HISA Assessment Methodology Rule Modification, 67915-67919 [2022-24609]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 87, Number 217 (Thursday, November 10, 2022)]
[Notices]
[Pages 67915-67919]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-24609]



[[Page 67915]]

=======================================================================
-----------------------------------------------------------------------

FEDERAL TRADE COMMISSION

[File No. P222100]


HISA Assessment Methodology Rule Modification

AGENCY: Federal Trade Commission.

ACTION: Notice of Horseracing Integrity and Safety Authority (HISA) 
proposed rule modification; request for public comment.

-----------------------------------------------------------------------

SUMMARY: The Horseracing Integrity and Safety Act of 2020 recognizes a 
self-regulatory nonprofit organization, the Horseracing Integrity and 
Safety Authority, which is charged with developing proposed rules on a 
variety of subjects. Those proposed rules and proposed rule 
modifications take effect only if approved by the Federal Trade 
Commission. The proposed rules and rule modifications must be published 
in the Federal Register for public comment. Thereafter, the Commission 
has 60 days from the date of publication to approve or disapprove the 
proposed rule or rule modification. The Authority submitted to the 
Commission a proposed rule modification on Assessment Methodology on 
October 20, 2022. The Office of the Secretary of the Commission 
determined that the proposal complied with the Commission's rule 
governing such submissions. This document publicizes the Authority's 
proposed rule modification's text and explanation, and it seeks public 
comment on whether the Commission should approve or disapprove the 
proposed rule modification.

DATES: If approved, the HISA proposed rule modification would take 
effect upon approval, and the Commission must approve or disapprove the 
proposed rule modification January 9, 2023. Comments must be received 
on or before November 25, 2022.

ADDRESSES: Interested parties may file a comment online or on paper by 
following the instructions in the Comment Submissions part of the 
SUPPLEMENTARY INFORMATION section below. Write ``HISA Assessment 
Methodology Rule Modification'' on your comment and file your comment 
online at https://www.regulations.gov under docket number FTC-2022-
0068. If you prefer to file your comment on paper, mail your comment to 
the following address: Federal Trade Commission, Office of the 
Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex B), 
Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Austin King (202-326-3166), Associate 
General Counsel for Rulemaking, Office of the General Counsel, Federal 
Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Self-Regulatory Organization's Statement of the Background, 
Purpose of, and Statutory Basis for, the Proposed Rule Modification
    a. Background and Purpose
    b. Statutory Basis
II. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Modification and Discussion of 
Alternatives
III. Self-Regulatory Organization's Summary of Comments Received 
Pre-Submission and Its Responses to Those Comments
IV. Legal Authority
V. Effective Date
VI. Request for Comments
VII. Comment and Submissions
VIII. Communications by Outside Parities to the Commissioners or 
Their Advisors
IX. Self-Regulatory Organization's Proposed Rule Language

Background

    The Horseracing Integrity and Safety Act of 2020 \1\ recognizes a 
self-regulatory nonprofit organization, the Horseracing Integrity and 
Safety Authority, which is charged with developing proposed rules on a 
variety of subjects. Those proposed rules and proposed rule 
modifications take effect only if approved by the Federal Trade 
Commission.\2\ The proposed rules and rule modifications must be 
published in the Federal Register for public comment.\3\ Thereafter, 
the Commission has 60 days from the date of publication to approve or 
disapprove the proposed rule or rule modification.\4\
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 3051 through 3060.
    \2\ 15 U.S.C. 3053(b)(2).
    \3\ 15 U.S.C. 3053(b)(1).
    \4\ 15 U.S.C. 3053(c)(1).
---------------------------------------------------------------------------

    Pursuant to Section 3053(a) of the Horseracing Integrity and Safety 
Act of 2020 and Commission Rule 1.142, notice is hereby given that, on 
October 20, 2022, the Horseracing Integrity and Safety Authority 
(``HISA'' or the ``Authority'') filed with the Federal Trade Commission 
an Enforcement proposed rule modification and supporting documentation 
as described in Items I, II, III, and IX below, which Items have been 
prepared by the Authority. The Office of the Secretary of the 
Commission determined that the filing complied with the Commission's 
rule governing such submissions.\5\ The Commission publishes this 
notice to solicit comments on the proposed rule modification from 
interested persons.
---------------------------------------------------------------------------

    \5\ 16 CFR 1.140 through 1.144; see also Fed. Trade Comm'n, 
Procedures for Submission of Rules Under the Horseracing Integrity 
and Safety Act, 86 FR 54819 (Oct. 5, 2021), https://www.federalregister.gov/documents/2021/10/05/2021-21306/procedures-for-submission-of-rules-under-the-horseracing-integrity-and-safety-act.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Background, Purpose 
of, and Statutory Basis for, the Proposed Rule Modification

a. Background and Purpose

    The Horseracing Integrity and Safety Act of 2020 (``Act'') 
recognizes that the establishment of a national set of uniform 
standards for racetrack safety and medication control will enhance the 
safety and integrity of horseracing. The Assessment Methodology rule is 
established in the Rule 8500 Series, the ``Assessment Methodology 
Rule'' filed by the Authority with the Commission earlier this year. 
The Rule 8500 Series was published in the Federal Register on February 
18, 2022,\6\ and subsequently approved by the Commission by Order dated 
April 1, 2022.\7\
---------------------------------------------------------------------------

    \6\ See Fed. Trade Comm'n, Notice of HISA Assessment Methodology 
Proposed Rule (``Notice''), 87 FR 9349 (Feb. 18, 2022), https://www.federalregister.gov/documents/2022/02/18/2022-03717/hisa-assessment-methodology-rule.
    \7\ See Fed. Trade Comm'n, Order Approving the Assessment 
Methodology Rule Proposed by the Horseracing Integrity & Safety 
Auth. (Apr. 1, 2022), https://www.ftc.gov/system/files/ftc_gov/pdf/Order%20re%20HISA%20Assessment%20Methodology.pdf.
---------------------------------------------------------------------------

    The Authority proposes to modify the Rule 8500 Series and to 
supplement it with additional provisions. The proposed rule 
modifications are described in detail in Item II of this Notice. The 
modifications are intended to address suggested changes and potential 
problems in interpreting and implementing the rule by amending dates 
specified in the rule, providing a True-Up Calculation based on actual 
rather than projected starts and purse starts, providing alternative 
calculation methods should a court enjoin the enforcement of Rule 8500 
based on the use of Projected Purse Starts, and addressing the scenario 
of a State racing commission's electing to remit fees after the initial 
election date to remit fees.
    The proposed modifications are consistent with the requirements of 
the Act in that they further the purpose of properly and equitably 
allocating the costs of the Authority's operations to the States or 
Covered Persons involved with Covered Horseraces, as mandated by 15 
U.S.C. 3052(f). The cost allocations ensure that the Authority is 
adequately funded and able to implement the provisions of the Act. 
Successful implementation of the Act affects Covered Persons, Covered 
Horses, and

[[Page 67916]]

Covered Horseraces by ensuring that the horseracing anti-doping and 
medication control program and the racetrack safety program operate to 
enhance the safety and integrity of horseracing and all its human and 
equine participants.
    The Act requires that the Authority provide to each State racing 
commission an estimated amount required from the State to ``(i) to fund 
the State's proportionate share of the horseracing anti-doping and 
medication control program and the racetrack safety program for the 
next calendar year; and (ii) to liquidate the State's proportionate 
share of any loan or funding shortfall in the current calendar year and 
any previous calendar year.'' \8\ A state's proportionate share is to 
be based on the annual budget of the Authority, ``the projected amount 
of covered racing starts for the year in each State'' and shall ``take 
into account other sources of Authority revenue.'' \9\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 3052(f)(1)(C)(i).
    \9\ Id. 3052(f)(1)(C)(ii).
---------------------------------------------------------------------------

