Jon Stettin
The Horseracing Integrity and Safety Authority has released its proposed 2027 budget and invited the public to comment before the proposal is sent to its Board of Directors and ultimately the Federal Trade Commission.
So I have some comments.
First, credit where credit is due. HISA’s proposed gross budget is going down. Total expenses are projected at $74.03 million, compared with $78.55 million in 2026. That is a reduction of approximately $4.52 million, or 5.75 percent. The amount assessed to the industry would fall from $77.17 million to $72.73 million. HIWU expenses are down. Laboratory testing is down. Legal expenses are down. Public relations spending is down. Anyone examining the budget honestly should acknowledge that.
A smaller number, however, is not automatically the right number.
The most important number in the entire forty page filing may not be the proposed $74.03 million budget. It may be the $24.77 million HISA reports spending during the first six months of 2026. HISA’s budget for that same six month period was $38.45 million. That means HISA spent approximately $13.68 million less than budgeted through June 30. Its actual expenses were more than 35 percent below the amount anticipated for the period. There are explanations contained in the filing. Some invoices had not yet arrived. Some states used assessment credits by paying certain expenses directly. Texas and Nebraska did not enter HISA jurisdiction as had been contemplated in the 2026 budget. California and Pennsylvania laboratories were not billing HISA directly because their costs were being applied against assessments. HIWU also came in below its maximum projections for sample collection, travel and testing. Those explanations are important. They do not make the questions disappear.
Before the industry celebrates a 5.75 percent reduction from HISA’s previous budget, it deserves to know whether the 2027 proposal is being reduced from what HISA actually costs to operate or merely from an earlier authorization that was substantially too high.
The industry should not be asked to compare the 2027 proposal exclusively with the approved 2026 budget. It should be allowed to compare the new proposal with what HISA now expects to spend in 2026. That projected year end figure is not clearly presented.
HISA should publish its projected actual 2026 expenses for every major category alongside the approved 2026 budget and the proposed 2027 budget. Without that third column, the public cannot determine whether HISA is genuinely cutting costs or simply reducing amounts it was never going to spend. The largest part of the budget remains the Anti Doping and Medication Control Program. HIWU is budgeted at $35.29 million, down from $37.23 million. Laboratory testing is budgeted at $17.86 million, down from $19.48 million. Adding adjudication services brings the total ADMC budget to approximately $53.57 million. That means almost 72 percent of HISA’s entire gross budget continues to be spent on anti doping enforcement, sample collection, testing and adjudication.
By comparison, the Racetrack Safety Program is budgeted at $3.22 million. Veterinary Services receives $1.03 million. Administration receives $7.23 million. Technology receives $8.98 million. For every dollar budgeted for Racetrack Safety, more than sixteen dollars are being budgeted for ADMC.
That may be justified. If it is, HISA should be able to demonstrate it with measurable results. How much testing is enough? What is the cost per sample? How many serious violations are being discovered? How many positives involve contamination, therapeutic medication or substances with no demonstrated effect on performance? What specific metric does HISA use to determine whether spending more than $53 million on this program is producing value proportional to its cost? Those are not anti HISA questions. They are the questions anyone responsible for paying the bill should ask.
The HIWU numbers deserve particular scrutiny. HIWU currently has 41 full time employees and shares seven additional employees with Drug Free Sport International. The 2027 budget contemplates 43 full time employees and ten shared employees. HIWU salaries alone are budgeted at $7.24 million. Payroll taxes and employee benefits add approximately $1.22 million. Technology adds another $1.70 million. Professional services are budgeted at $2.94 million. Sample collection costs are budgeted at $16.56 million. On top of those individually identified expenses, Drug Free Sport receives a management fee equal to eight percent of applicable ADMC expenses. That fee is budgeted at $2.67 million in 2027.
