the issuance of an Equine Health
Advisory (available at <a href="https://hisaus.org/resources/hisa-equine-health-advisory-exercise-associated-sudden-death">https://hisaus.org/resources/hisa-equine-health-advisory-exercise-associated-sudden-death</a>) and are intended to help the
Authority, Veterinarians, racetracks, and industry stakeholders develop
evidence-based strategies to reduce preventable fatalities and improve
overall equine welfare. By investing in scientific research and data
analysis, the Authority can identify emerging health trends, evaluate
risk factors, and implement targeted safety measures that enhance the
health and safety of Covered Horses, as required under the Act. The
Authority has budgeted $199,800 for this line item in the Proposed
Budget (this research was not included in the 2026 budget).
Other expenses covered in this line item include contracting with a
jockey wellness consultant and a partnership with OnRise, a third-party
that provides a confidential platform that provides jockeys with access
to mental health support through the insights and experiences of
trained retired athletes, licensed therapists and psychiatrists. These
expenses are associated with the health and safety of Covered Persons.
The Authority has budgeted $106,000 for this line item (this expense
was not included in the 2026 budget).
Finally, this line item includes expenses that the Authority
advances on behalf of racetracks to support compliance with the
Racetrack Safety Program, such as costs associated with stewards and
veterinarians. Although the Authority initially bears these costs,
racetracks reimburse the Authority for their share of these compliance-
related expenses, which are subsequently recorded as ``Other Revenues''
in the Proposed Budget (see Section III above).
In sum, this line item contemplates a proposed increase compared to
the 2026 Budget due in part to the addition of the EASD Study,
epidemiologist, jockey wellness consultant, and OnRise.
Accreditation Services (5915). The Proposed Budget contemplates
$153,000 for this line item. Pursuant to 15 U.S.C. 3056 and the
Racetrack Safety Program, 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 Program 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 line item includes the costs of compensating teams of
employees and independent contractors to perform site accreditation
visits, and the costs of covering the travel and meal expenses for this
team. In 2027, it is anticipated that the Authority will conduct 17
accreditation visits. 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,
2024, 2025, and the anticipated total costs for 2026.
Racetrack Surface Testing (5920). The Proposed Budget contemplates
$690,000 for this line item. The Act requires that the Racetrack Safety
Program include ``[a] racing surface quality maintenance system that .
. . may include requirements for track surface design and consistency
and established standard operating procedures related to track surface,
monitoring, and maintenance (such as standardized seasonal assessment,
daily tracking, and measurement)'' as well as ``a uniform set of track
safety standards and protocols.'' 15 U.S.C. 3056(b)(3)-(4). Consistent
with the Act's mandate, the Racetrack Safety Program requires
comprehensive pre-meet inspections performed on all surfaces prior to
the start of each Race Meet as well as seasonal inspections.
This line item covers funding for services and activities related
to the evaluation, monitoring, and testing of racetrack surfaces to
support compliance with track surface standards established in the
Racetrack Safety Program and required under the Act. The Authority
contracts with the Racing Surfaces Testing Laboratory (RSTL), an expert
in testing and evaluating racetrack surfaces, to test, evaluate, and
monitor track surfaces at the racetracks operating under the Racetrack
Safety Program. These services help identify surface conditions that
may affect the safety and welfare of Covered Horses and Covered
Persons.

B. Anti-Doping and Medication Control

In addition to the Racetrack Safety Program, the Act directed the
Authority to establish a ``horseracing anti-doping and medication
control program applicable to all covered horses, covered persons, and
covered horseraces'' (the ``ADMC Program''). 15 U.S.C. 3055(a)(1).
Nearly 75% of the Proposed Budget is dedicated to the ADMC Program.
Pursuant to the Act, the Authority contracted with HIWU, a division of
Drug Free Sport (``DFS''), to serve as the independent enforcement
agency of the ADMC Program. HIWU oversees testing, educating
stakeholders on the ADMC Program, accrediting laboratories,
investigating potential violations, and prosecuting any such
violations.
The ADMC Program portion of the Proposed Budget (Appendix 5) funds
the implementation of the ADMC Program as set forth in the Rule Series
3000, 4000, 5000, 6000, and 7000 and as originally approved by order of
the Federal Trade Commission dated March 27, 2023. The ADMC portion of
the Proposed Budget consists of three line items: Professional
Services, HIWU, and Laboratory Testing.
Professional Services (5890). The Proposed Budget contemplates
$420,844 for this line item. The Act required the Authority to
establish a disciplinary process for safety, performance, and anti-
doping and medication control rule violations. 15 U.S.C. 3057(c). This
line item consists of costs related to the established disciplinary
process for alleged ADMC violations, including estimated fees to cover
the cost of proceedings before the Internal

[[Page 57603]]

Adjudication Panel (primarily equine controlled medication violations)
and the Arbitral Body (primarily equine anti-doping rule violations).
These proceedings are in accordance with the Act and the ADMC Program
rules approved by the Commission.
Compared to the 2026 Budget, the proposed amount for this line item
represents an approximate 42% reduction. The primary driver of this
cost savings is a potential shift to a different service provider to
administer the Arbitral Body. To reduce the costs to the industry, HISA
and HIWU are exploring alternative independent service providers that
will provide a high-level quality of service for a rate lower than the
amount being charged by the current provider.
Laboratory Testing (5925). The Proposed Budget contemplates
$17,860,583 for this line item. This line item includes funding for
laboratory analysis of Covered Horse samples (Post-Race, Out of
Competition, B Samples, Claimed Horse Testing, and Clearance Testing)
by one or more of the laboratories with HISA Equine Analytical
Laboratory (``HEAL'') accreditation status. Currently, this includes
the Equine Integrity and Anti-Doping Sciences (``EQIAS'') Laboratory,
Industrial Laboratories, and the Kenneth L. Maddy Equine Analytical
Chemical Laboratory at the University of California-Davis.
HEAL accredited laboratories have many years of experience in the
testing of blood, urine, and hair samples taken from Thoroughbred
racehorses. HISA and HIWU have conducted negotiations with each of
these laboratories to ensure that competent testing is performed at the
lowest price possible. The HEAL accreditation process and extensive
contract negotiations has led to fewer laboratories being utilized for
Sample analysis under the ADMC Program, allowing the approved
laboratories to spread their fixed costs (salaried employees, testing
equipment, etc.) over a larger number of samples, resulting in minimal
price increases year-over-year.
In 2025, HIWU oversaw 111,287 sample collections (blood, urine, and
hair) from 73,815 horses in 2025. Laboratory testing is a core
component of the ADMC Program and the Act as it provides the scientific
validation necessary to detect Prohibited Substances and verify
compliance with the ADMC Program. The expenditure amount contemplated
in this line item represents a reduction of approximately 8.3% compared
to the 2026 budget. One reason for this anticipated reduction is a
result of efficiencies learned from the first 3+ years of the ADMC
Program.
HIWU (5910). The Proposed Budget contemplates $35,292,590 for this
line item. This line items covers the cost to comply with the Act's
requirement of contracting with an ``independent anti-doping and
medication control enforcement organization for covered horses, covered
persons, and covered horseraces, implementing the anti-doping and
medication control program on behalf of the Authority.'' 15 U.S.C.
3054(e)(1)(E)(i). Further details about this line item are set forth
below. Compared to the 2026 Budget, the proposed amount for this line
item represents an approximate 5.2% reduction.

C. Horseracing Integrity and Welfare Unit

As noted above, HIWU serves as the independent enforcement agency
for the Authority's ADMC Program. HIWU is remarkably efficient given
its size and available resources. With only 41 full-time employees
(budgeting for 43 full-time employees) and seven additional shared
employees (budgeting for 10 shared employees),\12\ HIWU oversaw 111,287
sample collections (blood, urine, and hair) from 73,815 horses in
2025.\13\
On the legal front, in 2025, HIWU served 377 Equine Anti-Doping/
Equine Controlled Medication Notices and 361 Equine Anti-Doping/Equine
Controlled Medication Charges in 2025.\14\ The average resolution time
for cases originating in 2025 was 82.6 days.\15\ HIWU's investigations
teams conducted or oversaw 463 searches at 50 racetracks/training
centers in 19 States. Finally, HIWU administers the HEAL Accreditation
Program, which includes empowering HIWU to closely monitor compliance
and act accordingly when laboratories cannot meet the Laboratory
Standards. The Laboratory Expert Group, whose members bring a broad
range of relevant expertise in human and equine anti-doping, laboratory
operations, and quality assurance management, is essential to this
component of the ADMC Program.
The HIWU portion of the Proposed Budget (Appendix 6) totals
$35,292,590, approximately a 5.2% decrease compared to 2026. Further
details of the HIWU portion of the Proposed Budget are set forth below.
Salaries. The Proposed Budget contemplates $7,238,100 for this line
item. This line item covers salaries for 43 full-time HIWU employees
and 10 additional employees shared with DFS whose work directly
supports the implementation and enforcement of the Authority's ADMC
Program (currently, HIWU has 41 full-time employees and seven employees
shared with DFS). As required under the Act, this consists of
conducting and overseeing anti-doping and medication control results
management, including independent investigations, charging and
adjudication of potential medication control rule violations, and the
enforcement of any civil sanctions for such violations. 15 U.S.C.
3055(c)(4). This also includes the performance and management of test
distribution planning, the sample collection process, and in-
competition and out-of-competition testing as well as the accreditation
of testing laboratories. Id. HIWU's 41 full-time employees are spread
across the following departments:

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 and 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 currently shares seven 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. This proposed line item
contemplates three additional shared employees for 2027 (an additional
human resource specialist, an instructional design specialist to assist
with educational content management and creation, and a controller).
Salary levels for each position are based on market rates, and the
line-item amount contemplates cost of living adjustments for current
employees plus the addition of at least one staff member in the legal
department and one staff member in the investigations department.
Payroll Tax Expense. The Proposed Budget contemplates $515,000 for
this line item. This line item is based on historical data and covers
funding for Federal, State, and local payroll tax obligations
associated with HIWU personnel. As noted above, HIWU staff are
necessary to carry out the Act's requirement of an ``independent anti-
doping and medication control enforcement organization for covered
horses, covered persons, and covered