    If a State racing commission does elect to remit fees pursuant to 
15 U.S.C. 3052(f)(2), then the Authority is required to ``not less 
frequently than monthly, calculate the applicable fee per racing start 
multiplied by the number of racing starts in the State during the 
preceding month.'' \10\ This calculation is required to be allocated 
equitably ``among covered persons involved with covered horseraces 
pursuant to such rules as the Authority may promulgate'' and collected 
``according to such rules as the Authority may promulgate.'' \11\
---------------------------------------------------------------------------

    \10\ Id. 3052(f)(3)(A).
    \11\ Id. 3052(f)(3)(B).
---------------------------------------------------------------------------

    With the review, input and ultimate approval of the Authority's 
Board of Directors, the proposed rule modification to the Rule 8500 
Series enhances the procedures for the Assessment Methodology Rule 
promulgated by the Authority.

b. Statutory Basis

    The Horseracing Integrity and Safety Act of 2020, 15 U.S.C. 3051 
through 3060.

II. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Enforcement Proposed Rule Modification and Discussion of 
Alternatives

    Rule 8520(a), as originally filed with the Commission, did not 
address the scenario of a State racing commission's electing to remit 
fees after the initial election date to remit fees. The Authority now 
proposes to add the following language to Rule 8520(a): ``If a State 
racing commission elects to remit fees pursuant to 15 U.S.C. 3052(f)(2) 
for any subsequent calendar year, the State racing commission shall 
notify the Authority in writing on or before 30 days from the receipt 
of the estimated amount provided to the State racing commission 
pursuant to Rule 8520(b). A State racing commission may be permitted to 
pay a portion of the estimated amount provided to the State racing 
commission pursuant to Rule 8520(b). In such case, the remaining 
portion of the estimated amount provided to the State racing commission 
pursuant to Rule 8520(b) shall be paid pursuant to Rule 8520(e).'' With 
this revision, Rule 8520(a) allows a State racing commission to elect 
to remit fees pursuant to 15 U.S.C. 3052(f)(2) for any year that it 
elects to do so. In addition, the revision permits a State racing 
commission to pay a portion of the estimated amount provided to the 
State racing commission pursuant to Rule 8520(b). These modifications 
afford State racing commissions broader flexibility in their payment 
options.
    As noted below, several commentators suggested that the dates set 
forth in the proposed modification were confusing. These comments were 
accepted by the Authority, and a change is proposed to Rule 8520(b) and 
Rule 8520(e)(4). Rule 8520(b) would now state: ``Not later than 
November 1, 2022, and not later than November 1 of each year thereafter 
. . . .'' Rule 8520(e)(4) would now state: ``Not later than December 
10, 2022, and not later than December 10 each year thereafter . . . .'' 
These changes provide greater clarity to the deadlines set forth in 
Assessment Methodology. New language was also added in Rule 8520(e) to 
account for partial payments under Rule 8520(a). These changes make 
clear that the payments made under Rule 8520(e) shall take into account 
any partial payments made by State racing commissions.
    Rule 8520(f) is a new subsection. The Act and the Assessment 
Methodology rule necessarily base the annual assessments on Projected 
Starts and Projected Purse Starts. This new subsection requires the 
Authority to ``true-up'' the projected start and purse start amounts 
with the actual numbers for these amounts. Rule 8520(f) requires the 
Authority to calculate the actual number of starts in covered 
horseraces for the previous calendar year and the actual total amount 
of purses for covered horseraces for the previous calendar year and 
apply such amounts to the calculations set forth in Rule 8520(c), 
instead of the projected amounts utilized in the calculation of the 
estimated amount provided to the State racing commission pursuant to 
Rule 8520(b) for the relevant calendar year (the ``True-Up 
Calculation''). The current year allocations are then equitably 
adjusted to account for any differences between the estimated amount 
provided to the state racing Commission pursuant to Rule 8520(b) for 
the previous year and the True-Up Calculation. The remainder of Rule 
8520(f) addresses a comment posted on https://www.regulations.gov 
during the notice-and-comment period for the Assessment Methodology 
rule. This new provision allows State racing commissions, horsemen's 
organizations, and Racetracks to object to the Equibase numbers. The 
Authority has been in discussion with industry stakeholders since April 
of this year concerning the True-Up Calculation, and the calculation is 
consistent with the goals and purposes of the Act. It is self-evident 
that the assessments should ultimately be based on actual numbers 
instead of projected numbers.
    Rule 8520(g) is a new subsection. Certain states and stakeholders 
have objected to the use of Projected Purse Starts in Assessment 
Methodology. If an injunction enjoins the enforcement of the Rule 8500 
Series based on the use of Projected Purse Starts in Assessment 
Methodology, Rule 8520(g) requires the applicable States, Racetrack,s 
and Covered Persons, as the case may be, to pay the allocation due from 
each State pursuant to 15 U.S.C. 3052(f)(1)(C) and 15 U.S.C. 
3052(f)(3)(A)-(C) proportionally by the applicable State's respective 
percentage of Projected Starts. Rule 8520(g) operates as a savings 
clause and ensures that Assessment Methodology will continue to operate 
during any court challenges.
    All the changes proposed in the Assessment Methodology proposed 
rule modification are intended to enhance the Rule 8500 Series in a 
manner that is consistent with the Act. The modifications have been 
crafted to address specific issues in the most precise manner possible, 
and no reasonable alternatives presented themselves for consideration. 
The proposed rules are carefully tailored to the unique character of 
horseracing and to the organizational structure of the Authority.

III. Self-Regulatory Organization's Summary of Comments Received Pre-
Submission and Its Responses to Those Comments

    As encouraged by the Commission's procedural rule, the Authority, 
before finalizing this submission to the Commission, made a draft of 
the

[[Page 67917]]

Assessment Methodology proposed rule modification available to the 
public for review and comment on the HISA website, https://www.hisausregs.org/. On September 19, 2022, and September 24, 2022, 
Authority representatives shared a draft of the proposed rule 
modification with interested stakeholders for input. Those interested 
stakeholders included: Racing Officials Accreditation Program; Racing 
Medication and Testing Consortium (Scientific Advisory Committee); 
Water Hay Oats Alliance; National Thoroughbred Racing Association; The 
Jockey Club; The Jockeys' Guild; Thoroughbred Racing Association; 
Arapahoe Park; Colonial Downs; Thoroughbred Owners of California; 
California Horse Racing Board; National Horsemen's Benevolent and 
Protective Association; Thoroughbred Owners and Breeders Association; 
Kentucky Thoroughbred Association; American Association of Equine 
Practitioners; American Veterinary Medical Association; Stronach Racing 
Group (5 thoroughbred racetracks); Churchill Downs (6 thoroughbred 
racetracks); Keeneland; and Del Mar. On September 19, 2022, the rule 
modification proposal was made available to the public for review and 
comment on the HISA website at https://www.hisaus.org/. Available on 
the docket at https://www.regulations.gov is Exhibit A, which includes 
copies of all comments received concerning the rule modification 
proposal.
    Comments on the Assessment Methodology proposed rule modification 
were received from seven groups in the horseracing industry: Racing 
Officials Accreditation Program, the American Association of Equine 
Practitioners, the Washington Horse Racing Commission, Oregon Racing 
Commission, Oklahoma Horse Racing Commission, American Veterinary 
Medical Association, and the National HBPA, Inc. The first four of 
these commenters had no specific suggested changes to the proposed 
modifications. The Oklahoma Commission and American Veterinary Medical 
Association both suggested that the retention in the rule of dates that 
had already occurred was confusing. As noted above, these suggestions 
were adopted. The remaining commenter, National HBPA, addressed a 
portion of Rule 8520(e) that had not been proposed to be modified. This 
commenter also requested that horsemen's organizations be permitted to 
object to the Equibase numbers. As noted above, this suggestion was 
adopted. And finally, this commenter suggested that Rule 8520(g) should 
be revised to establish a process to allocate an underpayment or 
overpayment. The Authority declined to make this change. No process is 
necessary. As set forth in the rule, if an injunction is reversed by a 
court of competent jurisdiction, the Authority shall adjust the 
allocation due in the current calendar year to account for the 
overpayment or underpayment created using the Alternative Calculation 
made during the time that the injunction was in force. This adjustment 
is simply a mathematical calculation.

IV. Legal Authority

    This rule modification is proposed by the Authority for approval or 
disapproval by the Commission under 15 U.S.C. 3053(c)(1).

V. Effective Date

    If approved by the Commission, this proposed rule modification will 
take effect immediately.

VI. Request for Comments

    Members of the public are invited to comment on the Authority's 
proposed rule modification. The Commission requests that factual data 
on which the comments are based be submitted with the comments. The 
supporting documentation referred to in the Authority's filing, as well 
as the written comments it received before submitting the proposed rule 
modification to the Commission, are available for public inspection at 
https://www.regulations.gov under docket number FTC-2022-0068.
    The Commission seeks comments that address the decisional criteria 
provided by the Act. The Act gives the Commission two criteria against 
which to measure proposed rules and rule modifications: ``The 
Commission shall approve a proposed rule or modification if the 
Commission finds that the proposed rule or modification is consistent 
with--(A) this chapter; and (B) applicable rules approved by the 
Commission.'' \12\ In other words, the Commission will evaluate the 
proposed rule modification for its consistency with the specific 
requirements, factors, standards, or considerations in the text of the 
Act as well as the Commission's procedural rule.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 3053(c)(2).
---------------------------------------------------------------------------

    Although the Commission must approve the proposed rule modification 
if the Commission finds that the proposed rule modification is 
consistent with the Act and the Commission's procedural rule, the 
Commission may consider broader questions about the health and safety 
of horses or the integrity of horseraces and wagering on horseraces in 
another context: ``The Commission may adopt an interim final rule, to 
take effect immediately, . . . if the Commission finds that such a rule 
is necessary to protect--(1) the health and safety of covered horses; 
or (2) the integrity of covered horseraces and wagering on those 
horseraces.'' \13\ The Commission may exercise its power to issue an 
interim final rule on its own initiative or in response to a petition 
from a member from the public. If members of the public wish to provide 
comments to the Commission that bear on protecting the health and 
safety of horses or the integrity of horseraces and wagering on 
horseraces but do not discuss whether the Authority's Enforcement 
proposed rule modification is consistent with the Act or the applicable 
rules, they should not submit a comment here. Instead, they are 
encouraged to submit a petition requesting that the Commission issue an 
interim final rule addressing the subject of interest. The petition 
must meet all the criteria established in the Rules of Practice (Part 
1, Subpart D); \14\ if it does, the petition will be published in the 
Federal Register for public comment. In particular, the petition for an 
interim final rule must ``identify the problem the requested action is 
intended to address and explain why the requested action is necessary 
to address the problem.'' \15\ As relevant here, the petition should 
provide sufficient information for the public to comment on, and for 
the Commission to find, that the requested interim final rule is 
``necessary to protect--(1) the health and safety of covered horses; or 
(2) the integrity of covered horseraces and wagering on those 
horseraces.'' \16\
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 3053(e).
    \14\ 16 CFR 1.31; see Fed. Trade Comm'n, Procedures for 
Responding to Petitions for Rulemaking, 86 FR 59851 (Oct. 29, 2021).
    \15\ 16 CFR 1.31(b)(3).
    \16\ 15 U.S.C. 3053(e).
---------------------------------------------------------------------------

VII. Comment Submissions

    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before November 25, 
2022. Write ``HISA Assessment Methodology Rule Modification'' on your 
comment. Your comment--including your name and your State--will be 
placed on the public record of this proceeding, including, to the 
extent practicable, on the website https://www.regulations.gov.
    Because of public health considerations and the Commission's 
heightened security screening, postal mail addressed to the Commission 
will be subject to delay. The Commission