What exactly does the industry receive for the additional $2.67 million management fee that it is not already buying through salaries, shared employees, consultants, technology, insurance, collection costs and the other HIWU expense lines? The fee may have been part of the original agreement necessary to create and launch HIWU. The program is no longer being created or launched. It has been operating since May 2023. Has HISA attempted to renegotiate that percentage as startup costs diminish and the program matures? If not, why not?
Technology presents another familiar question.
HISA’s Technology Department is budgeted at $8.98 million. That is slightly below the 2026 department budget, but the internal movement matters. Technology salaries rise from $966,766 to $1.28 million. The direct technology line covering Palantir, Amazon Web Services and other vendors rises from $2.24 million to $2.32 million. The overall reduction is produced primarily by cutting outside professional services from $5.69 million to $5.03 million. HISA also acknowledges that its technology spending was already running above budget during the first half of 2026. It spent approximately $1.40 million against a six month budget of $1.12 million, an overage of 24.5 percent. HISA attributes that overage to Amazon Web Services costs being higher than anticipated. How were those costs underestimated? What controls have now been implemented? How much of the proposed technology budget is for continued development and how much is for ordinary recurring operation and maintenance?
HISA should also disclose how much is being paid individually to Palantir, Amazon Web Services and every other technology vendor receiving more than $100,000 annually. Grouping all of those relationships together under broad headings does not allow the people funding the program to evaluate whether they are receiving competitive value.
Legal spending is going down, but the industry is still being asked to provide $3 million for lawyers in 2027. General legal expenses are budgeted at $690,000, while lawsuit expenses are budgeted at $2.31 million. Through the first half of 2026, general legal expenses were already 21.9 percent above budget. HISA attributed the overage largely to outside counsel handling Racetrack Safety enforcement cases and stated that it anticipated hiring an in house enforcement lawyer to reduce those costs. The industry deserves to know how much of the proposed $3 million is being spent enforcing HISA’s rules, how much is being spent defending HISA’s constitutionality and jurisdiction, and how much is being spent on all other legal matters.
Uniformity was supposed to replace racing’s fragmented and expensive regulatory system. The industry should be told how much it is paying to operate that system and how much it is paying to defend it.
Then there is the debt.
HISA states that it does not intend to obtain any new loans in 2027. It also budgets nothing for repayment of existing loan principal. Nevertheless, interest expense rises from $123,456 to $312,601, an increase of more than 153 percent. The explanation is one of the more revealing disclosures in the filing. HISA says its 2026 budget contemplated that a portion of the interest on outstanding loans and its line of credit would be forgiven. After discussions with its external auditors, HISA determined that the entire amount of interest had to be accrued.
Who made the loans? What is the outstanding principal balance? What are the interest rates? What was the basis for believing that some interest would be forgiven? Who was expected to forgive it? When will the principal be repaid if the proposed 2027 budget contains no repayment?
The industry is being charged more than $300,000 in interest while receiving no disclosed plan in this budget for eliminating the debt producing it.
The fine income tells another interesting story. During the first six months of 2026, HISA levied $543,500 in ADMC fines. Based on that pace, it anticipates levying approximately $1.087 million in 2027. Yet it expects to collect only $180,000. HISA explains that fines are not due until suspensions have been served and that substantial fines have been assessed against individuals who are not expected to return to racing. That reduces the likelihood those fines will ever be paid. That raises a fair question about how penalties are publicly presented. Announcing a substantial fine creates the appearance of a meaningful financial sanction. If the person leaves racing and the fine is never collected, the number exists primarily on paper. HISA should disclose the total amount of ADMC fines currently outstanding, the amount actually collected since the program began and the amount it considers unlikely ever to be collected.
