Who Built This System, Who Pays For It, and Who Gets a Pass
If you want to find the truth, follow the money. Right now, the money isn’t just moving — it’s being used as a weapon.
On March 16, a HISA board panel issued what amounts to a pay-or-die order to Churchill Downs Inc. The demand: clear over $5 million in back fees by March 26, or the simulcast signal goes dark. No out-of-state betting. No national wagering pools. Just a kill switch, deployed with the Kentucky Derby a matter of weeks away.
HISA’s public messaging has been consistent. Lisa Lazarus says HISA is “duty-bound to treat all constituents the same.” The 37 other tracks are paying. CDI is freeloading. The math is simple.
Except the math isn’t simple. And the more you look at HISA’s actual books, the more you realize that “fairness” is a word this organization only uses when it’s holding someone else’s wallet.
The Lender Class vs. the Racetrack ATM
When HISA needed to keep the lights on in its startup years, it didn’t go to a bank. It went to the Breeders’ Cup and The Jockey Club. According to HISA CEO Lisa Lazarus, both organizations — along with the NTRA — provided what she described as “pretty much no interest” loans to cover short-term operational costs. Private entities. The very organizations HISA was created to regulate. Funding the regulator.
That is not a conspiracy theory. That is what HISA’s own CEO said publicly in 2023.
Now look at HISA’s budget documents sitting before the FTC. Ask a simple question: where is the loan repayment line? If those loans are still on the books and repayment isn’t a documented budget priority, that is a question every track being assessed millions in fees has a right to ask. When a regulator owes money to the entities it oversees — at no interest, with no public repayment schedule — you are not looking at a loan. You are looking at influence. And in any other regulated industry in America, that arrangement would trigger serious scrutiny.
If you owe someone millions and you aren’t paying them back in cash, you’re paying them back in something else. In regulatory circles, they have a word for that.
Meanwhile, HISA is publicly shaming CDI for disputing $5 million while the funding relationships that built this organization remain largely unexamined by the trade press. That’s not a coincidence. It’s a feature of how power operates in this industry.
The ‘Starts-Only’ Shell Game
For years, the argument against HISA’s purse-weighted fee formula was straightforward: it penalized success. It treated high-purse tracks as a personal ATM while small tracks caught a relative break. CDI and NYRA sued. Smaller horsemen’s groups fought from the other direction. HISA eventually moved to a starts-only formula for 2026 — an acknowledgment, however grudging, that the original methodology was broken.
But here is what HISA did next. For the 2025 enforcement action against CDI, they demanded payment calculated under the starts-only formula — the very formula CDI had endorsed in its own lawsuit as the correct legal standard. HISA’s position: pay us under your formula, and we’ll still pursue the larger purse-based amount if we win in court. It is tactically clever. It is also a move designed to strip CDI of the legal high ground it has been building, forcing partial payment that could be construed as acceptance of HISA’s jurisdiction to adjudicate the dispute internally — the exact constitutional question CDI’s lawsuit raises.
The small tracks, meanwhile, got left holding the bill. Under the starts-only formula, Washington state’s HISA assessment was projected to increase by nearly 90 percent. Emerald Downs — a track that averages close to 3,500 fans per live race day, operates a clean facility, and actually brings people to the sport — would see its bill more than double. They don’t have Churchill’s handle. They don’t have the gaming revenue. They just have the fee for a learning curve that HISA is still running on the industry’s dime.
Who Gets a Pass?
The Breeders’ Cup runs two days of racing per year. Fourteen Grade 1 Championship races. A handful of undercard races. Roughly 200 total starts across both days at the host track. Under the starts-only formula now in effect for 2026, Breeders’ Cup Limited’s HISA assessment reflects those starts — and only those starts.
At the per-start rate in effect for 2025, that math produces a HISA contribution that is a fraction of what CDI pays for a single mid-level meet at Turfway Park. The Breeders’ Cup distributes more than $34 million in purses over two days, generates over $180 million in wagering handle, and operates as a 501(c)(6) sitting on substantial financial reserves — reserves that Past The Wire has documented in prior reporting. Its reputational and commercial value depends entirely on the integrity infrastructure HISA is supposed to provide. And its proportional contribution to that infrastructure, under the current formula, is negligible, unless one counts the loans.
Breeders’ Cup chairwoman Barbara Banke and president Drew Fleming signed a joint public statement in 2023 declaring HISA “common sense” and calling on the industry to rally behind the authority. They were right that uniform integrity standards matter. But it’s a more complicated message when the organization signing it helped fund the regulator at startup, pays a structurally minimal assessment, and faces no enforcement threat while CDI stares down a signal blackout.
HISA is publicly shaming CDI for disputing $5 million. The funding relationships that built this organization remain largely unexamined.
The Enforcement Arithmetic
HISA’s proposed 2026 budget exceeds $80 million. Administrative expenses alone have grown from $29 million in 2023 to over $41 million in the current proposal — a 41 percent increase in three years. There is a $3 million legal fund in that budget. A legal fund whose purpose, in part and practice, has been to litigate against the very tracks funding the operation.
What has the enforcement apparatus produced? There have been medication cases. There has been testing. The Churchill fatality rate improved meaningfully in 2024 when HISA and CDI were cooperating — and Lazarus acknowledged it moved in the wrong direction again in 2025, the year CDI disengaged. That detail matters and deserves credit. But the industry was promised intelligence-based enforcement and systemic reform. What it got was a regulatory engine that spends millions on professional services and consulting while the per-start fee has climbed from $285 in 2023 to $462 in 2025 and is still rising. Small tracks are hemorrhaging. Fields are shrinking. And the budget keeps growing.
The Bottom Line
Is CDI being difficult? Yes. They are a publicly traded corporation with the legal resources to fight, and they have chosen to use them. They paid nothing in 2025 while consuming over a million dollars in HISA drug testing services and track safety inspections. HISA’s “freeloading” label isn’t wrong on the facts.
But CDI is also the only entity in this sport with pockets deep enough and lawyers sharp enough to challenge a regulatory structure that was designed by the people it was supposed to regulate, funded at startup by those same people, and enforced with a fee formula that has shifted and morphed under litigation pressure — while the signal-kill threat has been the hammer from day one.
Blocking a track from simulcasting while an active federal lawsuit challenges the legality of the underlying fee structure is not standard regulatory enforcement. It is coercive pressure designed to force settlement before the court can rule. The March 19 hearing in Louisville is the one to watch. If CDI gets any injunctive relief, that changes the entire calculus. If they don’t, they will almost certainly pay before the Derby signal is at risk — because however principled the legal fight, they are not going to blow up the most commercially significant day in American racing over $2.4 million.
But the payment, if it comes, will not resolve the larger question. Who built this system? Who funded it? Who benefits most from the integrity imprimatur it provides? And who is actually paying for it?
Those questions deserve the same scrutiny HISA reserves for the people writing the checks it demands.
Pay Me:
