Horseracing Integrity and Safety Authority (HISA) Proposed 2024 Budget, 77582-77587 [2023-24939]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 88, Number 217 (Monday, November 13, 2023)]
[Notices]
[Pages 77582-77587]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-24939]


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FEDERAL TRADE COMMISSION

[File No. P222100]


Horseracing Integrity and Safety Authority (HISA) Proposed 2024 
Budget

AGENCY: Federal Trade Commission.

ACTION: Notice of publication of Horseracing Integrity and Safety 
Authority 2024 proposed budget; request for public comment.

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SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'') 
publishes the 2024 proposed budget of the Horseracing Integrity and 
Safety Authority and seeks public comment on whether the Commission 
should approve, disapprove, or modify the proposed budget.

DATES: Comments must be filed on or before November 27, 2023.

ADDRESSES: Interested parties may file a comment online or on paper by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section. Write ``HISA 2024 Budget, Matter No. 
P222100'' on your comment and file it online at https://www.regulations.gov by following the instructions on the web-based 
form. If you prefer to file your

[[Page 77583]]

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 H), Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: John H. Seesel (202-326-2702), 
Associate General Counsel, Office of the General Counsel, Federal Trade 
Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580.

SUPPLEMENTARY INFORMATION: The Horseracing Integrity and Safety Act,\1\ 
enacted on December 27, 2020,\2\ and amended on December 29, 2022,\3\ 
directs the Federal Trade Commission to oversee the activities of a 
private, self-regulatory organization called the Horseracing Integrity 
and Safety Authority (``HISA'' or the ``Authority''). In March 2023, 
the Commission issued rules setting forth the procedure whereby the 
Commission approves, disapproves, or modifies the Authority's proposed 
annual budget.\4\ Under these rules, the Authority must first publish a 
proposed budget on its own website and invite public comments. See 16 
CFR 1.150(b). Thereafter, the Authority must forward the budget to the 
Commission, along with any public comments received and an assessment 
of those comments. Id. The Authority's submission must include (a) a 
statement of the vote by the Authority's Board of Directors approving 
the proposed budget; (b) information about revenues, including how fees 
are calculated and apportioned; (c) information about expenditures, 
broken down by program area, e.g., the racetrack safety program, the 
anti-doping and medication control program, etc.; (d) sufficient 
information about individual line items for the Authority's Board of 
Directors to exercise their fiduciary duty of care; and (e) information 
comparing actual revenues and expenses against the approved budget and 
explaining variances of greater than 10 percent. 16 CFR 1.150(c).
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    \1\ Codified at 15 U.S.C. 3051 through 3060.
    \2\ Public Law 116-260, 134 Stat. 1182, 3252 (Dec. 27, 2020).
    \3\ Public Law 117-328, 136 Stat. 4459, 5231 (Dec. 29, 2022).
    \4\ 88 FR 18034 (Mar. 23, 2023); see 16 CFR 1.150 1through 
1.152.
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    After the Authority submits its proposed budget and supporting 
materials to the Commission, the Commission must determine whether 
``the proposed budget contains sufficient information for the members 
of the Board of Directors of the Authority to exercise their fiduciary 
duty of care,'' 16 CFR 1.150(d), and whether the submission otherwise 
comports with the submission requirements of the Commission's rules. 
