By Susan E. Campbell
The equine industry is the largest agricultural
industry in New York state , those in the
industry say, and as such has a tremendous
economic impact on the state and communities
The business of horses in broad terms
represents tens of thousands of New Yorkers
looking to make money and protect their
assets. These are horse owners and syndicate
members, trainers and stable hands,
breeders, veterinarians, stable owners, riding
instructors, jockeys, agents, racetrack
owners, hobbyists and others with interests
in how both race horses, pleasure horses
and even wild horses are treated and how
The litany of issues is diverse as well: ownership, bankruptcy, contracts, insurance, intellectual property, treatment of horses, licensing, racing, bloodlines, malpractice, leasing, non-payment, and more. So when disputes arise, an equine law practitioner wears the many hats needed to settle matters — in or out of court.
“Equine law entails a number of different types of law,” said Ethan C. Lerman, Esq. of the Lerman Law Firm. Lerman’s father is a trainer and he “grew up mucking stalls and in the back of a van going to horse tracks,” he said. With experience in criminal law both as a public defender and in private practice, he said racing rules violation cases suit his background well.
“There was a case of a trainer sanctioned by the racing stewards who received a 10-year suspension over a positive drug test of a race horse,” said Lerman. “He thought this ruling unduly harsh and we tried to get it overturned at the second level of oversight, the Gaming Commission.”
He said there had been little investigation by the steward as to how the substance came to be evident and how much there was. Ultimately the sanction was reduced to a small fine.
Many cases are contract disputes because, Lerman said, “in this business many agreements are made with a handshake and not in writing.”
Todd S. Engel, Esq. of the Engel Law Office recalled a debt collection case in which a trainer was not being paid enough to cover his personal compensation and the upkeep expenses for his horses.
“The owner said, you’ll be paid out of winnings,” said Engel. “But the judge says, if the horses aren’t running they still have to eat.” Engel said being in arrears on the payments necessary to cover monthly bills is not uncommon. If the owner has multiple horses, basic necessities can run in the tens of thousands of dollars a day. He was successful in putting an agister’s lien against the owner’s debt. In such a case, if the debt is not paid, the horse is auctioned off.
Horse auctions occur three times a year. When this trainer’s case was resolved the horse was indeed sold, but in a private auction. “We went to the state Supreme Court to establish a valid lien because the owners disputed the amount owed the trainer,” said Engel. “We proved both a preliminary value of the horse and the full amount of debt.”
He anticipates the horse will draw enough at auction to satisfy the debt. Another type of case involves claiming races.
“In New York, horses have different classifications,” said James T. Towne, Jr., Esq. of Towne, Ryan & Partners PC. He has been a racehorse owner, an equitarian horse owner and a thoroughbred racehorse breeder, as well as an equine law practitioner for 30 years.
Not all horses are competitive at the same level, hence classifications, said Towne. Claiming races give horse owners a place to race those horses that could not win against the top-quality competitors.
“In a claims race, you put a claim on your horse for a set price,” he said. The price varies with the competitive level in order to keep like horses racing against each other.
“When the gate opens, the horse will be owned by the successful claimer and the owner entering his horse in the race gets the purse,” said Towne. In one case, a horse had been in several claiming races. It won one month and ran in other claiming races over several subsequent months, but not well.
“It came out months later that in the first claiming race, the horse had been drugged,” said Towne. “If my client had known this, he wouldn’t have claimed the horse in that third race.”
Towne spoke of one license suspension hearing involving a jockey who was accused of hitting the nose of another horse with his whip, illegally bumping the animal, during a race. The horse pulled back.
“Whether intentional or not, the owner believed his horse may have otherwise won the race,” said Towne. “There was a protest. It is up to the stewards to determine if a horse would be taken down.”
In situations where the individual feels punishment is excessive, cases can be appealed to the Gaming Commission and thereafter to state Supreme Court.
Engel said a growing facet of his equine law practice involves setting up thoroughbred ownership syndicates as limited liability corporations. A syndicate find members for each horse the syndicate stable buys. Members own a percentage of the syndicate based on their financial outlay and share in the profits proportionally. Often members have partial ownership of several horses.
“I recommend setting up an LLC for each different horse as a subsidiary of the syndicate stable for legal and accounting purposes,” Engel said. “My role involves protecting each member’s personal liability as well as against the other members.”
“The managing member selects the trainer and jockey and runs the day-to-day operations,” he said. “The remaining members share the financial contribution and the glory at the winner’s circle.”
Engel said syndication is the way of the future. With the costs of thoroughbred racehorses continually on the rise, “the average owner is being priced out.”
On Towne’s mind of late is the affect a local casino may have on the state’s racinos, including Saratoga’s.
State voters will decide the fate of a constitutional amendment in November that would allow the expansion to full blown casinos in the state. “Will the casinos be located at current racinos or be standalone facilities? No one knows at this juncture,” said Towne, who provides legal representation for the New York State Thoroughbred Breeders Association.
The lawyers said owners, stables, veterinarians and others also need qualified representation for issues such as: What if I loan my horse and the rider gets hurt? Can I claim a tax loss if my horse-related income is only a hobby? Should I sue my veterinarian for malpractice? Is there recourse if my lease agreement is in dispute? What are the liability issues for minor children?