[[Page 67918]]

strongly encourages that comments be submitted online through the 
https://www.regulations.gov website. To ensure that the Commission 
considers online comment, please follow the instructions on the web-
based form.
    If you file your comment on paper, write ``HISA Assessment 
Methodology Rule Modification'' on your comment and on the envelope, 
and mail your comment to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite 
CC-5610 (Annex B), Washington, DC 20580.
    Because your comment will be placed on the public record, you are 
solely responsible for making sure that your comment does not include 
any sensitive or confidential information. In particular, your comment 
should not contain sensitive personal information, such as your or 
anyone else's Social Security number; date of birth; driver's license 
number or other State identification number or foreign country 
equivalent; passport number; financial account number; or credit or 
debit card number. You are also solely responsible for making sure your 
comment does not include any sensitive health information, such as 
medical records or other individually identifiable health information. 
In addition, your comment should not include any ``[t]rade secret or 
any commercial or financial information which . . . is privileged or 
confidential''--as provided in Section 6(f) of the FTC Act, 15 U.S.C. 
46(f), and FTC Rule Sec.  4.10(a)(2), 16 CFR 4.10(a)(2)--including in 
particular competitively sensitive information such as costs, sales 
statistics, inventories, formulas, patterns, devices, manufacturing 
processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule Sec.  4.9(c), 16 CFR 
4.9(c). In particular, the written request for confidential treatment 
that accompanies the comment must include the factual and legal basis 
for the request and must identify the specific portions of the comment 
to be withheld from the public record. See FTC Rule Sec.  4.9(c). Your 
comment will be kept confidential only if the General Counsel grants 
your request in accordance with the law and the public interest. Once 
your comment has been posted publicly at https://www.regulations.gov--
as legally required by FTC Rule Sec.  4.9(b), 16 CFR 4.9(b)--we cannot 
redact or remove your comment, unless you submit a confidentiality 
request that meets the requirements for such treatment under FTC Rule 
Sec.  4.9(c), and the General Counsel grants that request.
    Visit the FTC website to read this document and the news release 
describing it. The FTC Act and other laws that the Commission 
administers permit the collection of public comments to consider and 
use in this proceeding as appropriate. The Commission will consider all 
timely and responsive public comments it receives on or before November 
25, 2022. For information on the Commission's privacy policy, including 
routine uses permitted by the Privacy Act, see https://www.ftc.gov/siteinformation/privacypolicy.

VIII. Communications by Outside Parties to the Commissioners or Their 
Advisors

    Written communications and summaries or transcripts of oral 
communications respecting the merits of this proceeding, from any 
outside party to any Commissioner or Commissioner's advisor, will be 
placed on the public record. See 16 CFR 1.26(b)(5).