The Racetrack Safety budget also deserves attention because it moves in the opposite direction from the overall budget. Expenses rise from $2.97 million to $3.22 million. The primary reason is an increase in professional services from $878,000 to $1.25 million. Who is receiving that additional $373,138? What services are being added? Why are those services becoming more expensive while other areas are being reduced? Veterinary Services also rises from $936,551 to $1.03 million. That increase includes higher salaries, separately reported health insurance and retirement costs, and a new $49,000 line for memberships and subscriptions. That may all be reasonable. HISA should identify the memberships and subscriptions and explain their direct benefit to the Veterinary Services program. Public relations spending has been reduced from $270,000 to $192,000. Again, that is a legitimate reduction. It remains almost $200,000 paid for outside public relations services while HISA also employs internal Communications personnel through its Administration Department. What services are being purchased externally? Who is providing them? Why can those duties not be handled by the people already employed to communicate on HISA’s behalf?
There is also an apparent discrepancy in HISA’s description of its staffing.
The filing says HISA operates with “only 27 full time employees.” Its departmental descriptions, however, contemplate six employees in Racetrack Safety, three in Veterinary Services, fourteen in Technology and eleven in Administration. That adds up to 34 positions before counting HIWU. There may be a simple explanation. Some positions may be planned but not filled. Employees may be allocated between departments. The 27 may represent a different date or a narrower definition. Whatever the explanation, the figures should be reconciled. HISA should identify the number of current and budgeted employees in each department, the number of vacant positions and the total compensation associated with those positions.
The proposed budget also shows $16.24 million in expected industry credits. If those credits are fully used, the net cost to the industry would be approximately $56.49 million rather than the gross assessment of $72.73 million. That needs to be explained much more clearly.
Expenses paid directly by states, racetracks or other industry participants may still be legitimate costs of operating the national program. But presenting them within the gross HISA budget and then deducting them as credits makes it more difficult to identify how much money HISA will actually collect and spend itself.
HISA should provide three numbers in plain language: the gross cost of the entire system, the amount expected to be paid directly by industry participants through credits, and the amount HISA expects to collect and spend.
Florida carries the largest proposed state assessment at approximately $9.08 million. Pennsylvania is next at $8.32 million, followed by New York at $8.16 million and Kentucky at $7.91 million.
Gulfstream Park is assigned approximately $5.99 million. Parx is assigned $4.48 million. Laurel and Pimlico are assigned $3.67 million. Churchill Downs is assigned $3.07 million. Tampa Bay Downs is assigned $3.09 million. The statewide and racetrack allocations are based on covered starts, with the 2027 assessment amount working out to approximately $449.97 per start.
Louisiana and West Virginia are excluded because of the existing federal injunction. Texas is also outside the current calculation, although HISA is requesting advance authority to assess any Texas racetrack that conducts covered races during 2027. If Texas, Louisiana or West Virginia enters the system, HISA says assessments against existing jurisdictions would be reduced proportionately. That leads back to the central problem. HISA’s budget has repeatedly included assumptions about jurisdictions, testing volumes, sample collection expenses and vendor costs that did not materialize as projected. When those assumptions prove wrong and expenses come in below budget, what happens to the money? Will excess assessments be returned? Will they automatically reduce the following year’s assessment? Will they remain in HISA’s accounts? What mechanism ensures that favorable variances benefit the people who funded them?
HISA should commit to publishing quarterly budget versus actual reports throughout 2027. Those reports should disclose material variances, delayed expenses, credits, staffing levels, outstanding debt and revised full year projections. The industry should not have to wait for the next annual budget filing to discover that tens of millions of dollars were not spent as originally projected.
I have been critical of HISA when criticism was deserved, and I have supported the concept of uniform national regulation when it was the right thing to do. Those positions are not contradictory. Uniformity does not eliminate the need for scrutiny. Federal oversight does not replace accountability. A reduction in spending does not make every remaining expense reasonable.
HISA asked the public to comment on its proposed $74 million budget. The most responsible comment is not that every dollar is wasted. It is that every dollar must be explained.
The following are the questions I will submit during the public comment period.
HISA reports total expenses of $24.77 million through June 30, 2026, compared with a six month budget of $38.45 million. What is HISA’s current projection for actual full year 2026 expenses, and how was that projection used in developing the proposed 2027 budget?
