Churchill vs. TOC Lawsuit Withdrawn; Neither Side Wants to Say Why

After alleging last month that a disagreement over advance-deposit wagering (ADW) hub rate fees was so egregious that it amounted to a “shakedown” that needed to be fought in federal court, a subsidiary of the gaming corporation Churchill Downs, Inc., dropped its lawsuit against Thoroughbred Owners of California (TOC) Mar. 8.

According to a “notice of voluntary dismissal” filed Monday in United States District Court (Central District, California, Western Division) by Churchill Downs Technology Initiatives Company (CDTIC), an agreement between the parties was reached Mar. 5 that apparently settles the matter “without prejudice.”

But the details of that agreement were not disclosed in court filings. And when given the opportunity on Tuesday by TDN to explain what led to the apparent resolution, neither TOC president/CEO Greg Avioli nor Scott Edelman, the CDTIC's attorney, responded to email queries.

In a spat that centered on which entity should benefit from the pandemic-related boom in at-home betting, CDTIC filed a Feb. 2 complaint asking a judge to rule that TOC couldn't use a state law to force CDI into either accepting lower rates, abandoning its recently signed agreement with Santa Anita Park, or entering into arbitration to settle the dispute. (Santa Anita itself was not a defendant in the suit.)

According to CDTIC's complaint for declaratory and injunctive relief, the dispute arose Oct. 28, 2020, when Avioli allegedly asked CDI's then-executive director of racing, Mike Ziegler, to “voluntarily return the equivalent of 1% of the total amount generated from California residents wagering on those platforms in 2020.”

In addition, according to the complaint, “Mr. Avioli proposed that all ADW providers agree to a 3% hub fee for the 2021-2022 term–a rate CDT has never agreed to in its history of operating in California.”

CDTIC had not wanted to disclose details of those hub fees in court documents, and had even been granted permission from the judge overseeing the case Feb. 9 to instead file those financial details as sealed documents that the public couldn't view. Hub fees are generally not disclosed by industry entities because such figures are deemed competitive secrets.

According to the original complaint, “TOC threatened that if CDT did not comply with its 'voluntary' request, it would demand arbitration pursuant to [a California law]. Contrary to Mr. Avioli's false characterization, the revenue ADW providers earned in 2020 was not a 'windfall,' but the result of increased demand for online wagering.”

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Laurel Locks Down Over EHV-1; Kentucky Urges Caution On Ship-Ins

Four barns at Laurel Park were placed under quarantine and shipping out was barred for horses stabled at Maryland's two Thoroughbred tracks Mar. 9 after a symptomatic horse at Laurel tested positive for equine herpesvirus type 1 (EHV-1) and was removed to a veterinary facility.

On a national scale, active cases of the highly contagious respiratory disease are being monitored in several states right now, including in Florida at the World Equestrian Center in Ocala.

On Mar. 7, the Kentucky Department of Agriculture state veterinarian's office issued written guidance related to this recent spate of EHV-1.

“In the past seven days we have learned of multiple occurrences of EHV-1 impacting equine events throughout the world,” Rusty Ford, the equine operations consultant for the Kentucky state's veterinarian, said in that statement.

“Additionally, as we are coming to the time of year that we historically see an increase in movement of equine exhibition and racing stock into Kentucky, I want to remind all associated parties that mitigating risk of disease introduction is a shared responsibility that requires commitment from each individual exhibitor, trainer, event managers, facility operators, veterinarians, and animal health officials,” Ford said.

That statement urged stabling facilities in Kentucky to review biosecurity protocols and elevate their responses to minimize direct contact between horses via shared water, feed supplies and equipment.

Speaking during a Tuesday informational videoconference, Steve Koch, the senior vice president of racing for The Stronach Group, whose tracks include Laurel Park and Pimlico Race Course in Maryland, detailed the plan of action at both venues.

Horses will be allowed to ship into both Laurel and Pimlico and can travel between those two tracks to train and race, but can't exit for another jurisdiction until the quarantine has lifted, Koch said.

“Chances are–and this is me speculating, and maybe I shouldn't,” Koch said, “but chances are, you're going to run out of places to go anyhow, because no one on the East Coast racing is going to want our horses shipping into their facilities.”

