Louisville, Ky. – A legal battle over how thoroughbred racing funds its safety and anti-doping programs played out in a federal courtroom Thursday, as attorneys for Churchill Downs Inc. And the Horseracing Integrity and Safety Authority (HISA) clashed over the legality of HISA’s assessment methodology. The hearing, held before Judge Benjamin Beaton in the U.S. District Court for the Western District of Kentucky, centered on a dispute that could significantly impact the financial future of both the sport and the regulator established to oversee it.
At the heart of the disagreement is how HISA calculates assessments – the fees tracks pay to fund the organization’s operations. HISA, created by Congress in 2020, is tasked with establishing uniform national safety and anti-doping rules for thoroughbred racing. The current legal challenge focuses on HISA’s funding model prior to 2026, which factored in both the number of racing starts and the total purse amounts awarded at each track. Churchill Downs Inc. Argues this approach exceeds the authority granted to HISA by Congress, contending that assessments should be based solely on the number of races run.
A Payment Dispute and Potential Racing Suspension
The dispute escalated in 2025 when Churchill Downs Inc. Refused to pay HISA assessments, even based on the starts-only methodology it had previously used to partially satisfy its obligations. This led HISA to issue an order on March 16, demanding approximately $5.27 million from the company within 10 days, or face the potential suspension of racing at four of its tracks: Churchill Downs, Turfway Park, Ellis Park, and Presque Isle Downs. The $5.27 million figure represents the amount due under the starts-only calculation, a concession HISA made in response to CDI’s objections.
During Thursday’s hearing, Pratik Shah, counsel for HISA, informed Judge Beaton that Churchill Downs Inc. Is the only thoroughbred track or track operator in the country that “paid zero in 2025,” according to reporting from BloodHorse. This assertion underscores the unique position CDI has taken in challenging HISA’s authority and funding structure.
Legal Arguments and the “Arbitrary and Capricious” Standard
The core of CDI’s argument rests on the belief that HISA’s original assessment methodology, which included purse levels, was not authorized by Congress. Attorneys for Churchill Downs Inc. Maintain that basing fees on purse amounts introduced an arbitrary element into the assessment process. Judge Beaton appeared to share some of these concerns, questioning whether the purses-included formula could withstand scrutiny under the “arbitrary and capricious” standard – a key principle in administrative law. This standard requires agency actions to be based on reasoned decision-making, supported by evidence, and not irrational or inconsistent.
HISA’s counsel, Shah, defended the initial approach, explaining that purse levels were initially considered given that higher-level races, like the prestigious $5 million Kentucky Derby at Churchill Downs, often require more extensive testing and carry greater legal risks, particularly in the event of a disqualification. Yet, Shah acknowledged that after several years of evaluation, the evidence did not ultimately support a purse-based funding mechanism. HISA has since shifted to a starts-only methodology, a change that benefits Kentucky tracks with revenue from historical horse racing gaming.
A Potential Resolution and Next Steps
The situation took a slight turn during the hearing when Shah proposed a compromise: he encouraged CDI’s attorney, Thomas H. Dupree Jr., to have the company pay the $5.27 million while HISA pledged to return the funds if the court ultimately rules in CDI’s favor. However, Brandon Kenney, CDI’s corporate counsel, questioned HISA’s finances, prompting a rebuke from HISA general counsel John Roach, who suggested Kenney lacked sufficient understanding of the regulator’s financial situation.
CDI has requested a stay of HISA’s payment order, and that request is now before the HISA board for consideration. Dupree indicated that CDI could also seek a temporary restraining order to halt enforcement of the payment demand if the board denies the stay. To obtain a TRO, CDI would need to demonstrate that it faces immediate and irreparable harm.
Judge Beaton concluded the hearing with a note of optimism, telling both sides to “preserve in touch” and expressing hope that “cooler heads will prevail.” The outcome of this legal challenge will have significant implications for the future of thoroughbred racing regulation and the financial stability of HISA. The HISA board’s decision on CDI’s request for a stay is the next key step in this ongoing dispute, and a resolution is anticipated in the coming weeks.
This is a developing story. Check back for updates as they become available.
