HISA Threatens ‘Freeloading’ CDI with Cutting Off Ability to Race over Alleged Non-Payment of Assessment Fees

[Wandering Eyes]

by Dan Ross and T.D. Thornton

The Horse Racing Integrity and Safety Act (HISA) Authority on Wednesday summoned Churchill Downs Racetrack and its corporate parent, CDI, to a hearing before a panel of HISA board members in an attempt to secure payment of 2025 assessment fees that CDI has allegedly failed to submit on behalf of four racetracks the gaming corporation owns in Kentucky and Pennsylvania, including its flagship track in Louisville.

HISA wants Churchill to pay $2,408,501 in allegedly overdue 2025 fees (plus $93,998 in interest) to the Authority within 10 days of any order by the HISA board that results from the just-scheduled Mar. 11 hearing.

If not, according the Feb. 18 notice of hearing, “for each day the payment is late, Churchill [will] be prohibited from conducting any Covered Horserace, to be applied immediately on the next scheduled race day(s) at Churchill.”

Joe Drape of the New York Times first reported on Wednesday's new escalation of an ongoing dispute.

“CDI has not fulfilled Churchill's obligation to remit Churchill's and the horsemen's group share of allocated and assessed fees for calendar year 2025 in violation of HISA Rule 8100(i), HISA Rule 8520(e), and 15 U.S.C. § 3052(f)(3),” the hearing notice stated.

“In fact, CDI has refused to pay one cent of the 2025 HISA assessments allocated to Churchill, Turfway Park, Ellis Park, and Presque Isle Downs,” the notice continued.

“CDI even refuses to pay what it believes it owes for the CDI Racetracks under its own [assessment formula] that is based solely on racing starts. The CDI Racetracks stand alone among Covered Racetracks in refusing to make any HISA assessment payments whatsoever for 2025,” the hearing notice stated.

The notice was served Wednesday via email and certified mail to Gary Palmisano, Jr., CDI's executive director of racing.

TDN asked Palmisano via email if he'd like to comment or explain CDI's side of the story, but did not receive any reply prior to deadline for this article.

In addition to the alleged non-payment of 2025 fees, the notice of hearing details allegations that because of the above-referenced disagreement over assessment methodologies, CDI has also not paid all of the fees that HISA claims the corporation owes for 2023 and 2024, either.

“In 2023 and 2024, CDI calculated and paid full year assessments using its own assessment formula, based solely on the number of racing starts, in an amount less than would be due under the Original Methodology Rule,” the notice of hearing stated. “The total difference that remains currently due and owing from racetracks operated by CDI for the 2023 and 2024 Assessments is $1,708,475.”

But because that dispute over 2023 and 2024 assessments is still being litigated in federal court, “issuance of the Board panel's decision in the 2023/2024 Enforcement Action is currently stayed per the agreement of the parties,” the Authority's hearing notice explained.

In CDI's original complaint in that lawsuit, filed Dec. 4. 2024, CDI argued that the HISA Authority couldn't threaten “to prohibit them from conducting any horseraces until the fees due under the Authority's illegal assessment methodology are paid in full” because the HISA Act “does not empower the private Authority to adjudicate fee-collection disputes in-house.”

Rather, the lawsuit explained, the HISA Act “envisions that the Authority would exercise its statutory power to bring a civil action in federal court to compel payment of any legitimate fee assessments.”

The CDI complaint (initially joined by co-plaintiff the New York Racing Association, which settled with HISA a month after the litigation was filed), stated that HISA demanding fee payments and threatening penalization based on its own findings “would violate the Act and Article III of the Constitution, which require that such disputes between private entities be adjudicated in federal courts–not within administrative agencies and certainly not within private, unaccountable corporations.

“And it would also violate the fundamental due-process principle that no person may serve as a judge in his own case,” the CDI suit alleged.

Wednesday's hearing notice stated that, “In this enforcement action, the Authority is seeking payment only based on the CDI Formula endorsed by CDI in the CDI Lawsuit.

“If the United States District Court for the Western District of Kentucky concludes in the CDI Lawsuit that the Original Methodology Rule is valid, the Authority will initiate a separate enforcement action or civil action–if necessary–to collect the difference between the amount owed by CDI under the CDI Formula and the Original Methodology Rule for 2025.

“If the District Court adopts the legal arguments made by CDI and concludes that the Original Methodology Rule is invalid, then CDI would still owe the exact amount sought in this proceeding, i.e., the racing-starts only amount due under the 'Alternative Calculation' that CDI endorses and advocates,” the hearing notice stated.

“In other words, CDI owes at least the amount sought here regardless of the outcome of the pending litigation,” the hearing notice stated.

The hearing notice described CDI as allegedly “freeloading” by availing itself of HISA's services related to drug testing, results management from intra-articular injection violations, track surface inspections from the Racing Surfaces Testing Laboratory, and technology platforms that promote the safety of horses and jockeys.

Despite CDI allegedly not paying into the regulatory system, “the CDI Racetracks continue to receive millions of dollars in services from the Authority,” the hearing notice stated.

“CDI promotes the benefits of HISA with its investors while at the same time failing to pay its fair share–or any share at all,” the notice of hearing stated.

The Mar. 11 board hearing will be chaired by Joe De Francis. Bill Thomason and Terri Mazur will also adjudicate on that panel.

CDI may file a pre-hearing brief setting forth any objections to the enforcement action by Feb. 27, and HISA's enforcement counsel may file a response by Mar. 6.

The post HISA Threatens ‘Freeloading’ CDI with Cutting Off Ability to Race over Alleged Non-Payment of Assessment Fees appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

View the full article