[[Page 57604]]

horseraces, implementing the anti-doping and medication control program
on behalf of the Authority.'' 15 U.S.C. 3054(e)(1)(E)(i).
Other Employee Benefits. The Proposed Budget contemplates $706,180
for this line item. This line item is based on historical data and
covers funding for employer-provided benefits associated with HIWU
personnel and includes HIWU's paid-portion of the health and dental
insurance plan offered to employees. This line item also includes the
cost of HIWU's match paid to the accounts of employees that participate
in the company provided 401(k) Plan. These costs support the
recruitment, retention, and well-being of staff responsible for
carrying out the Act's requirement of an ``independent anti-doping and
medication control enforcement organization for covered horses, covered
persons, and covered horseraces, implementing the anti-doping and
medication control program on behalf of the Authority.'' 15 U.S.C.
3054(e)(1)(E)(i).
Rent. The Proposed Budget contemplates $114,810 for this line item.
This line item covers the rent associated with HIWU's 3,000 sq. ft.
office space located in Kansas City, Missouri 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 line item.
Office Expenses. The Proposed Budget contemplates $28,700 for this
line item. This line item consists of common office expenses such as
utilities and maintenance costs, which are necessary for HIWU employees
to carry out their duties as the independent enforcement agency from a
physical location in Kansas City, Missouri. Compared to the 2026
budget, this line has been reduced by approximately 68% due to the
elimination of sponsorship/accounting-related office expenses.
Telecommunications. The Proposed Budget contemplates $79,800 for
this line item. This line item consists of the cost of office phones,
mobile phone service at a commercially reasonable rate, and portable
hot-spot Wi-Fi services to be used in test barns, all of which are
necessary to carry out the requirements of the ADMC Program. Compared
to the 2026 budget, this line item has been reduced by approximately
17% due to lower rates obtained from a new service provider.
Travel. The Proposed Budget contemplates $816,709 for this line
item. This line item consists of travel expense necessary for full-time
employees to perform functions essential to the administration of the
ADMC Program and required under the Act, 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 cost. This line item is based on historical data over
the last three years and represents a 12% reduction compared to the
2026 budget.
Supplies. The Proposed Budget contemplates $1,270,000 for this line
item. The Act directs the independent anti-doping enforcement agency
(HIWU) to, among other things, perform and manage the sample collection
process. 15 U.S.C. 3055(c)(4). This line item furthers that directive
as it includes the costs of drug testing supplies needed for sample
collections and sample collection personnel training, such as secure
urine collection kits, vacutainer blood vials, and other chain-of-
custody supplies. The costs of these supplies are budgeted at the
lowest feasible rate based on current market conditions, historical
procurement data, and vendor pricing.
Professional Services. The Proposed Budget contemplates $2,938,300
for this line item. This line item covers funding for specialized
professional and technical services obtained from external consultants,
contractors, and subject-matter experts to provide and/or augment
services in the following areas of the ADMC Program:
(i) Results Management;
(ii) Investigative and State Racing Commission Relations; and
(iii) Laboratory Accreditation.
Specifically, this expense covers external legal counsel for
assistance with complex case prosecution, contract investigators who
provide seasonal ``boots on the ground'' investigative services at
Covered Racetracks and Training Facilities, consultation with the
independent Laboratory Expert Group members for laboratory
accreditation expertise, the HIWU Advisory Council, and outside venders
for services such as the management and distribution of laboratory
quality control samples, educational video production, and
communications support.
With more than three years' experience administering the
Authority's ADMC Program, HIWU's reliance on external consultants is
decreasing as reflected by the 18% decrease compared to the 2026
budget.
Technology. The Proposed Budget contemplates $1,696,642 for this
line item. This line item covers funding for all software, hardware,
licenses and continued technological development needed to administer
the ADMC Program. As noted above, HIWU is responsible under the Act for
conducting and overseeing the results management process. In 2025
alone, HIWU oversaw 111,287 sample collections (blood, urine, and hair)
from 73,815 horses.
Given the scale and complexity of the ADMC Program, robust
technology infrastructure is essential to ensure the efficient,
accurate, secure, and timely management of testing and results data.
Technology supports the end-to-end administration of the program,
including sample collection and tracking, chain-of-custody
documentation, laboratory data integration, results reporting, case
management, regulatory compliance, and communication with laboratories,
Veterinarians, racetracks, and other stakeholders. It also facilitates
real-time monitoring and analysis of testing activities, reduces the
risk of manual errors, enhances data integrity, and provides the
transparency and auditability required for a national anti-doping and
medication control program.
Continued investment in technology is necessary to maintain system
reliability, accommodate growing testing volumes, address evolving
regulatory requirements, strengthen cybersecurity protections, and
implement enhancements that improve operational efficiency and
stakeholder service. Without these systems and ongoing technological
development, HIWU would be unable to effectively manage the substantial
volume of testing data and associated regulatory activities required to
fulfill its statutory responsibilities.
Insurance. The Proposed Budget contemplates $516,023 for this line
item. This line item covers the cost of HIWU's insurance policies,
including liability insurance with an Umbrella policy, cyber-risk
insurance, property insurance, and workers' compensation insurance.
This line amount is based on historical costs with estimated year-over-
year increases.
Resources and Education. The Proposed Budget contemplates $136,752
for this line item. This line item includes training and continuing

[[Page 57605]]

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 adequately carry
out its duties as the independent enforcement agency of the Authority's
ADMC Program.
Taxes-Other. The Proposed Budget contemplates $3,600 for this line
item. This line item covers anticipated sales and use taxes on ADMC
Program-related purchases, including technology, testing supplies,
office equipment, and other operational expenditures. This line-item
amount is based on historical spending patterns.
ADMC Collection Costs. The Proposed Budget contemplates $16,559,342
for this line item. This line item covers wages paid to sample
collection personnel in the 19 States that conduct Covered Horseraces.
The amounts are based on wages paid to sample collection personnel over
the last three years of the ADMC Program. The sample collection
personnel are responsible for more than 100,000 sample collections per
year.
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.
The expenditure amount contemplated in this line item represents a
reduction of approximately 6.5% compared to the 2026 budget. This
anticipated reduction is a result of efficiencies learned from the
first 3+ years of the ADMC Program.
Management Fees. The Proposed Budget contemplates $2,672,633 for
this line item. This line item covers the management fee owed to HIWU
for administering the Authority's ADMC Program. The Act specifies that
the ``Authority shall enter into an agreement with an entity that is
nationally recognized as being a medication regulation agency equal in
qualification to the United States Anti-Doping Agency to act as the
anti-doping and medication control enforcement agency under this
chapter for services consistent with the horseracing anti-doping and
medication control program.'' 15 U.S.C. 3054(e)(1)(B). Consistent with
the Act, the Authority entered into an agreement with DFS for HIWU to
administer the ADMC Program. HISA's agreement with DFS is structured so
that ADMC Program expenses are budgeted and billed directly to HISA on
an at-cost basis. The 8% management fee effectively represents a fee
paid to DFS for developing and maintaining the administrative and
organizational functions required to establish HIWU and administer the
ADMC Program. The Authority notes further that its agreement with DFS
contains an incentive structure that encourages DFS to minimize the
costs it incurs in carrying out its responsibilities under the
agreement.

D. Veterinary Services

The Authority incurs other programmatic expenditures that support
its statutory mission beyond the direct administration of the Racetrack
Safety Program and the ADMC Program. These expenditures include
veterinary services, technology operations, and administrative
services, all of which play a critical role in advancing HISA's
statutory mandate to protect and enhance the safety and welfare of
Covered Horses and Covered Persons and the integrity of Covered
Horseraces.
The Authority's Veterinary Services department plays a crucial role
in promoting the health, welfare, and safety of Covered Horses. The
three Veterinarians that comprise this department have a combined 60
years of veterinary experience and are responsible for developing and
overseeing the Authority's veterinary-related rules and protocols,
supporting regulatory veterinarians and attending practitioners,
managing veterinary reporting and compliance requirements, evaluating
injury and health data, and helping implement data-based safety
initiatives designed to reduce equine injuries and improve racing
outcomes. Veterinary Services also collaborates with industry
stakeholders, researchers, and HISA advisory committees to advance best
practices in equine care, medication management, racetrack safety, and
horse welfare, ensuring consistent standards are applied across all
covered racing jurisdictions. Their work supports the health, safety,
and welfare of the tens of thousands Covered Horses and 1,400
veterinarians participating in Thoroughbred racing across the United
States.
The Veterinary Services expenditures (Appendix 7) include the
following:
Salaries (5200). The Proposed Budget contemplates $647,891 for this
line item. This line item covers salaries for the three full-time
veterinarians that comprise the Veterinary Services Department. As set
forth above, these veterinarians have a combined 60 years of veterinary
experience and are responsible for developing and overseeing the
Authority's veterinary-related rules and protocols, supporting
regulatory veterinarians and attending practitioners, managing
veterinary reporting and compliance requirements, evaluating injury and
health data, and helping implement data-based safety initiatives
designed to reduce equine injuries and improve racing outcomes. Given
the national scope of the Authority's responsibilities and the
continuous nature of racing operations, these veterinarians routinely
provide oversight, consultation, and regulatory support that extends
well beyond traditional business hours. Their work supports the health,
safety, and welfare of the tens of thousands of Covered Horses and
1,400 veterinarians participating in Thoroughbred racing across the
United States.
The Act requires the Authority to ``exercise independent and
exclusive national authority over--(A) the safety, welfare, and
integrity of covered horses, covered persons, and covered horseraces;
and (B) all horseracing safety, performance, and anti-doping and
medication control matters for covered horses, covered persons, and
covered horseraces.'' 15 U.S.C. 3054(a)(2). These three Veterinarians
are indispensable to fulfilling this statutory mandate. Through their
ongoing oversight of veterinary policy, injury prevention initiatives,
horse health monitoring, regulatory compliance, and stakeholder
engagement, they help ensure the consistent implementation of the Act's
safety and welfare objectives throughout the industry.
The Authority has included in the Proposed Budget a cost of living
adjustment to base salary for all staff hired prior to June 1, 2026. In
establishing compensation ranges, HISA considers relevant market
benchmarks, the specialized nature of the positions, geographic
considerations, and the need to compete with opportunities available in
the private sector, regulatory organizations, and other professional
fields.
Payroll Tax Expense (5210). The Proposed Budget contemplates
$58,310 for this line item. This line item is based on historical data
and covers funding for Federal, State, and local payroll tax
obligations associated with Veterinary Services personnel. As noted
above, the staff are necessary to carry out the Act's requirement of
protecting and enhancing the safety and welfare of Covered Horses.
Health Insurance (5220). The Proposed Budget contemplates $44,232
for this line item. This line item covers funding for the Authority's
paid-portion of the multi-employer health insurance plan offered to
Veterinary Services employees (2027 will be the first full

