Administrative Rule of the Month - (Number of Flat Race Days Rule)

IBOP's Administrative Rule of the Month for October is a bit of a departure from the prior months. This particular administrative rule is only a proposed rule at this point, but a proposed rule that can have significant impact on thoroughbred breeding and racing in Indiana. Therefore, we've made this as-yet untitled administrative rule our Administrative Rule of the Month.

On September 14th, IHRC Executive Director Joe Gorajec sent an email to industry stakeholders outlining a proposed rule that would lower the statutory requirement for flat racing dates. As part of the slot legislation, the General Assembly established a 60 day minimum for flat racing per each track. The slot legislation also gave the IHRC the authority to create an administrative rule that could reduce the number of required flat race days. This proposed administrative rule, which would effectively lower the minimum number of race days to 50 per track, is copied below. In addition, IBOP's position statement, which was submitted to the IHRC on September 30th, is copied below as well. The IHRC is expected to consider this new administrative rule at their next scheduled meeting on October 12th.

Proposed Administrative Rule Sent To Industry Stakeholders

71 IAC 4-4-12
Authority: IC 4-31-3-9
Affected: IC 4-31
(a) Pursuant to IC 4-31-5-9(c), there shall be no fewer than one hundred thirty (130) and no more than one hundred sixty-five (165) total live racing days each calendar year at the racetrack designated in a permit holder’s permit, as follows:
(1) At least eighty (80) but not more than ninety (90) live racing days must be for standardbreds.
(2) At least fifty (50) but not more than seventy-five (75) live racing days must be for horses that are:
A. mounted by jockeys; and
B. run on a course without jumps or obstacles.
(b) The requirements of this rule are a continuing condition for maintaining the permit holder’s permit. However, the requirements do not apply if the commission determines that the permit holder is prevented from conducting live horse racing as a result of a natural disaster or another even over which the permit holder has no control.

IBOP Position Statement Sent To IHRC

"Please consider this communication as part of the Indiana Breeder & Owner Protection, Inc. (IBOP) position regarding the proposed, as-yet untitled, 71 IAC 4-4-12. Given that there was no detailed justification for the necessity of this rule; IBOP’s position is that it’s the responsibility of the Indiana Horse Racing Commission (IHRC) to provide such justification. This proposed administrative rule carries significant potential fiscal and economic impact to the State of Indiana and to the thoroughbred breeding and racing industry within Indiana. A clearly communicated position from the IHRC is paramount not only to provide clarity to the industry stakeholders, but also for those within the Legislature who established the current 60 day minimum requirement.

In other words, IBOP believes that the burden of proof as to the necessity of this rule should rest squarely upon the IHRC. At this point, we feel that this burden is far from being met. Within the IHRC’s own regulations, the purpose of the commission is clearly stated. For convenience, ‘71 IAC 2-1-1 Purpose’ is copied in its entirety below. We would like to fully understand, within the framework of the IHRC’s stated purposes, how 71 IAC 4-4-12 is “in the best interests of the public and the state of Indiana”? The industry needs to fully understand how 71 IAC 4-4-12 will encourage agriculture, the breeding industry, the training industry, tourism and employment opportunities in the State of Indiana.

71 IAC 2-1-1 Purpose
Authority: IC 4-31-3-9
Affected: IC 4-31-3
Sec. 1. (a) The commission, created by IC 4-31-3, is charged with implementing, administering, and enforcing the Act. It is the intent of the commission these rules be interpreted in the best interests of the public and the state of Indiana.
(b) Through these rules, the commission intends to encourage:
(1) agriculture;
(2) the horse breeding industry;
(3) the horse training industry;
(4) the breeding and racing of quality horses;
(5) tourism; and
(6) employment opportunities;
in the state of Indiana related to horse racing and to control and regulate pari-mutuel wagering in connection with that horse racing to ensure that pari-mutuel wagering on horse races in Indiana will be conducted with the highest of standards and the greatest level of integrity. (Indiana Horse Racing Commission; 71 IAC 2-1-1; emergency rule filed Feb 10, 1994, 9:20 a.m.: 17 IR 1124; readopted filed Oct 30, 2001, 11:50 a.m.: 25 IR 899; readopted filed Mar 23, 2007, 11:31 a.m.: 20070404-IR-071070030RFA; emergency rule filed Jul 19, 2010, 12:22 p.m.: 20100728-IR-071100480ERA)

Additionally, ‘71 IAC 11-1-7 Assignment of racing meetings’ provides guidance within the administrative code as to what factors the IHRC requires of itself in the evaluation of assigning race days. For your convenience, 71 IAC 11-1-7 is copied in its entirety below. To date, the only guidance on this proposed administrative rule was provided by Executive Director Gorajec’s September 14th email which stated, “The effect of this rule would lower the minimum on TB/QH days from 60 days to 50 days at each track.” Such guidance would suggest that an evaluation within the scope of 71 IAC 11-1-7 would already be available. Logic would also dictate that such an evaluation would be necessary to even suggest promulgating such an administrative rule.

