A United States District Court for the Western District of Kentucky ruled on April 1 2026 that the Horseracing Integrity and Safety Authority (HISA) acted in an arbitrary and capricious manner, invalidating HISA’s purse‑weighted fee methodology and the associated fee collection efforts against Churchill Downs Incorporated.
HISA, a quasi‑government entity created by Congress in 2020 and overseen by the Federal Trade Commission, had shifted its fee calculation to a “starts‑only” model effective January 1 2026. That model was more favorable to tracks with high purses, such as Churchill Downs, but the court found that HISA’s earlier purse‑weighted approach exceeded its statutory authority and was therefore unlawful.
Churchill Downs first challenged HISA in a lawsuit filed in late 2024. The New York Racing Association joined the suit but settled its dispute with HISA in early January 2025. In March 2026, HISA demanded approximately $5.27 million in unpaid dues and interest from Churchill Downs, threatening suspension of simulcasting rights. A settlement reached around March 24 2026 stayed that enforcement action, but the court’s April 1 ruling ultimately removed the purse‑weighted fee mechanism entirely.
The ruling comes on the heels of Churchill Downs’ record fourth‑quarter 2025 results, which included net revenue of $665.9 million—up 7 % year‑over‑year—and Adjusted EBITDA of $247.0 million, up 4 % year‑over‑year. The company also generated $700 million in free cash flow for the full year 2025, underscoring its strong financial position and the potential impact of the fee relief on future cash flows.
By invalidating the purse‑weighted fee methodology, the court effectively eliminates a significant regulatory cost that had been applied to Churchill Downs’ racing operations. The removal of this fee stream is expected to restore fee‑related revenue and reduce compliance costs, thereby improving the company’s operating flexibility and financial planning for both its live and historical racing segments.
Bill Carstanjen, CEO of Churchill Downs, said, "We are pleased with the Court's decision in our favor. It's unfortunate that HISA wasted so much time and resources, forcing us to go to such lengths to prove a very clear point. This is indicative of HISA's ongoing fiscal mismanagement, which is a distraction from our joint mission of equine health and safety. By finding that HISA continuously exceeded its authority, the Court reiterated why it was necessary to bring this legal action."
The decision signals a broader shift in the regulatory landscape for the horse‑racing industry, affirming that HISA’s fee assessments must align with its statutory mandate. For Churchill Downs, the ruling not only relieves a costly fee burden but also reinforces its position to negotiate future fee structures and maintain its competitive edge in the racing market.
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