[[Page 57606]]

year that the Authority has offered a multi-employer health insurance
plan). For employees covered under a different health insurance plan,
the Authority provides a stipend to those employees to cover a portion
of the cost of their own plans. These costs support the recruitment,
retention, and well-being of staff responsible for carrying out the
Act's requirement of protecting and enhancing the safety and welfare of
Covered Horses.
Retirement (5230). The Proposed Budget contemplates $24,387 for
this line item. This line item also includes the cost of the
Authority's match paid to the accounts of Veterinary Services employees
that participate in the Authority's 401(k) Plan. These costs support
the recruitment, retention, and well-being of staff responsible for
carrying out the Act's requirement of protecting and enhancing the
safety and welfare of Covered Horses.
Other Employee Benefits (5290). The Proposed Budget contemplates
$3,360 for this line item. This line item is based on historical data
and covers funding for employer-provided benefits associated with
Veterinary Services employees and includes workers' compensation
insurance, and mobile phone stipends. These costs support the
recruitment, retention, and well-being of Veterinary staff. While this
line item is reduced compared to the 2026 budget, a majority of the
difference has been reallocated to the Health Insurance (5220) and
Retirement (5230) accounts (both of which are new for 2027).
Meetings (5430). The Proposed Budget contemplates $15,000 for this
line item. This line item covers funding for costs associated with
meetings and stakeholder engagement activities that support the
Veterinary Services department. These meetings provide face-to-face
opportunities to discuss rule implementation, assist with challenges,
listen to concerns regarding uniformity and practical effects, and
bring back ideas for improvements to the internal team for
consideration. These meetings are typically held in conjunction with
other established industry meetings to maximize participation while
minimizing travel costs. These meetings improve the service of
veterinary operations and the Racetrack Safety Program.
Travel (5440). The Proposed Budget contemplates $40,000 for this
line item. This line item covers funding for travel expenses incurred
by Veterinary Services personnel, including transportation, lodging,
meals, mileage reimbursement, parking, and other allowable travel-
related costs associated with inspections, audits, investigations,
training, stakeholder meetings, conferences, and other activities
necessary to support the implementation, oversight, and enforcement of
veterinary standards established in the Racetrack Safety Program.
Memberships & Subscriptions (5450). The Proposed Budget
contemplates $49,000 for this line item. This line item covers the
costs of subscriptions for services to be provided to the industry
relating to the mental health of regulatory veterinarians and the
assessment of lameness in Covered Horses. As noted above, the Act
directs the Authority to exercise independent and exclusive national
authority over ``the safety, welfare, and integrity of covered horses,
covered persons, and covered horseraces.'' 15 U.S.C. 3054(a)(2). This
line item furthers this directive of the Act.
Payroll (5840). The Proposed Budget contemplates $2,700 for this
line item. This line item covers a portion of the costs associated with
the Authority's Professional Employer Organization, CoAdvantage, which
includes the cost of running payroll for Veterinary Services employees.
Payroll expenses directly further the purposes of the Act by supporting
employees responsible for monitoring and enhancing the safety and
welfare of Covered Horses. Without qualified veterinary personnel, the
Authority would be unable to effectively administer and enforce the
veterinary standards established in the Racetrack Safety Program.
Professional Services (5890). The Proposed Budget contemplates
$81,000 for this line item. This line item covers funding for
specialized professional and technical services obtained from external
consultants, contractors, and subject-matter experts to support the
Veterinary Services department. This line item includes costs
associated with compliance audits, training in specialized
administrative procedures, and review and drafting of opinion letters
regarding enforcement cases.

E. Technology Department

The Authority's Technology department supports the building and
development of all IT systems needed to properly and efficiently manage
the Racetrack Safety Program, the ADMC Program, and administration of
the Authority's operations. Among other things, the department is
responsible for the development and maintenance of the HISA Portal, a
proprietary platform utilized by over 39,000 Owners, Trainers,
veterinarians, racetracks, stewards, and other industry participants
for registration, reporting, compliance, and data management
activities.
On average, the Authority receives approximately 7,000 veterinary
treatment records per day and, as of the end of 2025, approximately
seven million veterinary treatment records had been uploaded to the
HISA Portal since the inception of the Racetrack Safety Program. Under
HISA rules, horses' treatment records are available to regulatory
veterinarians at any racetrack. Before the enactment of HISA's
Racetrack Safety Program, information shared between tracks and States
was limited to regulatory history (e.g., veterinarians' list history,
pre-race and other veterinary inspections). In addition, treatment
histories are now available to new owners, trainers and veterinarians
when a horse is transferred, sold or claimed. This information enables
all parties to have a more complete picture of a horse's medical and
regulatory history to promote continuity of care. Using this robust
dataset, the IT team developed HISA CHECK[radic], which analyzes the
comprehensive treatment information available in the HISA Portal, along
with historical performance data and other risk factors (e.g., the
length of a horse's previous layoff (if any), term with current
Trainer, history on the Veterinarians' List), to assess whether horses
are at increased risk for injury.
The Technology Department expenditures (Appendix 8) include the
following:
Salaries (5200). The Proposed Budget contemplates $1,284,129 for
this line item. This line item covers salaries for 14 Technology
Department staff whose work is essential to ensure the reliable
operation, security, and continuous improvement of the Authority's
technology infrastructure and services, including the HISA Portal,
which is utilized daily by over 39,000 Covered Persons and contains
health and performance information for over 90,000 Covered Horses. As
noted above, the Technology Department staff are necessary to provide
the technological support for the Racetrack Safety Program, the ADMC
Program, and the administration of the Authority's operations. This
line item contemplates a proposed increase compared to the 2026 Budget
due to the expectation that 4 contractors currently providing services
for the Authority will become full-time employees (part of this
increase is offset by the decrease in Professional Services (5890)) and
the addition of two new full-time employees (to replace outgoing
contractors).

[[Page 57607]]

The Technology Department also assists with fulfilling specific
responsibilities under the Act, including the development of a
registration platform for all covered persons as ``a condition of
participating in covered races and in the care, ownership, treatment,
and training of covered horses''; the ``develop[ment] and maint[enance]
[of] a nationwide database of racehorse safety, performance, health,
and injury information''; and the development of a rulings page to
comply with the Act's public disclosure requirements. 15 U.S.C.
3054(d)(1), 3056(c)(3)(A), 3057(c)(2).
The Authority has included in the Proposed Budget a cost of living
adjustment to base salary for all staff hired prior to June 1, 2026. In
establishing compensation ranges, HISA considers relevant market
benchmarks, the specialized nature of the positions, geographic
considerations, and the need to compete with opportunities available in
the private sector, regulatory organizations, and other professional
fields.
Payroll Tax Expense (5210). The Proposed Budget contemplates
$105,299 for this line item. This line item is based on historical data
and covers funding for Federal, State, and local payroll tax
obligations associated with Technology Department personnel. As noted
above, the Technology Department staff are necessary to provide the
technological support for the Racetrack Safety Program, the ADMC
Program, and the administration of the Authority's operations. The IT
Team also operates and maintains the HISA Portal and other technology
tools offered by the Authority.
Health Insurance (5220). The Proposed Budget contemplates $64,000
for this line item. This line item covers funding for the Authority's
paid-portion of the multi-employer health insurance plan offered to
employees (2027 will be the first full year that the Authority has
offered a multi-employer health insurance plan). For employees covered
under a different health insurance plan, the Authority provides a
stipend to those employees to cover a portion of the cost of their own
plans. These costs support the recruitment, retention, and well-being
of IT staff responsible for providing the technological support for the
Racetrack Safety Program, the ADMC Program, and the administration of
the Authority's operations.
Retirement (5230). The Proposed Budget contemplates $46,745 for
this line item. This line item includes the cost of the Authority's
match paid to the accounts of Technology Department employees that
participate in the Authority's 401(k) Plan. These costs support the
recruitment, retention, and well-being of IT staff responsible for
providing the technological support for the Racetrack Safety Program,
the ADMC Program, and the administration of the Authority's operations.
Other Employee Benefits (5290). The Proposed Budget contemplates
$7,476 for this line item. This line item is based on historical data
and covers funding for employer-provided benefits associated with
Technology Department employees and includes workers' compensation
insurance, and mobile phone stipends. These costs support the
recruitment, retention, and well-being of IT staff responsible for
providing the technological support for the Racetrack Safety Program,
the ADMC Program, and the administration of the Authority's operations.
While this line item is reduced compared to the 2026 budget, a majority
of the difference has been reallocated to the Health Insurance (5220)
and Retirement (5230) accounts (both of which are new for 2027).
Travel (5440). The Proposed Budget contemplates $97,000 for this
line item. This line item covers funding for travel expenses incurred
by the Technology Department employees to support the Authority's
responsibility to administer and oversee nationwide technology systems
that enable the implementation of the Act. This travel includes vendor
implementation activities, onsite support for various initiatives,
training and industry conferences, and collaboration with industry
stakeholders such as racetrack operations and regulatory officials.
Supplies (5500). The Proposed Budget contemplates $12,000 for this
line item. This line item covers funding for supplies necessary to
support the Authority's technology operations and includes the routine
purchase and replacement of technology-related consumables,
miscellaneous office technology equipment, and operational tools
required to maintain a secure, reliable, and efficient technology
environment that supports the Racetrack Safety Program, the ADMC
Program, and the administration of the Authority's operations.
Technology (5825). The Proposed Budget contemplates $2,324,040 for
this line item. This line item covers funding for cloud computing and
other specialized applications that together form the foundation of the
Authority's technology system. This primarily consists of the cost of
Palantir (budgeted for $1,590,000) (which support HISA CHECK[radic] and
HISA Horse In-Sight) and Amazon Web Services (budgeted for $600,000)
(necessary for the HISA Portal and control panel and the mobile app).
Additionally, Azure (budgeted for $24,000) (for processing the ruling
forms from Stewards), Office 365 (budgeted for $54,000) (for email,
login, storage, etc.), end user security tools (budgeted for $24,000),
and Odoo (budgeted for $5,400) (for billing software and accreditation
management) are included in this account.\16\ To be as cost-effective
as possible, HISA has chosen not to invest in centralized computing
assets. This keeps total cost of ownership low, infrastructure
stability high and enables solution flexibility as HISA is engaged in
meeting its mandate.
Payroll (5840). The Proposed Budget contemplates $6,900 for this
line item. This line item covers a portion of the costs associated with
the Authority's Professional Employer Organization, CoAdvantage, which
includes the cost of running payroll for the Technology Department
employees. Payroll expenses directly further the purposes of the Act by
supporting employees responsible for providing technological support
for the Racetrack Safety Program, the ADMC Program, and the
administration of the Authority's operations. Without qualified IT
personnel, the Authority would be unable to effectively administer and
enforce the Act's requirements.
Professional Services (5890). The Proposed Budget contemplates
$5,034,100 for this line item (a reduction of approximately 11.5%
compared to the 2026 budget). This line item covers the projected cost
of outsourced technology delivery provided by third-party system
integrators and software factories, including T-Soft ($3,150,000),
Reflective Matrix ($589,000), and XORGate Solutions ($193,200) Given
the need for cost-effective, round-the-clock services, the necessary
software and technology systems were procured internationally from
development resources in the United States, 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. This line item also includes the projected
cost of Ansafone ($486,000), a third-party vendor offering 24/7
assistance with HISA's Help Desk, a service of critical importance to
the Authority's stakeholders. Finally, this line item covers the
projected cost of Dean Dorton ($78,400), an entity to assist with
computer system security, and the projected cost of an annual audit of
HISA's IT system ($100,000), as

[[Page 57608]]

required by the Commission's Oversight Rule.