How much of the $13.68 million favorable first half variance represents permanent savings, how much represents assessment credits, and how much represents expenses that were delayed and are expected to be incurred during the second half of 2026?
Will HISA provide projected 2026 year end actual expenses for every major category alongside the approved 2026 budget and proposed 2027 budget?
How much of the stated 5.75 percent budget reduction represents genuine operational savings, and how much results from Texas and Nebraska not entering HISA jurisdiction or Louisiana and West Virginia remaining outside the program?
Why are costs paid directly by states and industry participants included in HISA’s gross program budget before being shown separately as approximately $16.24 million in expected credits?
HISA states that it operates with 27 full time employees, while its departmental descriptions contemplate six Racetrack Safety employees, three Veterinary Services employees, fourteen Technology employees and eleven Administration employees. How does HISA reconcile those figures?
How many positions are currently filled and how many are budgeted within each HISA department?
HIWU currently has 41 full time employees and seven shared Drug Free Sport employees but is budgeting for 43 full time employees and ten shared employees. What additional positions are contemplated, what will they cost and why are they necessary?
What specific services does Drug Free Sport provide in exchange for its $2.67 million management fee that are not already covered through HIWU salaries, shared employees, professional services, technology, insurance, collection expenses and other individual budget lines?
Has HISA attempted to renegotiate Drug Free Sport’s eight percent management fee now that the ADMC program has moved beyond its startup period? If not, why not?
HIWU, laboratory testing and adjudication account for approximately $53.57 million, or more than 72 percent of the proposed gross budget. What measurable outcomes does HISA use to determine whether that level of spending is cost effective?
What is HISA’s projected actual full year 2026 expenditure for HIWU and laboratory testing?
What is the projected cost per sample in 2027, and how does it compare with the actual cost per sample in 2024, 2025 and 2026?
How much of the $8.98 million Technology Department budget represents development of new systems, and how much represents recurring operation and maintenance?
Why were Amazon Web Services expenses 24.5 percent over budget during the first half of 2026, and what controls have been implemented to prevent continued overruns?
How much is budgeted individually for Palantir, Amazon Web Services and every other technology vendor expected to receive more than $100,000 during 2027?
Of the $3 million budgeted for legal expenses, how much relates to defending HISA’s constitutionality or jurisdiction, how much relates to enforcement, and how much relates to other legal work?
Why does interest expense increase from $123,456 to $312,601 when HISA anticipates obtaining no new loans and budgets nothing for repayment of existing principal?
What are the current balances, lenders, interest rates and maturity dates of HISA’s outstanding loans and lines of credit?
What was the basis for HISA’s previous assumption that a portion of its interest obligation would be forgiven, and who was expected to forgive it?
What is HISA’s plan and timetable for repaying the outstanding principal?
HISA expects to levy approximately $1.087 million in ADMC fines during 2027 but collect only $180,000. What is the total amount of ADMC fines currently outstanding, how much has been collected since the program began and how much is considered unlikely ever to be collected?
Why does Racetrack Safety professional services spending increase from $878,000 to $1.25 million, and which vendors or contractors will receive the additional money?
What memberships and subscriptions are included in the new $49,000 Veterinary Services line, and what direct program benefit does each provide?
What services are included in the $192,000 outside public relations budget, who provides those services and why can they not be performed by HISA’s internal Communications personnel?
If actual 2027 expenses again fall materially below budget, will the excess assessments be returned, applied automatically against future assessments or retained by HISA?
Will HISA commit to publishing quarterly budget versus actual reports showing material variances, assessment credits, staffing levels, debt balances and revised full year projections?
HISA has invited the industry to look at the budget. We should take them up on it.
Related Coverage
Three Times and Counting: Is HISA Constitutional – The Enforcement Problem HISA Can’t Outsource Away – HISA’s Town Hall: Credit Where It’s Due, Accountability Where It Isn’t – A Seat at the HISA Table — And Questions That Deserve Answers
