Some Exchanges From HISA Town Hall on Budgeting

Officials from the Horseracing Integrity and Safety Authority as well as its enforcement arm, the Horseracing Integrity and Welfare Unit, conducted a virtual town hall meeting April 24 to address financial processes. One of the big-picture takeaways? The budget can vary from what the ultimate expenses will be quite a bit, both in terms of expenses and savings. A hot topic also included HISA's plans to shift its method to assess payments in 2026 from a methodology that gives equal weight to a projected number of starts and projected average purse to an assessment based solely on the percentage of annual racing starts. BloodHorse compiled below some interesting question-and-answer exchanges from Thursday's town hall. Question from owner Donald Johnson: How do you believe HISA would hold up under the scrutiny of DOGE? How much waste do you believe Elon Musk and his team would find with the push to downsize federal government? Is this oversight of racing better or worse off under state control? Answer from HISA chief executive officer Lisa Lazarus: We really believe that there would not be much of any waste discovered. We spend a lot of time making sure that when we make expenditures, we're making them for good reason and that they're consistent with our mission to reduce horse and jockey injuries and also promote integrity. We do that in a way that is able to take advantage of the fact that we now have a national program and there are efficiencies in having a national program. Then the other piece of it is that we operate pursuant to federal law. We are governed by a federal statute, and so we have to deliver the programs that Congress has mandated us to deliver. We have to operate those programs, and we try to operate them as efficiently and cost effectively as possible. (At other points in the discussion, Lazarus noted that HISA is a private entity—operating under the oversight of the Federal Trade Commission—and does not receive any federal funding.) Question from Peter Berube, vice president and general manager of Tampa Bay Downs: Why is there no 10% cap on yearly increases? Tampa's assessment is estimated to be $1.9 million more in 2026 versus 2024; at $2.8 million versus $900,000? Lazarus: First of all we haven't created the 2026 budget yet, and as I've explained, there are a lot of things in place that have potential impact on that. I don't expect that those numbers will be accurate. It's actually true that the per-start methodology will increase the cost to Tampa, but we will work with you to address that. Certainly Tampa is a racetrack that does a really good job and prioritizes safety. I'm confident we'll be able to work together to support Tampa. HISA chief financial officer Jim Gates Jr. provided more insight on why there's no 10% cap: That's the formula that has been approved by the board and by the FTC. If West Virginia and Louisiana are included, that will reduce that 2026 number considerably for Tampa. As Lisa said, we're certainly willing to and planning to work closely with Tampa to try to help as much we can. Berube: Will credits be increased for tracks receiving cost increases in 2026? Answer from HIWU executive director Ben Mosier: The credits, as I described earlier, are a calculation of HIWU's full management of the testing collection personnel at that particular state or track. So for 2026 we will take into consideration rising personnel costs and potentially other inflationary-type expenses, but I wouldn't anticipate those credits to increase drastically. But in general if the credits increase, that's also an increase of the overall budget as well. So we are always looking to keep those costs down. Question from Churchill Downs Inc. vice president of racing Gary Palmisano Jr.: In 2024 HISA published reports showing 229,000 starts with an overall budget of $77 million. In 2025 the number of starts under HISA's purview is reduced to 174,000—a difference of 55,000 starts, roughly 24%. However, the overall budget grew to $80 million. How can we reconcile a 25% reduction in starts to play into more costs? Furthermore, should other tracks cease racing or opt out of HISA, will the burden for those costs continue to just be dispersed across the tracks that remain? Lazarus: So first of all the 2024 budget wasn't $77 million, as we've explained. The budget was $57 million, I believe, but we've already shared those numbers. The reason why that's so important is that that is the real number. When we send the (initial) budget to the FTC, we're assuming we're not going to reach any agreement with racing commissions. So we assume the worst-case scenario. Once we apply the credits, which essentially are paying back to commissions and racetracks money that we would have spent servicing them but don't have to because they're using their existing staff that they're already paying to do those jobs, (costs are reduced). So for example, Churchill Downs gets a significant offset from us because of the work the Kentucky (regulator) does in terms of working with us. So they pay their vets and then HISA credits Churchill Downs, Keeneland, members in Kentucky as an example, with that amount. So the real number is the $57 million number. Then in terms of the reduction in racing starts, you're assuming I think with that question that our costs are driven purely by the number of horses we test. That's really not how it works. We have national programs that we have to build and deliver, no matter how many horses are involved in how many starts. The purses grew significantly. For example, whenever we have, like in 2023 when we had significant safety issues where we had to invest, obviously that has an impact and carries over in 2024. We aren't necessarily going to test less because we have less starts. We're going to do what's required to ensure the integrity of the sport. So that's really the answer to your question. I think I've said a few times that the 2025 budget is really just an estimate at this point, and we are optimistic that we're going to come in under budget. Gates: The starts don't perfectly correlate with spending. I'll just reiterate that while the number of starts came down significantly because West Virginia and Louisiana weren't in the mix, we only had about $5 million in the budget for them, so that came out. But then we had increases in the build-out of the investigative department at HIWU. We had some legal fee increases. And then we had expected increases in the cost of lab testing due to a change in the credits. And then we had some technology increases that even though that $5 million came out, we had another $9 million or so in increases in those other areas. These question and answer sessions have been lightly edited for clarity.