F. Administration

The Administration portion of the Proposed Budget consists of the
general and administrative staff and expenditures that are needed to
conduct HISA operations and carry out the Authority's responsibilities
under the Act. This includes the Chief Executive Officer and the Chief
Financial Officer, along with employees in Legal, Communications,
Operations/Compliance, Public Affairs, and Administrative Services.
The Administration Department expenditures (Appendix 9) include the
following:
Salaries (5200). The Proposed Budget contemplates $2,389,274 for
this line item. This line item contemplates funding for salaries of 11
full-time employees in the Administrative Department, including the
Chief Executive Officer and the Chief Financial Officer, along with
employees in Legal, Communications, Operations/Compliance, Public
Affairs, and Administrative Services. As of July 31, 2026, there are 10
employees in the Administrative Department. These employees are
necessary to ensure the efficient operation of the Authority and the
effective delivery of its services. In addition, these employees
provide financial, legal, public affairs, and other corporate functions
necessary for HISA to operate efficiently and maintain compliance with
the Commission's Oversight Rule. Notably, the Authority eliminated a
full-time position in the Administrative Department. As noted above,
the Authority has budgeted for 11 full-time employees--the Authority
anticipates hiring an employee to work in the legal department, which
will reduce the costs currently paid to outside counsel.
The Authority has included in the Proposed Budget a cost of living
adjustment to base salary for all staff hired prior to June 1, 2026.
In establishing compensation ranges, HISA considers relevant market
benchmarks, the specialized nature of the positions, geographic
considerations, and the need to compete with opportunities available in
the private sector, regulatory organizations, and other professional
fields.
Payroll Tax Expense (5210). The Proposed Budget contemplates
$191,142 for this line item. This line item is based on historical data
and covers funding for Federal, State, and local payroll tax
obligations associated with Administrative personnel. As noted above,
the employees provide financial, legal, public affairs, and other
corporate functions necessary for HISA to operate efficiently, carry
out its duties and responsibilities under the Act, and maintain
compliance with the Commission's Oversight Rule.
Health Insurance (5220). The Proposed Budget contemplates $168,266
for this line item. This line item covers funding for the Authority's
paid-portion of the multi-employer health insurance plan offered to
Administrative employees (2027 will be the first full year that the
Authority has offered a multi-employer health insurance plan). For
employees covered under a different health insurance plan, the
Authority provides a stipend to those employees to cover a portion of
the cost of their own plans. These costs support the recruitment,
retention, and well-being of Administrative staff responsible for
carrying out the Act's requirements.
Retirement (5230). The Proposed Budget contemplates $86,014 for
this line item. This line item also includes the cost of the
Authority's match paid to the accounts of Administrative employees that
participate in the Authority's 401(k) Plan. These costs support the
recruitment, retention, and well-being of staff responsible for
carrying out the Authority's operations.
Other Employee Benefits (5290). The Proposed Budget contemplates
$12,000 for this line item. This line item is based on historical data
and covers funding for employer-provided benefits associated with
Administrative personnel and includes workers' compensation insurance,
and mobile phone stipends. These costs support the recruitment,
retention, and well-being of staff responsible for carrying out the
Authority's operations. While this line item is reduced compared to the
2026 budget, a majority of the difference has been reallocated to the
Health Insurance (5220) and Retirement (5230) accounts (both of which
are new for 2027).
Board and Committee Travel (5310). The Proposed Budget contemplates
$20,000 for this line item. This line item is based on historical data
and covers funding for travel, hotel, and meal expenses for the one
annual board meeting that is held with in-person attendance by the nine
board members. The Act requires the Authority to be governed by a board
of directors comprised of five independent members selected from
outside the industry and four industry members selected from among the
various equine constituencies. 15 U.S.C. 3052(b). The Board is
responsible for overseeing and advising on all aspects of the
Authority's operations, including the review and approval of proposed
rules, budgets, strategic initiatives and other matters necessary to
fulfill the Authority's statutory responsibilities. Board members
dedicate significant time and expertise to supporting the Authority's
operations and its two Programs (for example, Dr. Susan Stover, an
industry director, chairs the Racetrack Safety Committee, which meets
multiple times per month); however, they serve on a volunteer basis and
receive no compensation for their service to the Authority.
Rent (5410). The Proposed Budget contemplates $58,282 for this line
item. This line item is based on historical data and covers the lease
costs associated with the Authority's Lexington, Kentucky office, which
serves as the Authority's headquarters and provides office space for
approximately ten employees who support the administration of HISA's
operations. The office space is approximately 1,800 square feet and the
monthly base rent is roughly $2,800, which is consistent with market
rates.
This line item also covers the lease costs associated with a small
office for the Authority's Director of Public Affairs and one other
employee strategically located in Washington, DC. The monthly base rent
is approximately $1,300 per month, which is consistent with market
rates.
Compared to the 2026 budget, this amount contemplates a reduction
of approximately 18%, which is primarily due to the elimination of a
small office in Pennsylvania.
Phone (5420). The Proposed Budget contemplates $1,830 for this line
item. This line item is based on historical data and covers the costs
associated with office access cards and Wi-Fi in HISA's offices. These
expenses are necessary for HISA to conduct its operations and implement
the requirements of the Act.
Meetings (5430). The Proposed Budget contemplates $78,855 for this
line item. This line item is based on historical data and covers
funding for miscellaneous expenses associated with administrative and
operational meetings necessary to support HISA's operations and
execution of its responsibilities under the Act. This includes meetings
with industry stakeholders, strategic planning activities and
collaborative working meetings to ensure efficient and consistent
application of the Authority's services. These expenses include meeting
expenses, meeting materials, working meals, and other reasonable costs
associated with conducting business meetings involving HISA staff,
board members, committee members, consultants, and/or stakeholders.

[[Page 57609]]

Travel (5440). The Proposed Budget contemplates $139,750 for this
line item. This line item is based on historical data and covers
funding for travel expenses associated with administrative and
operational meetings necessary to support HISA's operations and
execution of its responsibilities under the Act. This includes meetings
with industry stakeholders, strategic planning activities and
collaborative working meetings to ensure efficient and consistent
application of the Authority's services. These expenses include
airfare, car rental, mileage, and meals associated with these meetings.
Memberships and Subscriptions (5450). The Proposed Budget
contemplates $9,607 for this line item. This line item is based on
historical data and covers funding for professional membership dues and
subscription fees necessary for functions performed by HISA staff,
including veterinary, personnel, and financial personnel. These
expenditures include memberships in professional organizations,
subscriptions to industry publications and databases and cybersecurity
information. Access to current information and professional resources
enables the Authority to understand and respond to industry issues, and
maintain programs consistent with evolving industry standards.
Interest Expense (5480). The Proposed Budget contemplates $312,601
for this line item. This line item relates to the accrual of interest
expense on the outstanding loans and the line of credit. Interest
expense is a reasonable and necessary cost of the Authority's
operations and responsibilities under the Act. In the 2026 Budget, HISA
contemplated that a portion of the interest on the outstanding loans
and the line of credit would be forgiven and therefore less than the
full amount of interest was included. After discussion with HISA's
external auditors in 2026, it was determined that the entire amount of
interest should be accrued each month and therefore that amount has
been included in the 2027 Budget. Should that interest ultimately be
forgiven, if HISA collects more revenues than its amount of cash
expenses then this excess will be returned to the industry as part of
the annual True-Up process.\17\
Bank and Credit Card Fees (5490). The Proposed Budget contemplates
$21,300 for this line item. This line item is based on historical data
and covers bank service charges, merchant processing fees, credit card
transaction fees, electronic payment fees, wire transfer fees, and
other financial institution charges incurred in the ordinary course of
the Authority's operations.
Supplies (5500). The Proposed Budget contemplates $6,000 for this
line item. This line item is based on historical data and covers the
cost of office supplies, including printer/copier paper, printer/copier
ink and toner, postage, shipping, and other miscellaneous office
supplies used in connection with the Authority's operations.
Postage (5510). The Proposed Budget contemplates $1,800 for this
line item. This line item is based on historical data and covers the
cost of postage and shipping for communications to Covered Persons.
While the Authority primarily conducts business via electronic
communications, U.S. Mail is required where the recipient does not
utilize an electronic means of communication.
License Fees (5710). The Proposed Budget contemplates $1,415 for
this line item. This line item is based on historical data and covers
the cost of a service contract for the copier/printer in the Lexington,
Kentucky office.
Accounting Services (5810). The Proposed Budget contemplates
$112,350 for this line item. This line item is based on historical data
and 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 the Authority were to hire staff to perform these functions in-
house. Additionally, this includes the cost of an annual independent
audit of the Authority, as required by the Commission's Oversight Rule.
P/R Svcs. (5815). The Proposed Budget contemplates $192,000 for
this line item. This line item is based on historical data and includes
the cost of a contract public relations service to assist with the
production and distribution of information to industry stakeholders,
and provide continuing education information for industry stakeholders.
The public relations firm that the Authority is working with has many
years of expertise in public relations for Thoroughbred racing
enterprises. However, to reduce costs, the Authority is reducing its
usage of the consulting service as reflected by the approximately 28%
reduction compared to 2026.
Legal--General (5820). The Proposed Budget contemplates $690,000
for this line item. This line item is based on historical data and
covers the cost of the General Legal Budget, which is largely made up
of two activities: (i) drafting and reviewing of proposed rules; and
(ii) the costs of legal counsel for enforcement proceedings of all rule
violations except for ADMC enforcement. The amount contemplated in this
expense is an approximate 16% reduction compared to last year, which is
based on (i) the assumption that the Authority will need fewer legal
resources for drafting rules since the proposed modifications to the
ADMC Program will have occurred in 2025 and 2026; and (ii) reduction in
the reliance on outside counsel for racetrack safety and other
enforcement actions and utilizing a full-time in-house lawyer for most
of the routine enforcement actions.
Legal--Lawsuits (5821). The Proposed Budget contemplates $2,310,000
for this line item. This line item is based on historical data and
covers the cost of the Legal Lawsuits Budget, which consists of fees
for outside counsel to represent the Authority in litigation. The
amount contemplated in this expense is an approximate 23% reduction
compared to last year, which is based on an assumption that the
Authority will face less litigation costs in the second half of 2027.
Insurance (5830). The Proposed Budget contemplates $49,318 for this
line item. This line item covers the cost of the following policies of
insurance:

1. Director and Officers Policy with Employment Practices
Liability Coverage;
2. General Liability Insurance with Terrorism Coverage; and
3. Cyber Insurance Coverage.