Id.; see 16 CFR 1.143. Once the Commission makes that determination, it 
publishes the Authority's proposed budget in the Federal Register and 
invites public comment for a period of 14 days. Id. After taking into 
consideration the comments submitted, the Commission either approves or 
disapproves the budget. 16 CFR 1.151(a).\5\ The Commission will approve 
the proposed budget if ``the Commission determines that, on balance, 
the proposed budget serves the goals of the Horseracing Integrity and 
Safety Act in a prudent and cost-effective manner, utilizing 
commercially reasonable terms with all outside vendors, and that its 
anticipated revenues are sufficient to meet its anticipated 
expenditures.'' 16 CFR 1.151(c). The Commission may also modify the 
amount of any line item. 16 CFR 1.151(d).
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    \5\ 16 CFR 1.151(a) provides that ``[t]he Commission will vote 
on the Authority's proposed budget no later than November 1.'' 
Pursuant to 16 CFR 4.3(b)(2), the Commission hereby extends the 
voting deadline to December 1, 2023, to allow the Commission 
sufficient time to consider any comments filed in response to this 
Notice.
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    On September 1, 2023, the Authority forwarded to the Commission a 
Notice of Filing of HISA Budget, together with appendices furnishing 
detailed information pertinent to its 2024 budget proposal (as required 
by 16 CFR 1.150(c)). The Notice of Filing of HISA Budget is reproduced 
below. The appendices to which it refers have been collected and 
reproduced as a supporting document on the docket for this publication 
at https://www.regulations.gov.
    Based upon these submissions and additional information the 
Authority has provided to the Commission, the Commission concludes that 
the Authority's proposed 2024 budget ``contains sufficient information 
for the members of the Board of Directors of the Authority to exercise 
their fiduciary duty of care.'' 16 CFR 1.150(d). The Authority's 
submission also complies with the filing procedures set forth in 16 CFR 
1.143. The Commission therefore issues this document and invites 
comments from the public on the Authority's 2024 budget. Comments 
should address the decisional criteria set forth in 16 CFR 1.151(c) and 
whether any line items should be modified. See 16 CFR 1.151(e).
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before November 27, 
2023. Write ``HISA 2024 Budget, Matter No. P222100'' on your comment. 
Your comment--including your name and your state--will be placed on the 
public record of this proceeding, including the https://www.regulations.gov website.
    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we strongly encourage you 
to submit your comments online. To make sure the Commission considers 
your online comment, you must file it at https://www.regulations.gov, 
by following the instructions on the web-based form.
    If you file your comment on paper, write ``HISA 2024 Budget, Matter 
No. P222100'' 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 H), 
Washington, DC 20580. If possible, please submit your paper comment to 
the Commission by overnight service.
    Because your comment will be placed on the publicly accessible 
website at https://www.regulations.gov, you are solely responsible for 
making sure your comment does not include any sensitive or confidential 
information. In particular, your comment should not include any 
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 ``any trade secret or any commercial or 
financial information . . . which is privileged or confidential.'' 15 
U.S.C. 46(f); see 16 CFR 4.10(a)(2). Your comment should not include 
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 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 16 CFR 4.9(c). Your

