Is Compact Answer to Federal Regulation?

The threat of federal regulation has the racing industry looking at its options.

The National Racing Compact, which currently authorizes multi-jurisdictional licensing for the pari-mutuel industry, is being offered as an alternative to possible federal regulation of aspects of the horseracing industry.

The federal government’s recent interest in jockeys’ health and welfare, insurance for backstretch workers, and use of anabolic steroids in racehorses has industry officials thinking federal regulation isn’t a stretch. Wagering across state lines is governed by the federal Interstate Horseracing Act, but racing is regulated on the state level.

The issue was addressed March 26 during the Association of Racing Commissioners International business meeting in Austin, Texas. RCI president Ed Martin said RCI is at a “very big crossroads” and issued a call to action.

“As we go into our 75th year, I want you to give serious thought not only about our organization, but give real serious thought and reflection about the entire regulatory structure of racing,” Martin said. “I think you need to take a hard look at the National Racing Compact—it might be the ultimate answer.

“I don’t want to throw a bomb on the table, but we should think about this going into the next several months.”

Martin noted other industries with cross-jurisdictional issues employ federal interstate compacts to carry out business. The pari-mutuel industry, like it did when the NRC was created, would have to outline what the compact would govern, and the legislature in each member state would then have to approve it.

Wagering security and medication are at the top of the list. National Thoroughbred Racing Association president and chief executive officer Alex Waldrop predicted March 26 legislation eventually will be introduced in Congress, most likely involving the IHA. The NTRA opposes efforts to tinker with the IHA.

“There is an issue with federal jurisdiction over our industry,” Waldrop said. “A bill will be filed. It will involve the Interstate Horseracing Act. And we will oppose it.”

Waldrop said it’s critical all racing jurisdictions adopt the industry’s model rules on medication. If not, the industry will be “vulnerable” to federal intervention and a zero-tolerance mandate on use of even therapeutic drugs in racehorses.

Martin said the Canadian Pari-Mutuel Agency offers a model for the United States. The organization oversees wagering security, medication rules, and drug testing for all racing provinces, and is funded by a percentage of pari-mutuel handle throughout the country.

Such an assessment in the U.S. could eliminate ongoing funding issues that stymie regulation, Martin said. Funds would become available for equine drug research and testing, wagering security, and other areas.

“A significant number of members have talked privately, and there is interest in trying to solve the problem,” Martin said. “We need the support of the entire industry. Let’s take a hard look at the big picture. If you’ve ever dealt with the federal government on something, you don’t want that (in pari-mutuel racing).”

Joe Gorajec, executive director of the Indiana Horse Racing Commission, took the oath of office as RCI chairman March 26 and will serve in that capacity for the next year. Gorajec, a regulator for more than 20 years, said RCI members should consider using the organization’s “human resources.”

Gorajec noted the National Horsemen’s Benevolent and Protective Association uses the motto, “Horsemen helping horsemen.” He said RCI needs to be “Regulators helping regulators.”

RCI has made positive strides since its merger with the North American Pari-Mutuel Regulators Association, which was formed in the late 1990s when states defected from RCI. Since the merger, the national group of regulators has become more involved with other industry groups, including the Racing Medication and Testing Consortium.

The RMTC and RCI joined forces on numerous model rules, including the one for regulation of anabolic steroids.

“This is the best example of the industry solving problems that I’ve ever seen,” Waldrop said of the work that went into the model rule for regulation of steroids.