Descriptions of these policies (in 2025) are included in the
Authority's Annual Financial Report, available at <a href="https://hisaus.org/financial-documents/2025-annual-financial-report">https://hisaus.org/financial-documents/2025-annual-financial-report</a>. The amount
contemplated for 2027 is based on historical costs with estimated year-
over-year increases.
Payroll Services (5840). The Proposed Budget contemplates $5,225
for this line item. This line item covers a portion of the cost of the
Authority's relationship with CoAdvantage, a Professional Employer
Organization (PEO). CoAdvantage 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 CoAdvantage

[[Page 57610]]

allows these functions to be performed in a more cost-effective manner
than if HISA hired employees to perform those functions.
Printing and Publication (5850). The Proposed Budget contemplates
$1,200 for this line item. This line item covers costs associated with
the printing, production, and distribution of materials necessary to
support the Authority's operations and fulfill its responsibilities
under the Act. These expenses may include the printing of educational
materials, training resources, stakeholder communications, and other
publications used in the administration of HISA's programs.
Professional Services (5890). The Proposed Budget contemplates
$407,210 for this line item. This line item covers funding for
specialized professional and technical services obtained from external
consultants, contractors, and subject-matter experts to provide and/or
augment services in various components of the Racetrack Safety Program,
including racetrack emergency response planning, training and
exercises; health services for Jockeys and other Covered Persons and
data analysis and management used to enhance racetrack safety and
support data-driven decision making within the Racetrack Safety
Program. These services further the required elements of the Racetrack
Safety Program set forth in the Act at 15 U.S.C. 3056(b).

VI. Information Concerning Rule 1.150(c)(5)

Attached as Appendix 10 is a comparison of the approved HISA 2026
Budget through June 30, 2026 to actual revenues and expenditures during
that same period. A variance has been calculated for each line item,
and a narrative explanation has been provided for all variances greater
than 10% and at least $100,000.

VII. Information Concerning Rule 1.150(c)(6)

The Authority received thirteen (13) public comments after posting
the Proposed Budget on its website.\18\ Pursuant to 16 CFR 1.150(d),
``[p]ublic comments [regarding the 2027 Budget] should provide
commenters' views as to the decisional criteria set forth in 1.151(c)
and whether any line items should be modified.'' 16 CFR 1.151(c) states
that ``[t]he 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).
In light of the above framework, the Authority provides the
following responses to each of the comments received after posting the
Proposed Budget on its website.
1. Larry Kaufman. Mr. Kaufman's submission stated, ``[a]bolish
hisa.'' This comment does not address the decisional criteria set forth
in 16 CFR 1.151(c) or whether any line items should be modified.
2. <a href="/cdn-cgi/l/email-protection#45223724372b2a2921773724262c2b22052228242c296b262a28"><span class="__cf_email__" data-cfemail="0e697c6f7c6061626a3c7c6f6d6760694e69636f6762206d6163">[email&#160;protected]</span></a>. This commenter's submission stated,
``[a]dd tramadol to your Jo key [sic] club list.'' This comment does
not address the decisional criteria set forth in 16 CFR 1.151(c) or
whether any line items should be modified.
3. Jonathan Stettin. The Authority received a list of thirty-one
(31) questions and comments from Jonathan Stettin who maintains the
Past the Wire website. ``Past the Wire is the Horse Racing column where
Professional Handicapper Jonathan Stettin shares his knowledge,
experience and passion for The Sport of Kings.'' \19\ Many of the
submitted questions and comments are similar to media inquiries and are
not relevant to the Commission's evaluation of the Proposed Budget.\20\
The Authority's assessment of the questions and comments that are
relevant to the Commission's evaluation of the proposed budget are as
follows:

--HISA reports total expenses of $24.77 million through June 30, 2026,
compared with a six month budget of $38.45 million. What is HISA's
current projection for actual full year 2026 expenses, and how was that
projection used in developing the proposed 2027 budget?

Response: The 2026 forecasted expenses total $54.87 million. This
was used as a starting point for the 2027 budgeted expenses, but as set
forth below, HISA prepares its budget on a gross basis which largely
explains why the 2027 expense budget is higher than the 2026 forecast
(actual expenses will always come in lower than budgeted expenses due
to the credits which are given for amounts paid directly by States and
industry participants).

--How much of the $13.68 million favorable first half variance
represents permanent savings, how much represents assessment credits,
and how much represents expenses delayed until the second half of 2026?

Response: $9.05 million of the favorable variance is a result of
credits (sample collection and laboratory) given to States/racetracks
for performing and paying for those functions). $675,000 stems from
racetracks located in Texas and Nebraska not participating in HISA. The
remaining favorable variance of roughly $4 million is approximately \2/
3\ savings and \1/3\ related to the timing of expenses.

--How much of the stated 5.75 percent reduction represents genuine
operational savings, and how much results from Texas and Nebraska not
entering HISA jurisdiction or Louisiana and West Virginia remaining
outside the program?

Response: $1.29 million was included in the 2026 Budget for Texas
and Nebraska, and that amount has been eliminated in 2027. Louisiana
and West Virginia were not in the 2026 Budget and are not included the
2027 Proposed Budget.

--Why are expenses paid directly by States and industry participants
included in HISA's gross budget before approximately $16.24 million in
expected credits are shown separately?
Response: HISA uses the gross budget (amount without credits) in
the calculation of gross assessments, then HISA nets each State's
credit amount off its gross assessment. If HISA used the net budget in
the assessments calculation, then the credits would not be properly
allocated to the States that are performing and paying for the sample
collections and lab testing.

--HISA states that it operates with 27 full time employees, while the
departmental descriptions contemplate six Racetrack Safety employees,
three Veterinary Services employees, fourteen Technology employees and
eleven Administration employees. Please reconcile these figures and
identify the number of filled, vacant and budgeted positions in each
department.
Response: HISA currently operates with 27 full-time employees and
has budgeted for 34 full-time employees for 2027. Racetrack Safety: 6
Current FTE and 6 Budgeted FTE; Veterinary Services: 3 Current FTE and
3 Budgeted FTE; Technology: 8 Current FTE and 14 Budgeted FTE; and
Administration: 10 Current FTE and 11 Budgeted FTE.

--HIWU currently has 41 full time employees and seven shared Drug Free
Sport employees but is budgeting for 43 full time employees and ten
shared employees. What additional positions are contemplated, what will
they cost and why are they necessary?

Response: HIWU has budgeted for (i) one additional full-time
employee: a paralegal to work in the legal department to assist the
HIWU attorneys

[[Page 57611]]

with ADMC enforcement cases, which is offset by an approximate 25%
reduction in external counsel costs; and (ii) one previously budgeted
full-time employee: an investigative analyst to support the HIWU
Investigations team with ADMC and Racetrack Safety investigative
activities including reviewing reports, managing evidence, and
conducting research and analysis. HIWU has budgeted for (i) two new
shared employees: an additional Human Resource Specialist and an
Instructional Design specialist to assist with educational content
management and creation; and (ii) one previously budgeted shared
employee: a Controller. This shared arrangement with HIWU's parent
company, Drug Free Sport, produces cost savings, obviating the need for
HIWU to retain full-time employees to provide these services.

--What specific services does Drug Free Sport provide in exchange for
its $2.67 million management fee that are not already covered by HIWU
salaries, shared employees, professional services, technology,
insurance, collection expenses and other individual budget lines?

Response: HISA's agreement with DFS is structured so that ADMC
Program expenses are budgeted and billed directly to HISA on an at-cost
basis. The management fee effectively represents a fee paid to DFS for
developing and maintaining the administrative and organizational
functions required to establish HIWU and administer the ADMC
Program.\21\ The Authority notes further that its agreement with DFS
contains an incentive structure that encourages DFS to minimize the
costs it incurs in carrying out its responsibilities under the
agreement.

--Has HISA attempted to renegotiate Drug Free Sport's eight percent
management fee now that the ADMC Program has moved beyond its startup
period? If not, why not?
See previous response.
--HIWU, laboratory testing and adjudication account for approximately
$53.57 million, or more than 72 percent of the proposed gross budget.
What measurable outcomes does HISA use to determine whether this level
of spending is cost effective?