[[Page 77584]]

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 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 16 CFR 4.9(c), and the General 
Counsel grants that request.
    Visit the FTC website to read this document. 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 27, 2023. For information on the 
Commission's privacy policy, including routine uses permitted by the 
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.
    The text that follows is the Notice of Filing of HISA Budget that 
the Authority submitted to the Commission. The appendices to which it 
refers have been collected and reproduced as a supporting document on 
the docket for this publication at https://www.regulations.gov.

Notice of Filing of HISA Budget

    Pursuant to the Horseracing Integrity and Safety Act of 2020 \6\ 
(the ``Act'') and the Federal Trade Commission's (the ``Commission'') 
Procedures for Oversight of the Horseracing Integrity and Safety 
Authority's Annual Budget,\7\ notice is hereby given that on September 
1, 2023, the Horseracing Integrity and Safety Authority (``HISA'' or 
the ``Authority'') filed with the Commission the Authority's proposed 
2024 budget. This Notice of Filing of HISA Budget (the ``Notice'') 
provides the contents of the submission as set forth in 16 CFR part 1 
subpart U.
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    \6\ 15 U.S.C. 3051 through 3060.
    \7\ 16 CFR part 1 subpart U.
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    I. Information Concerning Rule 1.150(b). The Authority's proposed 
2024 budget was posted on the HISA website (hisaus.org) on August 17, 
2023. The Authority did not receive any comments regarding the budget.
    II. Information Concerning Rule 1.150(b)(1). The Authority's 2024 
budget was approved by the Authority's Board of Directors by a vote of 
8 to 0 and therefore satisfies the requirements of 15 U.S.C. 
3052(f)(1)(C)(iii).
    III. Information Concerning Rule 1.150(b)(2). Using the Assessment 
Methodology Rule approved by the Commission, the Authority calculated 
the following:
     2024 Assessments by State (attached as Appendix 6).
     2024 Assessments by Track (attached as Appendix 7).
    Appendix 6 and Appendix 7 display the estimated amount required 
from each state racing commission as calculated under the Assessment 
Methodology Rule.
    The 2024 HISA Budget includes the following revenue line items:
     Racetrack Safety Fine Income--this consists of fines 
levied for violations of Racetrack Safety rules.
     ADMC Fine Income--this consists of fines paid for 
violations of the equine medication rules.
     Lab Test Income--this consists of the money paid to HISA 
to cover the cost of B Sample testing, claimed horse testing, and 
clearance testing.
     Other Revenue--this consists of payments made by certain 
racetracks to reimburse HISA for paying for the cost of Racetrack 
Safety rules compliance (there is an offsetting expense).
     In-Kind Contributions--this consists of the value of in-
kind contributions received (there is an offsetting expense).
    Please note that no loans are contemplated to be procured by HISA 
in 2024.
    IV. Information Concerning Rule 1.150(b)(3) & (b)(4). The 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 2024 budget allows the 
Authority to implement the horseracing anti-doping and medication 
control program and the racetrack safety program for Covered Horses, 
Covered Persons and Covered Horseraces. Pursuant to the Authority's 
Conflict of Interest Policy, ``HISA Representatives involved in 
procurement have a special responsibility to adhere to principles of 
fair competition in the purchase of products and services by selecting 
vendors based exclusively on standard commercial considerations, such 
as quality, cost, availability, service and reputation, and not on the 
receipt of special favors.'' In addition, the Conflict of Interest 
Policy requires:
     Transactions to be supported by appropriate documentation;
     No entry be made in our books and records that 
intentionally hides or disguises the nature of any transaction or of 
any of our liabilities, or misclassifies any transactions as to 
accounts or accounting periods;
     HISA Representatives comply with our system of internal 
controls; and
     No cash or other assets be maintained for any purpose in 
any unrecorded or ``off-the-books'' fund.
    In addition, the Conflict of Interest Policy requires that:
     No HISA Representative may take or authorize any action 
that would cause our financial records or financial disclosures to fail 
to comply with generally accepted accounting principles or other 
applicable laws, rules, and regulations; and
     All HISA Representatives must cooperate fully with our 
finance staff, as well as our independent public accountants and legal 
counsel, and respond to their questions with candor and provide them 
with complete and accurate information to help ensure that our records 
are accurate and complete.
    Any HISA Representative who becomes aware of any departure from 
these standards has a responsibility to report his or her knowledge 
promptly to the CEO or Chair of the Board.
    The 2024 HISA Summary budget (Appendix 1) is a compilation of the 
following departmental budgets: Racetrack Safety (Appendix 2); Anti-
Doping and Medication Control (``ADMC'') (Appendix 3); HIWU (Appendix 
3a) Technology (Appendix 4); and Administration (Appendix 5). A summary 
of these departmental budgets is set forth below:
    1. The 2024 Racetrack Safety budget funds the implementation of the 
Racetrack Safety Program as set forth in Rule Series 2000 and as 
approved by order of the Commission dated March 3, 2022. The budget 
consists of the following items:
    a. Salaries/Payroll Taxes/Employee Benefits. The salaries provide 
for staffing to support and monitor the Racetrack Safety program, 
including those persons necessary to oversee the following components 
of the program:

i. Administration
ii. Data Analysis
iii. Track Accreditation Services
iv. Research
v. Stewards' & State Racing Commission Liaison
vi. Jockey Health & Welfare
vii. Education

    Salary levels for each position are based on market rates, while 
Employee Benefits consist primarily of a HISA contribution to cover a 
portion of employee health insurance and a 401(k) match that is 
consistent with market practice. The salaries budget provides for nine 
racetrack safety employees. As of August 31, 2023, the Racetrack Safety 
Program has seven employees. For all employees of the Authority, the 
CEO and the CFO, both of whom are

