"If the lying were stopped by law, the business of horse trading would come to an end . . ."
This quote was lifted from an Opinion piece appearing in the New York Times more than a century ago. The article dealt with inflated circulation figures for newspapers and had nothing to do with horse sales, but it reflected the public perception of horse traders as shady characters. The writer might have overstated things a bit, but the world of buying and selling horses always has enjoyed a reputation as a playground for wheelers and dealers. For some buyers and sellers, this peculiar facet of the game is part of the appeal. Many others, though, demand more protection than the shopworn advice "buyer beware."
The Times article raises two questions, one practical, one philosophical: Can lawmakers create a level playing field for buyers and sellers in the horse business? And if lawmakers can accomplish that daunting task, should they?
Self-regulation of horse sales has a fox-guarding-the-henhouse feel, but it can work. Attempts by the horse industry to police itself have centered mainly on Thoroughbred auctions because that’s where most of the big money comes into play. A significant step forward has been a campaign by the Sales Integrity Task Force that fostered some fundamental changes in the conditions of sale at major auctions. A problem is that most people in the horse business are buying and selling horses privately or at non-Thoroughbred auctions where the impact of honesty-in-sales advocacy groups is minimal.
This is where state lawmakers enter the picture.
Comprehensive regulations aimed specifically at horse sales, both public and private, were passed in Kentucky a few years ago. Earlier this year, similar sales-related legislation took effect in California. State law in California already regulated the sales of horses, but the new legislation expands and strengthens the old law.
The Kentucky and California laws are similar, which should come as no surprise because Jess Jackson was a driving force behind passage of both bills. Jackson made a fortune as a wine entrepreneur before turning his attention to the Thoroughbred business. He made a number of high-end purchases and then filed lawsuits against some of his bloodstock advisors, claiming fraudulent misrepresentation, breach of fiduciary duty, and unjust enrichment.
The laws make fundamental changes in the way horse sales are conducted. They require a written bill of sale or acknowledgment of purchase for most transactions, signed by both the buyer and seller (or their authorized agents) and stating the purchase price; they prohibit "dual agency," a questionable but common practice in which a single agent represents both the buyer and seller, unless both parties to the transaction know about the dual agency and consent to it; they limit commissions that may be accepted by bloodstock agents to $500 or less without the knowledge and consent of the buyer and seller; and they provide for the recovery of triple damages for violations and attorney fees.
Intent of these laws is to make horse sales fair to everyone involved by making the transactions more transparent. Whether that will actually work remains to be seen. What is clear is that the business of buying and selling horses is changing.
Are horse sales a proper target for state lawmakers? Does state regulation help or hurt?