Response: The Act requires the Authority to enter into an agreement
with an anti-doping and medication control enforcement agency to
``serve as the independent anti-doping and medication control
enforcement organization for covered horses, covered persons, and
covered horseraces, implementing the anti-doping and medication control
program on behalf of the Authority.'' 15 U.S.C. 3054(e)(1)(E)(i).
In May 2022, the Authority entered into an agreement with Drug Free
Sport International (``DFSI''), to ``serve as the independent anti-
doping and medication control enforcement organization'' for the
Authority's ADMC Program. 15 U.S.C. 3054(e)(1)(E)(i). DFSI is a
worldwide leader in the sport drug testing industry and maintains
enforcement partnerships with leading sports organizations, including
the National Football League, NCAA, National Basketball Association,
Ladies Professional Golf Association, PGA Tour, NASCAR and Major League
Baseball. In 2022, DFSI established HIWU, led by a five-member Advisory
Council, to serve as the ADMC enforcement agency for the Authority. Id.
As the independent enforcement agency of the Authority's ADMC
Program, HIWU is responsible for: (a) test distribution planning
(including target or intelligence-based testing) and specific testing
decisions; (b) laboratory accreditation and the monitoring, testing and
auditing of accredited laboratories; (c) selecting the appropriate
laboratory for sample analysis as permitted by the Act; (d) organizing
analysis of samples and allocating special analysis to samples; (e)
providing drug reference resources; (f) conducting education and anti-
doping and medication control research; (g) statistical reporting to
the Authority; (h) gathering of intelligence and conducting of
investigations; (i) results management; (j) coordination with anti-
doping organizations, international equine regulatory bodies, law
enforcement, SRCs and the Authority; (k) administration of, and
decision-making on, day-to-day operations; and (l) such other services
as may be agreed by the Authority and HIWU in accordance with the Act.
The Authority evaluates the effectiveness of their spending on the
ADMC Program and HIWU through a range of performance measures reported
by HIWU and reviewed by HISA. As detailed in HIWU's Annual Reports,
these measures include the number and scope of tests conducted, out-of-
competition testing activity, laboratory turnaround times, the
identification and adjudication of ADMC violations, investigations,
educational outreach efforts, and oversight of laboratory
accreditation. HIWU's annual reporting also provides data on sample
collection, results management, case resolution, disciplinary actions,
and trends in medication-control violations, allowing the Authority to
assess both the operational efficiency and deterrent effect of the
program. In 2025 alone, HIWU oversaw 73,815 total Sample Collection
Sessions involving 25,515 unique Covered Horses tested under HISA's
ADMC Program. As for adjudications, in 2025, HIWU served 377 EAD/ECM
Notices and 361 EAD/ECM Charges. The average resolution time for cases
originating in 2025 was 82.6 days. HIWU's investigations team conducted
or oversaw 463 searches at 50 racetracks/training centers in 19 States.
In addition to enforcement metrics, the Authority considers broader
program outcomes, including the establishment and oversight of the HISA
Equine Analytical Laboratory Accreditation Program. The ADMC Program
Rules require that HIWU administer the HEAL Accreditation Program,
which includes empowering HIWU to closely monitor compliance and act
accordingly when laboratories cannot meet the Laboratory Standards. The
Laboratory Expert Group, whose members bring a broad range of relevant
expertise in human and equine anti-doping, laboratory operations, and
quality assurance management, is essential to this component of the
ADMC Program.
Accordingly, while laboratory testing and adjudication represent a
substantial portion of the ADMC Program budget, those functions
constitute the core enforcement mechanisms required by Congress and are
assessed by a variety of measures, including the metrics published by
HIWU each year.

--What is the projected cost per sample in 2027, and how does it
compare with the actual cost per sample in 2024, 2025 and 2026?

Response: See HIWU quarterly and annual reports for historical
Sample Collection Sessions.\22\ As a reminder, HIWU's annual report is
published based on Sample Collection Sessions. One Sample Collection
Session is counted each time a Covered Horse is selected for testing,
for any type. One Sample Collection Session may include the collection
of a urine, blood, and/or hair sample. HISA is unsure what expenses
should be included in the commenter's computation. Although the
Proposed Budget sets forth various expense categories related to sample
collection, the actual test distribution plan for 2027 will not be
established until the fourth quarter of 2026.
It should be also noted that the standardization and harmonization
of an anti-doping and medication control

[[Page 57612]]

program, and HIWU's mandate, expands beyond testing alone, and
therefore the cost per sample is not a valid way to measure the
uniformity, efficacy, or ``cost'' of a program. HIWU is confident that
its combined strategy for Post-Race Testing, TCO2 Testing, Out- of-
Competition Testing, and other Test Types creates an effective ADMC
program that detects and deters prohibited activities. However, HIWU's
impact must be considered holistically and include its investigative,
educational, and scientific efforts, plus uniform enforcement, in
accordance with the ADMC Rules.

--How much of the $8.98 million Technology Department budget represents
development of new systems, and how much represents recurring operation
and maintenance?

Response: This comment does not address the decisional criteria set
forth in 1.151(c) or whether any line items should be modified.
Nevertheless, HISA states that approximately 30%-40% is for ``new''
development systems.

--How much is budgeted individually for Palantir, Amazon Web Services
and every other technology vendor expected to receive more than
$100,000 during 2027?
Response: See discussion of Technology (5825) in Section V.E.

--Of the $3 million budgeted for legal expenses, how much relates to
defending HISA's constitutionality or jurisdiction, how much relates to
enforcement, and how much relates to other legal work?

Response: See discussion of Legal--General (5820) and Legal--
Lawsuits (5821) in Section V.F. This information was also included in
the draft Notice of Filing (at page 27) posted on the HISA website.

--Why does interest expense increase from $123,456 to $312,601 when
HISA anticipates obtaining no new loans and budgets nothing for
repayment of existing principal?

Response: HISA has not been informed whether interest will be
forgiven or not, and as such the independent auditors that performed
the audit of HISA's 2025 financial statements directed HISA to accrue
interest. As noted in HISA's 2025 audited financial statements,\23\ the
actual 2025 interest expense was $329,000. HISA is forecasting interest
expense of $335,000 in 2026 and has budgeted $312,000 in 2027.

--Why does Racetrack Safety professional services spending increase
from $878,000 to $1.25 million, and which vendors or contractors will
receive the additional money?
Response: See discussion of Professional Services (5890) in Section
V.A. This information was also included in the draft Notice of Filing
posted on the HISA website.

--What memberships and subscriptions are included in the new $49,000
Veterinary Services line, and what direct program benefit does each
provide?
Response: See discussion of Memberships & Subscriptions (5450) in
Section V.D. This information was also included in the draft Notice of
Filing posted on the HISA website.

--What services are included in the $192,000 outside public relations
budget, who provides those services and why can they not be performed
by HISA's internal Communications personnel?
Response: This line item covers public relations services provided
by Finsbury Glover Hering (FGS Global) and other public relations
consultants. FGS Global has many years of experience and specialized
expertise in public relations for Thoroughbred racing enterprises, and
they are utilized to supplement the services of HISA's two
communications employees. To reduce costs, however, HISA is reducing
its usage of the consulting service as reflected by the approximately
28% reduction compared to 2026.
4. Bill Thomas. Mr. Thomas submitted the following comment: ``I
don't know much about budgets, but oversight is needed for horse racing
to stay respectable in the public's eye. Too often they only see
breakdowns and think it is all crooked. They don't see the care and
compassion I see as an owner with a fabulous trainer . . . I believe
things like HISA help with non race people's perspectives.'' This
comment does not address the decisional criteria set forth in 16 CFR
1.151(c) or whether any line items should be modified.
5. Rachel Sampson. Ms. Sampson's comment does not address the
Proposed Budget, the decisional criteria set forth in 16 CFR 1.151(c),
or whether any line items should be modified.
6. Tom McKenna. Mr. McKenna's submission expressed a view that
``[q]uarter horses should be required to race under HISA especially
when racing in a mixed meet such as New Mexico.'' This comment does not
address the Proposed Budget, the decisional criteria set forth in 16
CFR 1.151(c), or whether any line items should be modified.
7. Peter Berube. This commenter's submission largely focuses on the
number of credits allocated by the Authority to the Florida racetracks,
including a request for a per-track or per-State disclosure of
estimated credits for 2027. That information is attached as Appendix 12
(Credits by State) and Appendix 13 (Credits by racetrack).
First, this commenter contends that the racetracks operating in
Florida account for 12.48% of total Covered Starts in 2027 and,
therefore, the Florida racetracks should receive 12.48% of the total
credits allocated by the Authority. That, however, is not how credits
are calculated. As set forth in Appendices 12 and 13, credits are
grouped into the following categories: Post Race Sample Collection,
TCO2 Sample Collection, Out of Competition Sample Collection and
Laboratory Credit. Each credit is calculated based on the amount of
reimbursements for expenses covered by the applicable racetrack or
State that HIWU/HISA would otherwise have had to pay for. The only item
in the Proposed Budget that is being paid for by the Florida racetracks
is the cost of sample collection (Post Race, TCO2, and OOC) in
Florida.\24\ In 2027, the State of Florida is allocated an estimated
$1,804,599 in Sample Collection Credits out of the total nationwide
Sample Collection Credits of $11,183,228.\25\ This means that
approximately 16.13% of all Sample Collection Credits are being
allocated to the Florida racetracks.\26\ Therefore, contrary to the
assertion made in this comment, the Florida racetracks actually receive
a higher percentage of credits than their percentage of Covered Starts.
Additionally, this commenter states ``. . . the split of Florida
credits between Tampa (29.4%) and Gulfstream (70.6%) does not track
their respective starts weights (34.1%/65.9%): Tampa receives
disproportionately less than even the FL-internal starts share would
suggest.'' The credits associated with the cost of the Post-Race Sample
Collection (that is being paid for by the Florida Gaming Commission)
were allocated between Gulfstream Park and Tampa Bay Downs pro-rata
based on starts. The credits associated with the costs of TCO2 Sample
Collection and Out-of-Competition Sample Collection (that are paid for
by the Florida racetracks) were allocated based on the amounts both
tracks were expected to pay (those credits act as reimbursements of
expected costs). On a proportional basis Gulfstream Park is expected to
pay more than Tampa Bay Downs because Gulfstream: (1) is directed by
HIWU to do Out-of-Competition Sample Collection at both their track and
at their training center (Palm Meadows), and (2) is required to do
Veterinarians'

[[Page 57613]]