[[Page 77585]]

individuals who do not have a conflict of interest with regard to the 
hiring of other open positions, review and document compensation based 
on industry norms for similar positions prior to setting and to 
offering other open positions. Where needed, the CFO and the CEO rely 
upon an outside search agency to help determine compensation for other 
open positions. The Authority plans to do a compensation comparison in 
2023 using comparability data and provide ongoing oversight to all 
staffing processes and payroll.
    b. Meetings. This includes the travel, meals, and materials to 
support the following annual meetings:

i. Equine Safety Directors
ii. Track Superintendents
iii. Racetrack Safety Committee

    These meetings are necessary to promote safety for both horses and 
riders.
    c. Travel. This category covers the business travel and meal 
expenses for all of the employees previously listed in Salaries 
(section a) of this department (excluding the travel and meal expenses 
for the Meetings described in section b. and the Track Accreditation 
Services travel set forth in section f.). Travel to Covered Racetracks 
by Authority employees is often necessary to ensure that Covered 
Horseraces are run as safely as possible.
    d. Supplies. This primarily consists of materials to be used in 
various Continuing Education programs provided and overseen by HISA. 
These programs ensure that trainers, jockeys, veterinarians, and 
stewards are educated in methods and procedures that promote the health 
and safety of horses and riders.
    e. Professional Services. Several independent contractors and 
external service provider companies will partner with HISA on a part-
time basis to provide and/or augment services in the following areas:

i. Data Analysis
ii. Research
iii. Statistical Analysis
iv. Jockey Concussion Tracking
v. National Medical Director

    Pay rates are based on market rates for similar positions. All of 
these independent contractor relationships will increase the knowledge 
base and/or education level of participants in Covered Horseraces.
    f. Track Accreditation Services. The Racetrack Safety rules require 
that tracks be accredited, and the rules mandate site visits to 
determine the extent of compliance with the rules. This category 
includes the costs of compensating teams of independent contractors to 
perform these site visits, and the costs of covering the travel and 
meal expenses for this team. It is expected that the accreditation site 
visits will be conducted by teams of three to four individuals. The 
costs included in this category were originally estimated based on the 
historical costs of site inspections performed by the National 
Thoroughbred Racing Association's Safety & Integrity Alliance, and have 
been adjusted based on the actual cost of accreditation site visits in 
2023. On-site track visits will ensure that track facilities meet the 
safety requirements set forth in the Racetrack Safety rules.
    g. Track Surface Testing. This category includes the cost of pre-
meet track surface testing of tracks that run Covered Horseraces. 
Testing is performed to ensure that track surfaces are safe for horses/
jockeys to run on. This testing is performed by the Racing Surfaces 
Testing Laboratory.
    2. The 2024 Anti-Doping and Medication Control budget supports the 
implementation of the ADMC Protocol. The budget consists of the 
following items:
    a. Travel. This line item covers the business travel and meal 
expenses that are expected to be incurred by HISA personnel to support 
and achieve the goals of the ADMC Program.
    b. Supplies. This line item sets forth the cost of materials 
utilized by the Authority to support and achieve the goals of the ADMC 
Program, including services such as continuing education.
    c. Professional Services. Several independent contractors will 
partner with HISA on a part-time basis to provide and/or augment 
services in the following areas:
    i. Arbitration--this covers the fees to be paid to arbitrators who 
preside over appeals of positive anti-doping tests.
    ii. Independent Adjudication Panel (IAP)--this covers the fees paid 
to members of the IAP, who hear appeals of positive tests for 
controlled medication.
    iii. Furosemide Study--this covers the fees to be paid in 2023 for 
the furosemide study that is required by the Act.
    d. Horseracing Integrity and Welfare Unit (HIWU). The Act requires 
that HISA contract with an independent enforcement agency to oversee 
the components of the ADMC Program. HIWU, a division of Drug Free 
Sport, LLC (``DFS''), has been retained by the Authority as the 
independent enforcement agency. The HIWU line items in the ADMC budget 
consist of the following:
    i. Salaries/Payroll Taxes/Employee Benefits. All HIWU employees are 
employed by DFS. The salaries account for a staff (expected to total 44 
full-time individuals) that will carry out all of the responsibilities 
of the enforcement agency, including those persons necessary to oversee 
and complete the following components of the program:

1. Testing Operations
2. Testing Strategy
3. Compliance & Policy
4. Collection Personnel Recruitment, Training, & Certification
5. Support Line Management
6. Science
7. Laboratory Accreditation
8. Equine Medical Resources
9. Intelligence and Strategy
10. Investigative Operations
11. Education
12. Communications & Outreach
13. Legal
14. Litigation
15. Results Management
16. Information Technology
17. Human Resources
18. Finance

    HIWU shares staff with DFS in the areas of Information Technology, 
Finance and Human Resources. This arrangement produces cost savings, 
obviating the need for HIWU to retain full-time employees to provide 
these services.
    ii. Rent. HIWU has procured 3,000 sq. ft. of office space for its 
employees. HIWU is paying $30/sq.ft., which is consistent with market 
rates in the Kansas City area. The cost of basic office equipment is 
also included in this category.
    iii. Office Expense. This consists of common office expenses such 
as utilities and maintenance costs and is based on historical costs for 
similar businesses.
    iv. Telecommunications. This consists of the cost of office phones, 
mobile phone service at $65/month/employee (a commercially reasonable 
rate), and portable hot-spot wi-fi services to be used in test barns.
    v. Travel. This is the travel expense necessary for full-time 
employees to perform functions such as meetings with State Racing 
Commissions and track associations, training and continuing education 
sessions with sample collection personnel, arbitration hearings, 
laboratory visits, meetings with HISA personnel, and participation in 
industry meetings and conventions. Travel expenses include airfare, 
hotel rooms, rental cars, fuel costs, mileage for personal vehicles 
used for business purposes, parking, and meals. The amounts for each 
expense component

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were based on estimated market average costs.
    vi. Supplies. This consists of drug testing supplies needed for 
sample collections and sample collection personnel training.
    vii. Professional Services. This consists largely of consulting 
fees paid to experts in the areas of:

1. Results Management
2. Investigations and State Racing Commission Relations
3. Laboratory Accreditation

    The guidance provided by these subject matter experts will result 
in a safer sport run on a more level playing field.
    viii. Technology. This consists of the cost of all software, 
hardware, licenses and continued technological development needed to 
perform HIWU's work.
    ix. Insurance. The expense consists of the cost of all of HIWU's 
insurance policies, including liability insurance with an Umbrella 
policy, cyber-risk insurance, property insurance, and workers' 
compensation insurance.
    x. Resources and Education. This includes Training and Continuing 
Education, registration fees for industry conferences, accounting fees 
for state tax filings, and dues and subscriptions to industry 
publications. All of these are necessary for HIWU to properly conduct 
its business.
    xi. Taxes--Other. Estimated taxes based on the historical 
experience of HIWU's sister companies. These taxes are minimal in 
amount and are commercially reasonable.
    xii. ADMC Collection Costs. This includes wages paid to sample 
collection personnel in all states that conduct Covered Horseraces. The 
wage amounts were based on rates paid to sample collection personnel in 
each state prior to HIWU assuming these sample collection functions. 
Additionally, to cover travel expenses specifically related to sample 
collection, this includes airfare, hotel rooms, rental cars, fuel 
costs, mileage for personal vehicles used for business purposes, 
parking, and meals. The amounts for each expense component were based 
on estimated market average costs.
    xiii. Management Fees. This is the profit amount to HIWU for 
administering the program. It is a negotiated amount of 8% of the total 
expenses incurred for services they provide directly and 4% for 
everything else.
    e. Lab Testing. Once the samples to be tested have been collected 
by HIWU personnel, they are shipped to one of six accredited 
laboratories located in the United States. All of the laboratories have 
many years of experience in the testing of blood, urine, and hair 
samples taken from thoroughbred racehorses. HIWU has conducted 
extensive negotiations with each of these laboratories in order to 
ensure that competent testing is performed at the lowest price 
possible. One way HIWU has successfully reduced costs is by utilizing 
only six laboratories to perform testing, instead of the nine 
laboratories previously used by various state racing commissions across 
the country. This allows the six laboratories to spread their fixed 
costs (salaried employees, testing equipment, etc.) over a larger 
number of samples, resulting in a lower charge per test.
    It is important to note that the ADMC Collection Costs and Lab 
Testing line items represent 55.2% of the total budget of the 
Authority.
    3. The 2024 Technology budget supports the building of all IT 
systems needed to properly and efficiently manage the Racetrack Safety 
and ADMC programs. The budget consists of the following items:
    a. Salaries/Payroll Taxes/Employee Benefits. This contemplates nine 
HISA full-time employees in areas including programming, field support, 
internal support, external support, project administration, and third-
party developer coordination. Salary levels for each position are based 
on market rates, while Employee Benefits consist primarily of a HISA 
contribution to cover a portion of employee health insurance and a 
401(k) match that is consistent with market practice. As of August 31, 
2023, the Technology department has five employees.
    b. Travel. This includes the costs of travel by IT employees to 
racetracks to meet with customers/users, to Lexington, Kentucky for 
HISA meetings, and to training seminars and technology summit meetings. 
Participation by IT employees in these meetings and seminars will 
result in a more efficient program that better meets the needs of the 
constituents.
    c. Supplies. This includes the purchase of laptops for all HISA 
employees, the provision of workstations for those employees located in 
the Lexington office, and the hardware/software/3rd-party services 
needed for image processing. These items are necessary for HISA to 
efficiently perform its duties under the Act.
    d. Technology. This item includes the costs of cloud computing and 
other specialized applications that together form the foundation of 
HISA's technology system. For example (and most significantly), this 
category includes the cost of Amazon Web Services, as well as 
relationships with other vendors relating to the HISA website and 
technology systems. In order to be as cost-effective as possible, HISA 
has chosen not to invest in centralized computing assets. This keeps 
costs low and increases flexibility as HISA is engaged in expanding its 
staff and infrastructure.
    e. Professional Services. This item budgets for outsourced 
technology delivery provided by third-party system integrators and 
software factories. Given the need for cost-effective, round-the-clock 
services, the necessary software and technology systems were procured 
internationally from development resources in the US, Europe, and Asia; 
this allowed for the implementation of a 24-hour code and test 
development cycle. This is the most cost-effective method of building 
and maintaining technology systems/portals to facilitate program 
reporting to and monitoring by HISA.
    4. The 2024 Administration budget consists of the general and 
administrative staff and expenditures that are needed to conduct HISA's 
business. This budget consists of:
    a. Salaries/Payroll Taxes/Employee Benefits. This includes 
executive-level personnel (the CEO and CFO), plus employees in Legal, 
Communications, Operations/Compliance, and Administrative Services. 
Salary levels for each position are based on market rates, while 
Employee Benefits consist primarily of a HISA contribution to cover a 
portion of employee health insurance and a 401(k) match that is 
consistent with market practice. As of August 31, 2023, six employees 
make up the Administration Department. The Administration Department 
has not filled all of its budgeted positions.
    b. Board/Committee Travel. This consists of travel, hotel, and meal 
expenses for the one annual board meeting that is held with in-person 
attendance by the board members.
    c. Rent. HISA currently contemplates that, in order to be as cost-
efficient as possible, it will not rent a stand-alone office and will 
instead continue its office-sharing arrangement with the National 
Thoroughbred Racing Association.
    d. Phones. This is the cost of an office phone system in HISA's 
corporate office, necessary for HISA to conduct its business.
    e. Meetings. This is the cost of miscellaneous meetings of HISA's 
corporate staff as are necessary for HISA to conduct its business.

