Enacted in 2020, the Horseracing Integrity and Safety Act (HISA) nationalized the regulation of the horseracing industry. HISA delegates power to the Horseracing Integrity and Safety Authority (Authority) — a private entity that operates under the Federal Trade Commission’s (FTC) oversight — to establish new rules, issue subpoenas, and enforce regulations with civil sanctions or obtain injunctive relief. In a lawsuit brought by horseracing associations against the Authority and FTC commissioners, the Fifth Circuit found the HISA unconstitutional because it “delegated government power to a private entity” without sufficient agency supervision.

The court sided with the horseracing associations and Texas Attorney General Ken Paxton who intervened to support the associations’ fight to prevent the Authority from regulating the industry. In the unanimous decision, the court reversed the district court’s ruling that rejected the private non-delegation challenge because the HISA’s structure “pushes the boundaries of public-private collaboration … and stays within current constitutional limitations … .” The district court acknowledged the Authority’s sweeping powers, but said it was balanced by the FTC’s equally sweeping oversight. The Fifth Circuit, instead, found that the Authority is not subordinate to the FTC since the Authority — not the FTC — has the final say over HISA programs. The court reiterated that “[f]or good reason, the Constitution vests federal power only in the three branches of the federal government. Congress defies this basic safeguard by vesting government power in a private entity not accountable to the people. That is what it has done in HISA.”

Since the decision, nine state AGs, led by the Louisiana AG, sent a letter to Senate Minority Leader Mitch McConnell, urging him not to pass legislation intended to fix HISA issues during the end-of-term session. The state AGs stated that the “HISA has already caused enormous upheaval in our States. A lame-duck session is not the time to slip new language into legislation amending HISA in response to [this decision]. Indeed, language that attempts anything other than repealing this ill-advised legislation will only make a bad situation worse.”