List testing at both Gulfstream Park and Palm Meadows. It would be
inaccurate and inequitable for HISA to allocate credits to Tampa Bay
Downs for amounts that were paid for by Gulfstream Park.
8. New York Thoroughbred Horsemen's Association. The Authority
received a comment from The New York Thoroughbred Horsemen's
Association (``NYTHA''). None of the questions/comments are relevant to
the Commission's evaluation of the proposed budget.\27\
9. Churchill Downs Incorporated. For the second straight year, this
commenter submitted a comment advancing the misleading proposition that
the Authority's per-start fee increased from $285 in 2023 to $450 in
2027. The obvious flaw in this argument was described in detail in
HISA's response to CDI's comments on the 2026 Budget.\28\ In that
response, HISA stated ``[m]uch of CDI's letter is built around
comparing 2023 costs to 2026 costs. The $285 per-start figure from 2023
is not an accurate baseline for evaluating the current budget. The 2023
expenses reflected only a partial year of the Anti-Doping and
Medication Control Program, which significantly understated the true
costs of a full-year program, since the ADMC program represents
approximately seventy percent of the total budget. The 2023 projected
assessment income also included more than 37,000 starts from West
Virginia and Louisiana, States that are not part of the 2026 budget.
These facts demonstrate that the use of the 2023 budget as a baseline
is not appropriate. It is also important to note that in all of CDI's
calculations, it utilizes gross budget figures without accounting for
credits that reduce the net budget. It must be noted that West Virginia
and Louisiana are again not in the 2027 Proposed Budget. Also, the
racetracks located in Texas and Hawthorne have been removed from the
2027 Proposed Budget, which increases the per-start fee given that
those racetracks do not cover any of the fixed costs in HISA's 2027
Proposed Budget.
This submission also states that despite a 15% reduction in
national starters, HISA's costs have declined by a lower amount, which
the commenter claims is evidence that HISA has not achieved operational
efficiencies. In actuality, the nationwide starts that were obtained
from Equibase and used to calculate the 2027 Proposed Budget only
declined by 8.56% from the starts that were used to calculate the 2026
Budget (of which nearly 60% was due to the removal of the Texas
racetracks and Hawthorne from the 2027 Budget). Given that the
inflation rate for the 12-month period ended May 31, 2026 was 4.2% and
HISA added some new services to its 2027 Proposed Budget that are
expected to benefit the industry and further the directives established
in the Act, the 5.75% decrease in the 2027 Budget illustrates that
HISA's 2027 Proposed Budget does in fact reflect operational
efficiencies.
Finally, this commenter raises several questions about the accrual
of interest on the outstanding loans and line of credit. HISA has not
been informed whether interest will be forgiven or not, and as such the
independent auditors that performed the audit of HISA's 2025 financial
statements directed HISA to accrue interest. Should that interest
ultimately be forgiven or if HISA collects more revenues than its
amount of cash expenses then this excess will be returned to the
industry as part of the annual True-Up process.
10. New York Thoroughbred Breeders, Inc. This commenter
``encourages HISA to continue pursuing every reasonable opportunity to
reduce operating costs, diversify revenue sources, improve efficiency,
and accelerate its transition toward financial self-sufficiency.''
While this comment does not address the decisional criteria set forth
in 16 CFR 1.151(c) or whether any line items should be modified, the
Authority states that it continues to be committed to pursuing
reasonable opportunities to reduce costs and improving efficiencies
while continuing to fulfill its mandate under the Horseracing Integrity
and Safety Act, as demonstrated through the Authority's 2027 budgeting
process. The Proposed Budget marks the second consecutive year in which
the Authority has proposed a reduction in its gross budget, and the
proposed gross budget has decreased by approximately 9.50% since 2025.
These reductions reflect ongoing efforts to identify efficiencies and
manage expenditures in various areas of the budget, including
laboratory testing, public relations, and third-party professional
services. The Authority also continues to pursue and evaluate revenue-
generating initiatives that could help reduce the overall cost of the
Authority's operations for the industry.
This commenter also encourages ``HISA to continue improving the
efficiency of its compliance and enforcement programs.'' The Authority
continues to pursue measures designed to improve efficiency and costs
of its enforcement programs while ensuring that enforcement is
administered in a manner that is fair and consistent with the Act and
the health and safety of Covered Horses and Covered Persons. For
example, the Authority has proposed a rule modification that would
introduce a voluntary mediation process in Anti-Doping and Medication
Control cases, which is intended to facilitate the prompt and efficient
resolution of appropriate ADMC matters and conserve resources for all
parties. In addition, the Authority plans to hire an in-house
enforcement attorney dedicated to Racetrack Safety matters to reduce
reliance on outside counsel, generating cost savings that ultimately
benefit the industry.
In sum, the Authority recognizes the importance of reducing the
costs of its operations for the industry and, where appropriate, will
continue to pursue opportunities to cut costs and increase revenue. At
the same time, the Authority must ensure that any efforts to reduce
costs remain consistent with its obligations under the Act to maintain
robust safety and integrity programs for thoroughbred racing.
11. Virginia Racing Commission. This commenter expressed ``support[
] of the Proposed Budget, particularly where it reflects HISA's efforts
to reduce the budget through operational efficiencies, cost-saving
strategies, and economies of scale.'' In so doing, the commenter
advanced a few recommendations for the Authority to consider moving
forward, including reporting of performance metrics and increased
sharing of programmatic outcomes. The Authority and HIWU both publish
quarterly and annual metric reports containing a wealth of information
regarding equine fatalities, laboratory testing, enforcement metrics,
and more. These reports continue to evolve, and more information is
being made available each year. As for programmatic outcomes, the
commenter specifically references racetrack surface quality testing
results. This information is made available to the individual racetrack
and the Authority encourages the commenter to coordinate with the
applicable racetrack for access to this information.
This commenter does raise a question about a few of the line items
in the Proposed Budget. Regarding the fine collection, since inception
through July 15, 2026, HISA has issued $5,093,138 in fines and
$2,097,850 has been collected to date. For unpaid fines, the Authority
considers the practicality of collection by comparing the resources
needed to pursue recovery via an enforcement action with the likelihood
and expected value of collection. Additionally, per HISA rule 8200(e),
any Covered Person that fails to pay a fine is subject to an automatic
suspension. As for the Authority's Interest Expense line item, the
Authority states that it has not been

[[Page 57614]]

informed whether interest will be forgiven or not, and as such the
independent auditors that performed the audit of HISA's 2025 financial
statements directed the Authority to accrue interest. Should that
interest ultimately be forgiven or if HISA collects more revenues than
its amount of cash expenses then this excess will be returned to the
industry as part of the annual True-Up process.
12. Terry J. Westemeir. This commenter raises various criticisms in
their comment, many of which are outside the scope of the Commission's
decisional criteria and do not address specific line items in the
Proposed Budget.\29\ With respect to those comments addressing
particular line items, the Authority responds as follows:

--HIWU Salaries: This commenter states, ``one of [sic] more egregious
of these self-serving and misleading assertions is that HIWU is an
independent enforcement agency'' which appears to be based on a
mistaken premise that HISA and HIWU ``share'' employees. That is not
correct. The draft Notice clearly stated that HIWU ``shares'' employees
with Drug Free Sport, not the Authority and that the sharing of
employees is designed to produces cost savings, obviating the need for
HIWU to retain full-time employees to provide these services.
--Management Fee: This commenter describes this as a ``material
questionable expense.'' The Authority's agreement with DFS is
structured so that ADMC Program expenses are budgeted and billed
directly to HISA on an at-cost basis. The management fee effectively
represents a fee paid to DFS for developing and maintaining the
administrative and organizational functions required to establish HIWU
and administer the ADMC Program. This is a necessary and reasonable
expense related to the Act's requirement of an independent third-party
administer of the Authority's ADMC Program. The Authority notes further
that its agreement with DFS contains an incentive structure that
encourages DFS to minimize the costs it incurs in carrying out its
responsibilities under the agreement.
--Racetrack Safety, Veterinary Services, Technology, and Administration
Salaries. This commenter criticizes these line items on the basis that
they are above market average. The amounts included in these line items
are used to compensate full-time professionals with significant subject
matter expertise and extensive industry experience. The Authority
operates a national regulatory framework that spans 40 racetracks, 19
States, and multiple time zones. Given the national scope of the
Authority's responsibilities and the continuous nature of racing
operations, these employees routinely provide oversight, consultation,
and regulatory support that extends well beyond traditional working
days and hours. Their work supports the health, safety, and welfare of
the tens of thousands of Covered Horses and Covered Persons
participating in Thoroughbred racing across the United States.
Maintaining a skilled and motivated workforce is essential to
fulfilling HISA's mandate to enhance the safety and integrity of
Thoroughbred racing nationwide. In establishing compensation ranges,
HISA considers relevant market benchmarks, the specialized nature of
the positions, geographic considerations, and the need to compete with
opportunities available in the private sector, regulatory
organizations, and other professional fields. Comparisons to
generalized industry averages do not adequately account for the unique
qualifications, experience, and responsibilities required of HISA
personnel.

13. The National Horsemen's Benevolent and Protective Association.
The Authority received a comment from the Chief Executive Officer of
the National HBPA (the ``HBPA''). The letter ``must be read against the
backdrop of the HBPA's unrelenting mission (1) to prevent the passage
of the Horseracing Integrity and Safety Act by repeatedly testifying
against the proposed legislation during congressional hearings and (2)
to dismantle HISA via various lawsuits--a campaign that has spanned
five years and three Federal appellate courts and has resulted in
millions of dollars of expenditures that the industry has had to
shoulder.'' \30\ The HBPA continues to ignore the statutory text as it
questions mental health programs, medical and wellness initiatives and
other programs that are consistent with the text of the Act. The Act
provides that the Authority, subject to Commission oversight, shall
``exercise independent and exclusive national authority over (A) the
safety, welfare, and integrity of covered horses, covered persons, and
covered horseraces; and (B) all horseracing safety, performance, and
anti-doping and medication control matters for covered horses, covered
persons, and covered horseraces.'' 15 U.S.C. 3054(a)(2). See also, FTC,
Order Denying the National Horsemen's Benevolent and Protective
Association's Petition for Rulemaking Regarding No-Effect Thresholds
(December 19, 2025), <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/R407002-Commission-Order-re-NHBPA-petition.pdf">https://www.ftc.gov/system/files/ftc_gov/pdf/R407002-Commission-Order-re-NHBPA-petition.pdf</a>, at 13 (explaining that
the ``Authority's remit under the statute includes maintaining the
integrity of the sport, as well as the safety and welfare of covered
persons and covered horses'').
Much of the criticisms leveled at the Authority by the HBPA ignore
the many publicly available reports that are available on HIWU and
HISA's website. For example, the HIWU annual and quarterly reports
provide detailed information concerning the number of Sample Collection
Sessions. These details allow any observer to place whatever expense
inputs they wish from the budget to arrive at a cost per Sample
Collection Session. In addition, among other things, the detailed HIWU
reports set forth the (i) total number of Adverse Analytical Findings
nationally by State; (ii) the number and type of test by State and
racetrack; (iii) Adverse Analytical Findings by substance; (iv) the
number of investigative searches at racetracks and training centers.
The HBPA has also ignored the information and data that the Authority
makes regularly publicly available in its Metrics Reports.\31\

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 Proposed 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.