IBOP’s position is that a narrative within the requirements of 71 IAC 11-1-7 should be provided to industry stakeholders prior to any consideration of this proposed administrative rule. Most importantly within that narrative, we would suggest that the burden of proof is also on the IHRC to determine how reduced flat racing dates would “maximize revenues to the state” as required by 71 IAC 11-1-7(7).

71 IAC 11-1-7 Assignment of racing meetings
Authority: IC 4-31-3-9
Affected: IC 4-31-5-9
Sec. 7. In determining the assignment of racing meetings and race dates to permit holders under IC 4-31-5-9, the commission shall consider factors relating to the economic and practical feasibility of conducting racing meetings at various tracks. Factors to be considered shall include, without limitation, the following:
(1) The types and dates of racing meetings being held elsewhere, both within and outside of Indiana.
(2) The effects that various types of pari-mutuel racing have on one another.
(3) The quality of horse racing provided at various tracks.
(4) Past dates.
(5) Past performance of the permit holder.
(6) Whether the permit holder has complied with all applicable laws and rules relating to horse racing.
(7) Whether the assignment will maximize revenues to the state.
(8) Whether the assignment will adversely affect the public health, welfare, and safety.
(9) Stability of dates.
(10) The stability of the racing circuit.
(Indiana Horse Racing Commission; 71 IAC 11-1-7; emergency rule filed Feb 10, 1994, 9:20 a.m.: 17 IR 1211; emergency rule filed Jan 27, 1995, 3:30 p.m.: 18 IR 1507; readopted filed Oct 30, 2001, 11:50 a.m.: 25 IR 899; readopted filed Mar 23, 2007, 11:31 a.m.: 20070404-IR-071070030RFA)

Furthermore, the very limited discussions on this topic have centered on recent declines in the North America thoroughbred foal crops and the effect on the number of available starters. Given the potential fiscal and economic implications of this proposed administrative rule, we would also suggest that the IHRC needs to clearly communicate how simply reducing race dates would increase the pool of available horses willing to race in Indiana.

The willingness of owners and trainers to actually race in Indiana versus other venues will always be a significant contributing factor to the number of available starters. With the limited number of stalls at the two tracks, reliance on the thoroughbred population in the region to ship to race is necessary. Willingness to race in Indiana brings into question a much broader review of thoroughbred racing in Indiana that should include the regulatory environment versus other states within the region as well as the restrictions placed upon the open racing program and the lack of flexibility within the IHRC’s so-called ‘Quality of Racing’ policies and their effect on field sizes.

We would also suggest that one of the greatest resources available to Indiana’s thoroughbred racing is the record Indiana-bred foal crops over the last two years. The two-year old crops of 2011 and 2012 have been record crops for Indiana with the expectation that the two-year olds of 2013 will set yet another record. Reducing race dates prior to any consideration as to how to best utilize this resource seems a bit premature. Race dates should be a part of a more detailed, comprehensive plan which does not seem to exist.

Technical Issues

From a technical perspective, IBOP’s position is that the Authority Line of the proposed rule should be modified. The Authority Line as required by Indiana’s Administrative Rules Drafting Manual is as follows:

“(a) The authority line must give the citation of each Indiana statute (enabling statute) that
expressly delegates rulemaking power to the agency to issue a rule on the subject matter of the
accompanying rule. If an agency has multiple sources of rulemaking power, the citation for each
source must be included.”

The current reference to IC 4-31-3-9 in the Authority Line would not meet this definition as there is no expressed authority within this particular citation for the proposed rule. What IC 4-31-3-9(1)(H) does provide the IHRC is the authority to promulgate “any other regulation that the commission determines is in the public interest in the conduct of recognized meetings and wagering on horse racing in Indiana.” Our view would be that creating an administrative rule that determines the number of race days in a recognized meeting is vastly different from an administrative rule regulating “the conduct of recognized meetings.” With that said, IC 4-31-5-9(c) provides the General Assembly’s expressed authority to create such an administrative rule.

Thank you,

Jim Hartman
IBOP Vice-President

CC: Chairman Diener
Vice-Chairman Schaefer
Commissioner Lauck
Commissioner Grimes
Commissioner Barclay"