A federal court in Kentucky on Wednesday issued a declaratory judgement in a lawsuit brought by Churchill Downs, Inc. (CDI) against the Horseracing Integrity and Safety Act Authority (HISA), ruling that assessment fees based on a purse-weighted methodology that the Authority used between 2022 and 2024 were “arbitrary and capricious, and therefore unlawful.”However, the ruling did not vacate any of the previously issued HISA orders relating to those fees, noting that since the start of 2026, HISA and its governmental overseer, the Federal Trade Commission (FTC), have abandoned the purse-weighted methodology and replaced it with an assessment calculation based instead on a projected number of starts.“Churchill Downs does not ask that the Court vacate any of the Commission's orders,” the 32-page ruling out of United States District Court (Western District of Kentucky) stated. “Even if it did, moreover, the Court finds that declaratory relief 'represent[s] a more tailored and appropriate remedy,' given that the purse-weighted methodology is no longer in effect for the current funding cycle and nothing indicates any likelihood that it'll reemerge.”A declaratory judgment in a U.S. court is a legal determination that clarifies the rights, duties, or obligations of the parties involved, without necessarily ordering any specific action or awarding damages.In the wake of Wednesday's judgment, CDI's chief executive officer, Bill Carstanjen, touted the ruling as a victory for the gaming corporation and its six Thoroughbred tracks in four states.“We are pleased with the Court's decision in our favor,” Carstanjen said in a press release. “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.”By contrast, a statement issued by HISA (not attributed to any specific executive) portrayed the court's decision as limited and unlikely to have significant impact on the way assessments are calculated currently and in the future.“[Wednesday's] district court decision is narrow: It rejects a prohibition on using factors beyond racing starts in fee assessments, rejects Churchill's equitable and contract-based theories, and declines to vacate the prior purse-weighted assessment rule,” the HISA statement explained.“Instead, it orders limited declaratory relief to Churchill, for past years only, based on the FTC's failure to adequately explain its approval. As the industry moves forward under the racing-starts-only rule that went into effect in 2026, HISA remains focused on advancing its safety and integrity mission,” the HISA statement concluded.In a follow-up query, TDN asked the Authority to provide a plain-language explanation and dollar amount of what the Authority now expects CDI to pay in outstanding and projected HISA assessments.“Based on this decision, CDI will have to pay assessments on the starts-only structure for 2025,” a HISA spokesperson replied. No dollar amount was provided.Churchill's assessment figures might remain unknown. Back on Mar. 24, an order posted to HISA's website announced an agreement with Churchill Downs regarding the track's unpaid HISA dues, which were at that time listed as in excess of $2.4 million. Other than stating that the parties have reached an agreement to resolve HISA enforcement actions relating to the unpaid assessments, no specific details of that agreement were made public.CDI's original version of the lawsuit was filed Dec. 4. 2024. It was initially joined by co-plaintiff the New York Racing Association, which settled with HISA and dropped out of the case a month after the litigation was filed.The Apr. 1, 2026, court order outlined the main counts in CDI's lawsuit:1) That the 2023-25 interstate methodology was inconsistent with the statutory requirement that state fees are based on starts and not purses.2) That the 2023-25 interstate-assessment rules were arbitrary and capricious because each relied on an unexplained and illogical purse-weighted methodology.3) That the “savings clause” adopted by the FTC in January 2023 had applied to CDI ever since, given that a federal district court in Louisiana had previously enjoined use of the purse variable.4 and 5) That even if the Authority's rule withstood Administrative Procedure Act (APA) scrutiny, common-law doctrines of estoppel and quasi-contract authorized the court to enjoin the Authority's efforts to collect.The ruling then explained how the court adjudicated those claims:The Authority, according to the ruling, “enjoys the power to make and enforce legislative rules for the industry–and fills its coffers not through appropriations but by assessing fees against those it regulates. This unusual structure immediately provoked constitutional challenges across the land.“This case poses a time-limited question that is–at least on the surface–merely financial. CDI challenges not whether the Authority can lawfully regulate, but instead how it may procure funding for those regulatory activities.Kentucky Derby starting gate at Churchill Downs | Horsephotos “Congress authorized the Authority to reimburse its own costs through the States 'based on' their number of racing starts and their proportionate share of the Authority's costs. The Authority opted to allocate these fees on an 'equitably'–based not only on starts, but also on purse sizes, which it viewed as a proxy for which States' racing outfits could or should pay more,” the ruling explained.“Churchill Downs–a large track in a State that pays disproportionately large purses–objected that this 'purse-weighted' methodology reflected an error of judgment and of law. The Horseracing Act, Churchill maintains, leaves little if any room for consideration of purse sizes. Given its objections to the legality of the method, Churchill Downs refused to pay its full assessment for 2023, 2024, and 2025 and instead filed this lawsuit,” the ruling stated.“Although Churchill's common-law claims fail, its APA claims succeed in part,” the ruling stated. “[T]he Authority's purse-weighted methodology is contrary to law to the extent it is 'based on' a State's tracks' perceived ability to pay the assessments and arbitrary and capricious to the extent it rests on relatively higher purses as a proxy for the State's proportionate share of testing costs under the Horseracing Act. The purse-weighted formula set forth in the Commission's 2022, 2023, and 2024 therefore may not be enforced against Churchill.“The Court accordingly grants in part the Authority's motion to dismiss with respect to Counts 3, 4, and 5 of the amended complaint. The Court also grants in part Churchill's motion for partial summary judgment and enters declaratory judgment in its favor,” the ruling stated.“As to Churchill's request for an injunction forbidding the Authority and Commission not to enforce these funding rules against it, the Court sees neither a factual need nor a legal basis for that remedy at this stage,” the ruling stated.“During the hearing on these motions, both parties agreed that the proper relief if the Court sided with Churchill would be the 'declaration about the meaning of the statute and the lawfulness of [the Defendants'] purse-based methodology,'” the ruling stated.“And in any event, given the record before the Court and the history of this and the related litigation, the Court sees no reason to think Churchill satisfies 'the traditional four-factor framework that governs the award of injunctive relief,'” the ruling stated.“The classic monetary harms Churchill describes counsel against finding that it suffered an irreparable injury for which legal remedies 'are inadequate to compensate,' and the 'balance of hardships' and 'public interest' give the Court pause, considering that as of Jan. 1, 2026, the Authority and Commission ceased using the purse-weighted formula,” the court stated. “For now, then–and seemingly with the parties' blessing–the Court declines to afford this 'extraordinary remedy.'”But the ruling did point out that, “Notably, Churchill has not yet moved for emergency or interim relief, though the parties' filings have alluded to that prospect. If Churchill wishes in the future to argue that '[f]urther necessary or proper relief based on [this] declaratory judgment' would be appropriate, it may so move.”The post Court Declares Previous Purse-Based Assessments “Unlawful” As HISA Moves Forward With New Starts-Based Methodology appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.