Endnotes

\1\ 15 U.S.C. Ch. 57A.
\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\ 16 CFR part 1 subpart U.
\6\ HISA, Proposed 2027 Budget Opens for Public Comment (July
17, 2026), <a href="https://hisaus.org/news/hisas-proposed-2027-budget-opens-for-public-comment">https://hisaus.org/news/hisas-proposed-2027-budget-opens-for-public-comment</a>.
\7\ HISA, Comments Received Regarding HISA 2027 Proposed Budget,
https://bphisaweb.wpengine.com/wp-content/

[[Page 57615]]

uploads/2026/07/2027-Budget-Comments_Redacted.pdf.
\8\ The Proposed Budget (net) increased by nearly $459,000 due
to a decrease in the total amount of credits (HIWU has taken over
sample collection at Delaware Park, and, therefore, they no longer
receive sample collection credits as originally contemplated in the
draft budget).
\9\ The amounts identified in Appendix 2 are applicable to
racetracks located in States where the State Racing Commission did
not elect to remit fees to cover the full amount of the HISA
Assessment.
\10\ The Proposed Budget (Appendix 3) is a compilation of the
following departmental budgets: Racetrack Safety (Appendix 4); Anti-
Doping and Medication Control (Appendix 5); HIWU (Appendix 6);
Veterinary Services (Appendix 7); Technology (Appendix 8); and
Administration (Appendix 9). The Authority is not contemplating the
procurement of any loans for 2027.
\11\ The relatively low fine collection rate reflects both the
timing of payment obligations, as fines are not due until
suspensions are served, and the assessment of significant fines and
suspensions against individuals who are not expected to return to
racing, reducing the likelihood of payment. That said, approximately
86% of all cases involving fines are either paid in full or are
actively being paid per a payment plan.
\12\ This number does not include personnel engaged in the
sample collection network.
\13\ HIWU, Annual Report 2025, <a href="https://downloads.ctfassets.net/6mwruzwftvzd/2m6awOaZGOMekfONAJroAr/6234c6592d6b980210d945243d791970/HIWU_Annual_Report_2025_040626.pdf">https://downloads.ctfassets.net/6mwruzwftvzd/2m6awOaZGOMekfONAJroAr/6234c6592d6b980210d945243d791970/HIWU_Annual_Report_2025_040626.pdf</a>.
\14\ Id.
\15\ Id.
\16\ The remaining $27,000 is for various software development
tools and video and graphics packages.
\17\ The 2025 True-Up summary is posted on the HISA website by
racetrack: <a href="https://hisaus.org/financial-documents/2025-true-up-summary-by-track">https://hisaus.org/financial-documents/2025-true-up-summary-by-track</a> and by State: <a href="https://hisaus.org/financial-documents/2025-true-up-summary-by-state">https://hisaus.org/financial-documents/2025-true-up-summary-by-state</a>.
\18\ All thirteen (13) comments are combined in Appendix 11.
Together with the other appendices, this is reproduced as a
supporting document on the docket for this publication at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
\19\ Past the Wire, About Us at Past the Wire, <a href="https://pastthewire.com/about-us/">https://pastthewire.com/about-us/</a>.
\20\ See Questions/Comments No.3; No. 9; No. 11; No. 18 (But
see, April 21, 2026 HISA Town Hall <a href="https://www.hisaus.org/resources/2026-annual-hisa-town-hall">https://www.hisaus.org/resources/2026-annual-hisa-town-hall</a>); No. 19 (But see, discussion of Interest
Expense (5480) in Section V.F); No. 20 (But see, April 21, 2026 HISA
Town Hall); No. 21 (But see, April 21, 2026 HISA Town Hall); No. 22;
No. 23; No. 24 (But see, Horseracing Integrity and Safety Authority,
Inc. Conflicts of Interest and Business Ethics Policy, <a href="https://bphisaweb.wpengine.com/wp-content/uploads/2023/10/HISA-Conflict-of-Interest-Policy-1.pdf">https://bphisaweb.wpengine.com/wp-content/uploads/2023/10/HISA-Conflict-of-Interest-Policy-1.pdf</a>); No. 25; No. 26 (But, HISA states that since
inception through July 15, 2026, HISA has issued $5,093,138 in fines
and $2,097,850 has been collected to date); No. 30 (But, HISA states
that when the amount of assessments collected exceeds actual
expenses, this excess is returned to the industry as part of the
annual True-Up process. This portion of the True-Up would be
credited against each State and/or track's assessment in the
following year); and No. 31 (But, HISA states that HISA's website
includes a page dedicated to comprehensive financial reports,
including copies of HISA's Form 990s, annual financial reports,
annual performance reports, independent audits, and more. HISA is
also compliant with the extensive financial reporting requirements
set forth in the Federal Trade Commission's Oversight Rule. In
addition to HISA's comprehensive written reports, HISA has hosted
two virtual town halls to detail HISA's budgeting process and
financial framework. The most recent town hall occurred in April
2026 and lasted more than two hours, with HISA's Chief Executive
Officer and Chief Financial Officer discussing topics such as
building and managing the budget, where funds are allocated and
spent, and how HISA's expenditures further the Act's safety and
integrity requirements. The presentation included a live question-
and-answer session in which HISA responded to every question
submitted, including numerous questions submitted by this commenter.
Later, HISA publicly provided a comprehensive list of all vendor
payments of more than $5,000 made between 2023 and 2025. Through
HISA's existing financial disclosures combined with the various
engagement opportunities, stakeholders have meaningful and regular
access to detailed financial information, such that the incremental
value of additional quarterly reporting would be outweighed by the
associated additional personnel and costs, which would ultimately
need to be funded through the industry's resources.).
\21\ Since the expenses are billed at-cost, the management fee
essentially represents the DFS profit.
\22\ These reports are available on HIWU's website at <a href="https://www.hiwu.org/about/reports-and-statistics">https://www.hiwu.org/about/reports-and-statistics</a>.
\23\ This report is available on HISA's website at <a href="https://bphisaweb.wpengine.com/wp-content/uploads/2026/05/2025-HISA-Audit.pdf">https://bphisaweb.wpengine.com/wp-content/uploads/2026/05/2025-HISA-Audit.pdf</a>.
\24\ The commenter also states ``. . . the entirety of Florida's
2026 HISA credit--every dollar of the $1,722,414--comes from sample-
collection reimbursements. Florida's two Thoroughbred tracks receive
no meaningful credit from the Racetrack Safety, Veterinary Services,
Technology, or Administration program areas that together account
for the majority of the $72.7 million Florida is being asked to help
fund.'' As noted above, credits are only provided as reimbursements
for expenses that HIWU/HISA would otherwise have had to pay for. The
only item in the Proposed Budget that is being paid for by the
Florida tracks is the cost of sample collection in that State.
\25\ The discrepancy is due to this commenter including all
credits (sample collection plus laboratory/research) in the
calculation of total ``2026 HISA Credits.'' In 2026, only California
and Pennsylvania were eligible for the Laboratory Credits since they
both absorb the cost of laboratory testing performed at their
laboratories in exchange for more than $5,000,000 in Laboratory
Credits.
\26\ The same was true in 2026 when the Florida racetracks
accounted for 12.56% of nationwide starts, yet received 15.15% of
nationwide Sample Collection Credits.
\27\ Many of the comments/inquiries that are irrelevant to the
Commission's evaluation of the proposed budget were addressed in the
April 21, 2026 HISA Town Hall (<a href="https://www.hisaus.org/resources/2026-annual-hisa-town-hall">https://www.hisaus.org/resources/2026-annual-hisa-town-hall</a>). It is also important to note the
following: (i) since 2025, the Authority's gross budget has
decreased by approximately 9.50%; (ii) New York has been a
beneficiary of the 100% starts assessment formula--its assessment
dropped over 3 million dollars from 2025 to 2026; (iii) if the
expected U.S. Supreme Court decision regarding the constitutionality
of HISA is rendered in the 2027 term, it is likely that the
injunction covering Louisiana and West Virginia will be dissolved,
resulting in a decrease in the per start fee across the country; and
(iv) the Authority would be happy to work with New York stakeholders
on State efforts that decrease the financial burden on New York
stakeholders.
\28\ See HISA Supplemental Response to 2026 Budget Comments
(November 13, 2025), <a href="https://www.regulations.gov/document/FTC-2025-0462-0017">https://www.regulations.gov/document/FTC-2025-0462-0017</a>.
\29\ For instance, this commenter claims that the Authority has
provided ``incremental benefit to the horseracing industry'' and
claims that the Authority has failed to conduct a review of its
organizational performance. The Authority's Annual Performance
Reports, Annual Metrics Report, and Quarterly Metrics Reports--all
of which are available on the Authority's website--detail the
Authority's efforts to deliver real, measurable value in advancing
the goals of the Act, including in areas involving equine safety and
welfare, regulatory consistency, public trust and transparency, and
the long-term sustainability of Thoroughbred racing. The commenter
also wrongly claims that the Authority failed to provide the
``results of [the] audit of its financial information'' or
historical financial information. This information, too, is publicly
available on the Authority's website. The Authority further refers
this commenter to Endnote 17.
\30\ Bloodhorse, HISA CEO Lazarus Addresses Criticisms (April
30, 2026), <a href="https://www.bloodhorse.com/horse-racing/articles/291533/hisa-ceo-lazarus-addresses-criticisms">https://www.bloodhorse.com/horse-racing/articles/291533/hisa-ceo-lazarus-addresses-criticisms</a>.
\31\ Many of the final 12 questions are not relevant to the
Commission's evaluation of the Proposed Budget. See Questions No. 1
(But see, Audits of the Authority available on its website); No. 2;
No. 3 (But see, the Act, the HIWU and HISA Metrics Reports, and
supra at Endnote 29); No. 7 (See, e.g., discussions of Laboratory
Testing (5925) in Section V.B and ADMC Collection Costs in Section
V.C); No. 8; No. 9 (But see, the Act); No. 10; and No. 12 (But see,
supra at Endnote 20). As for the questions that are arguably
relevant to the Commission's evaluation of the proposed 2027 Budget.
See Questions No. 4 (See discussion of Management Fees in Section
V.C); No. 5 (See, e.g., discussions of

[[Page 57616]]

Professional Services (5890) in Sections V.A through V.F); No. 6
(See, e.g., discussions of Laboratory Testing (5925) in Section V.B
and ADMC Collection Costs in Section V.C, responses to comments of
Churchill Downs Incorporated and New York Thoroughbred Breeders,
Inc. in Section VII); No. 11 (See 15 U.S.C. 3054(a)(2)).

Joel Christie,
Acting Secretary.
[FR Doc. 2026-18505 Filed 9-9-26; 8:45 am]
BILLING CODE 6750-01-P

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