IX. Self-Regulatory Organization's Proposed Rule Language

    The following language reflects the Assessment Methodology rule 
with the proposed modifications incorporated. A redline version that 
shows every way in which the previously approved Assessment Methodology 
rule would be modified by the proposed rule modification is available 
as Exhibit B on the docket at https://www.regulations.gov.
8500. Methodology for Determining Assessments
8510. Definitions
    For purposes of this Rule 8500 Series:
    (a) Annual Covered Racing Starts means, for the following calendar 
year, the sum of: (i) 50 percent of the number of Projected Starts; 
plus (ii) 50 percent of the number of Projected Purse Starts.
    (b) Covered Horseraces has the meaning set forth in 15 U.S.C. 
3051(5).
    (c) Covered Persons has the meaning set forth in 15 U.S.C. 3051(6).
    (d) Projected Starts means the number of starts in Covered 
Horseraces in the previous 12 months as reported by Equibase, after 
taking into consideration alterations in the racing calendar of the 
relevant State(s) for the following calendar year.
    (e) Projected Purse Starts means: (i) the total amount of purses 
for Covered Horseraces as reported by Equibase (not including the 
Breeders' Cup World Championships Races), after taking into 
consideration alterations in purses for the relevant State(s) for the 
following calendar year; divided by (ii) the Projected Starts for the 
following calendar year.
    (f) Racetrack has the meaning set forth in 15 U.S.C. 3051(15).
8520. Annual Calculation of Amounts Required
    (a) If a State racing commission elects to remit fees pursuant to 
15 U.S.C. 3052(f)(2), the State Racing Commission shall notify the 
Authority in writing on or before May 2, 2022 of its decision to elect 
to remit fees. If a State racing commission elects to remit fees 
pursuant to 15 U.S.C. 3052(f)(2) for any subsequent calendar year, the 
State racing commission shall notify the Authority in writing on or 
before 30 days from the receipt of the estimated amount provided to the 
State racing commission pursuant to Rule 8520(b). A State racing 
commission may be permitted to pay a portion of the estimated amount 
provided to the State racing commission pursuant to Rule 8520(b). In 
such case, the remaining portion of the estimated amount provided to 
the State racing commission pursuant to Rule 8520(b) shall be paid 
pursuant to Rule 8520(e).
    (b) Not later than November 1, 2022, and not later than November 1 
of each year thereafter, the Authority shall determine and provide to 
each State Racing Commission the estimated amount required from each 
State pursuant to the calculation set forth in Rule 8520(c) below.
    (c) Upon the approval of the budget for the following calendar year 
by the Board of the Authority, and after taking into account other 
sources of Authority revenue, the Authority shall allocate the 
calculation due from each State pursuant to 15 U.S.C. 3052(f)(1)(C)(i) 
proportionally by each State's respective percentage of the Annual 
Covered Racing Starts. The proportional calculation for each State's 
respective percentage of the Annual Covered Racing Starts shall be 
calculated as follows:
    (1) the total amount due from all States pursuant to 15 U.S.C. 
3052(f)(1)(C)(i) shall be divided by the Projected Starts of all 
Covered Horseraces; then
    (2) 50 percent of the quotient calculated in (c)(1) is multiplied 
by the quotient of
    (i) the relevant State's percentage of the total amount of purses 
for all covered horseraces as reported by Equibase (not including the 
Breeders' Cup World Championships Races), after taking into 
consideration alterations in

[[Page 67919]]