[[Page 77587]]

    f. Travel. This includes airfare, car rental, mileage, and meals 
for HISA's corporate staff in the course of traveling to Covered 
Racetracks, industry meetings, HISA meetings (strategic planning 
summits, board meetings, etc.), and meetings with industry 
stakeholders. Travel to these events allows HISA's corporate staff to 
conduct its business more efficiently and to perform its duties under 
the Act.
    g. Interest. This includes the interest expected to be charged on 
the loans that HISA procured to fund its initial operations.
    h. Bank Fees. This includes the cost of bank fees and credit card 
fees. These fees are minimal and are necessary to efficiently and 
effectively conduct business.
    i. Supplies. This includes the cost of all office supplies, 
including printer/copier paper, printer/copier ink and toner, postage, 
shipping, and other miscellaneous office supplies.
    j. Accounting Services. This consists of the cost of a contract 
bookkeeping service that will book accounting entries, produce 
financial statements, manage and process Accounts Receivable, manage 
and process Accounts Payable, and draft/file HISA's annual IRS Form 
990. Contracting this work out to a company with expertise in these 
areas is much more cost-effective than if HISA were to hire staff to 
perform these functions in-house. Additionally, this includes the 
estimated cost of an annual independent audit of HISA.
    k. Public Relations Services. This is the cost of a contract public 
relations service to manage HISA's website, issue press releases, 
assist with the production and distribution of information to industry 
stakeholders, and provide continuing education information for industry 
stakeholders. The public relations firm that HISA is working with has 
many years of expertise in P/R for thoroughbred racing enterprises. The 
firm can perform the aforementioned tasks more efficiently and 
effectively than if HISA were to hire staff to perform these tasks in-
house.
    l. Legal. This includes the cost of outside legal counsel for the 
creation, management, and updating of Racetrack Safety and ADMC rules 
as well as the cost of outside counsel that is working on the various 
lawsuits in which HISA is a party. Doing all of these tasks requires a 
decentralized group of lawyers with varied skill sets. At present, it 
is much more efficient and effective to utilize outside counsel than 
for HISA to hire a large in-house legal team to handle these issues.
    m. Insurance. This includes the following insurance policies for 
HISA:
    i. Directors & Officers insurance.
    ii. Workers' Compensation insurance.
    All these policies were competitively shopped by a broker to get 
the lowest rate possible.
    n. Payroll Services. This includes all costs of HISA's relationship 
with Resource Management, Inc. (RMI), a Professional Employer 
Organization (PEO). RMI provides Human Resources administration 
(handbook and policy management resources, new employee onboarding, 
labor law assistance, etc.), benefits management, compliance services 
(workers' compensation claims management and annual reporting, 
unemployment claims management, etc.) and payroll administration 
(payroll processing, W2 management, vacation tracking, etc.). The 
relationship with RMI allows these functions to be performed in a more 
cost-effective manner than if HISA hired employees to perform those 
functions.
    o. Professional Services. This account consists of:
    i. Consulting fees to assist HISA with board and executive 
functions.
    ii. $300,000 contingency fund set aside for unexpected expenses.
    These items will ensure that HISA has high quality employees who 
are well-trained to properly serve its constituents.
    Please note that the 2024 HISA budget contemplates the repayment of 
$1.25M of loans; it does not assume that any funding shortfall will be 
incurred.
    V. Information Concerning Rule 1.150(b)(5). Attached as Appendix 8 
is a comparison of the approved HISA 2023 Budget to actual revenues and 
expenditures. A variance has been calculated for each line item, and a 
narrative explanation has been provided for all variances >10% and at 
least $100,000.

Conclusion

    The budget furthers the purpose of the Act in that it allocates the 
funding necessary for the successful implementation by HISA of the 
requirements of the Act. The budget has been carefully analyzed and is 
narrowly tailored to the various regulatory activities of HISA as 
contemplated by the Act.

    By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2023-24939 Filed 11-9-23; 8:45 am]
BILLING CODE 6750-01-P