purses for the relevant State for the following calendar year; divided 
by
    (ii) the relevant State's percentage of the Projected Starts of all 
covered horseraces starts; then
    (3) the sum of (i) the product of the calculation in (c)(2) and 50 
percent of the quotient calculated in (c)(1) is multiplied by the 
Projected Starts in the applicable State. Provided however, that no 
State's allocation shall exceed 10 percent of the total amount of 
purses for covered horseraces as reported by Equibase in the State (not 
including the Breeders' Cup World Championships Races). All amounts in 
excess of the 10 percent maximum shall be allocated proportionally to 
all States that do not exceed the maximum, based on each State's 
respective percentage of the Annual Covered Racing Starts. (d) Pursuant 
to 15 U.S.C. 3052(f)(2)(B), a State racing commission that elects to 
remit fees shall remit fees on a monthly basis and each payment shall 
equal one-twelfth of the estimated annual amount required from the 
State for the following year. (e) If a State racing commission does not 
elect to remit fees pursuant to 15 U.S.C. 3052(f)(2) or has remitted a 
partial payment under Rule 8520(a):
    (1) The Authority shall on a monthly basis calculate and notify 
each Racetrack in the State of the applicable fee per racing start for 
the next month based upon the following calculations:
    (i) Calculate the amount due from the State as if the State had 
elected to remit fees pursuant to 15 U.S.C. 3052(f)(2) (after taking 
into account any partial payment under Rule 8520(a)) (the ``Annual 
Calculation'').
    (ii) Calculate the number of starts in covered horseraces in the 
previous twelve months as reported by Equibase (the ``Total Starts'').
    (iii) Calculate the number of starts in covered horseraces in the 
previous month as reported by Equibase (the ``Monthly Starts'').
    (iv) The applicable fee per racing start shall equal (i) the 
quotient of Monthly Starts divided by Total Starts; (ii) multiplied by 
the Annual Calculation.
    (2) The Authority shall on a monthly basis calculate and notify 
each Racetrack in the jurisdiction of the following calculations:
    (i) Multiply the number of starts in Covered Horseraces in the 
previous month by the applicable fee per racing start calculated 
pursuant to paragraph (e)(1)(iv) above.
    (ii) The calculation set forth in 15 U.S.C. 3052(f)(3)(A) shall be 
equal to the amount calculated pursuant to paragraph (e)(2)(i) (the 
``Assessment Calculation'').
    (3) The Authority shall allocate the monthly Assessment Calculation 
proportionally based on each Racetrack's proportionate share in the 
total purses in covered horseraces in the State over the next month and 
shall notify each Racetrack in the jurisdiction of the amount required 
from the Racetrack. Each Racetrack shall pay its share of the 
Assessment Calculation to the Authority within 30 days of the end of 
the monthly period.
    (4) Not later than December 10, 2022, and not later than December 
10 each year thereafter, each Racetrack in the State shall submit to 
the Authority its proposal for the allocation of the Assessment 
Calculation among covered persons involved with covered horseraces (the 
``Covered Persons Allocation''). On or before 30 days from the receipt 
of the Covered Persons Allocation from the Racetrack, the Authority 
shall determine whether the Covered Persons Allocation has been 
allocated equitably in accordance with 15 U.S.C. 3052(f)(3)(B) and if 
so, the Authority shall notify the Racetrack that the Covered Persons 
Allocation is approved. If a Racetrack fails to submit its proposed 
Covered Person Allocation in accordance with the deadlines set forth in 
this paragraph, or if the Authority has not approved the Covered 
Persons Allocation in accordance with this paragraph, the Authority 
shall determine the Covered Persons Allocation for the Racetrack. Upon 
the approval of or the determination by the Authority of the Covered 
Persons Allocation, the Racetrack shall collect the Covered Person 
Allocation from the covered persons involved with covered horseraces.
    (f) Not later than March 1 of each year, the Authority shall 
calculate the actual number of starts in Covered Horseraces as reported 
by Equibase for the previous calendar year and the actual total amount 
of purses for Covered Horseraces as reported by Equibase for the 
previous calendar year and apply such amounts to the calculations set 
forth in Rule 8520(c) instead of the projected amounts utilized in the 
calculation of the estimated amount provided to the State racing 
commission pursuant to Rule 8520(b) for the relevant calendar year (the 
``True-Up Calculation''). The allocation due from each State in the 
current year shall be equitably adjusted to account for any differences 
between the estimated amount provided to the State racing commission 
pursuant to Rule 8520(b) for the previous year and the True-Up 
Calculation. Any State racing commission, horsemen's organization, or 
Racetrack that believes that Equibase has not accurately reported the 
correct number of starts in covered horseraces for the previous 
calendar year or the total amount of purses for covered horseraces for 
the previous calendar year shall notify the Authority by January 31 of 
each year of the basis for objecting to the relevant Equibase numbers 
for the applicable State or Racetrack. The Authority shall review the 
information submitted and shall determine the actual number of starts 
in Covered Horseraces for the previous calendar year and the actual 
total amount of purses for Covered Horseraces for the previous calendar 
year.
    (g) In the event that any court of competent jurisdiction issues an 
injunction that enjoins the enforcement of the Rule 8500 Series based 
on the use of Projected Purse Starts in the Assessment Methodology 
Rule, the applicable States, Racetracks, and Covered Persons, as the 
case may be, shall pay the allocation due from each State pursuant to 
15 U.S.C. 3052(f)(1)(C) and 15 U.S.C. 3052(f)(3)(A)-(C) proportionally 
by the applicable State's respective percentage of Projected Starts 
(the ``Alternative Calculation''). If such injunction is reversed by a 
court of competent jurisdiction and such reversal is final and non-
appealable, the Authority shall adjust the allocation due from the 
applicable States, Racetracks, and Covered Persons, as the case may be, 
in the current calendar year to account for the overpayment or 
underpayment created by the use of the Alternative Calculation made 
during the time that the injunction was in force.
    (h) All notices required to be given to the Authority pursuant to 
the Act and these regulations shall be in writing and shall be mailed 
to 401 West Main Street, Suite 222, Lexington, Kentucky 40507 and 
emailed to [email protected].

    By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2022-24609 Filed 11-9-22; 8:45 am]
BILLING CODE 6750-01-P