Koch said the EHV-1 protocols were initiated “on Saturday, [when] there was a horse showing some symptoms [at Laurel]. By Sunday, this horse [had] been tested for herpesvirus…. That horse had contact in both barns 10 and 4…. Upon further analysis, it was quickly evident that both barns 11 and 1 also has some fairly close contact with these horses and the respective shed rows. So currently barns 1, 4, 10 and 11 are on a lockdown situation.”

Koch said Laurel training was “set aside” on Tuesday, but starting Wednesday, “we will look for a way to give [horses in the locked-down barns] some training hours.”

Koch added that “It's more complicated than just extending training hours. The track crew has to know; there's complications with when we get to the race days on Friday how that will work. But we are cooking up a plan, and you'll hear that from day to day as we get in together.

Horses in Laurel's quarantined barns, however, will not be allowed to race.

“The quarantine we're currently looking at, assuming there's no further symptoms; no further positive horses, it's a 14-day quarantine,” Koch summed up. “And then we can lift the veil. The trick is we have to be super-diligent throughout those 14 days…and all horses need to be asymptomatic throughout that period.”

The highly contagious EHV-1 can spread during any time of the year, but winter typically brings a spike in cases nationwide.

The winters in the years 2016-18 saw a sharp increase in reported EHV-1 cases. But during those outbreaks several agricultural regulators told TDN it was unclear if those statistics represented actual spikes in EHV-1 cases or if veterinarians and testing methods are just getting better at detecting and reporting them.

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Robinson, Defendant In Federal Doping Indictment, Sentenced To 18 Months In Prison

Scott Robinson, one of the defendants in the federal case that rocked horse racing in March 2020, has been sentenced to 18 months in prison. The Thoroughbred Daily News reported that U.S. District Judge J. Paul Oetken handed down the sentence on Tuesday after Robinson pleaded guilty to one count of drug adulteration and misbranding conspiracy in September 2020.

Robinson, together with pharmacist Scott Mangini, was accused of operating consumer-facing websites such as HorsePreRace, peddling products which purported to be blood builders and pain blockers which were allegedly untestable, as well as discounted versions of prescription drugs despite not being an FDA-approved manufacturer. Robinson is neither a veterinarian nor a pharmacist.

Click here to read the Paulick Report's investigation of HorsePreRace from 2016.

A pre-sentencing report filed by federal prosecutors ahead of Oetken's ruling revealed even more disturbing details about the conditions in which those products were made. A state pharmacy board inspection report dated February 2016 which was published by the Paulick Report had picked up on unsanitary conditions at co-conspirator Scott Mangini's facility in Florida: the Florida Department of Health Records noted that there was no working sink in the pharmacy for hand washing, and employees were instead using a ten-gallon bucket. The department noted so much dust on the counters where prescriptions were made that an investigator was able to trace letters in the dirt with an alcohol swab — a particular problem since some products were injectables. Ingredients were mislabeled.

Click here to read more about Mangini's facility from this 2016 investigative feature by the Paulick Report.

Even before that inspection however, the report cited communications from Robinson to Mangini indicating he knew something could be wrong with the products he was selling. In spring 2015, Robinson began asking Mangini whether there had been changes to manufacturing processes.

“R u making stuff different? I have a lot of stuff that doesn't look same and has stuff floating in it. Blood building peptide has black particles,” one message to Mangini read.

“[Employee] has been complaining of bugs coming out of boxes u send. I told him he was crazy until I found one floating in bottle today when labeling,” read another, also to Mangini.

The Board of Pharmacy conducted its inspection in December 2015, but Robinson was dismissive of any danger resulting from the inspection, writing to Mangini, “And board of pharmacy worries about u? They got bigger problems! Lol.”

(Mangini, who has been charged with two counts of drug adulteration and misbranding, has entered a not guilty plea and his case is ongoing.)

Between December 2015 and January 2016, Robinson fielded complaints from trainers who had injected Pentosan into their horses, only to see the horses become severely depressed and unable to move. The horses' veterinarian attributed the reactions to a bad batch. The pre-sentencing report indicated Robinson “was dismissive of these complaints.”

When federal agents executed search warrants on premises used by Robinson in September 2019, prosecutors say he became incensed and “attempted to extort the federal agents involved in the seizure by threatening to release a letter to certain members of the racehorse industry informing them of of the existence and scope of the FBI's investigation if the FBI did not immediately return his electronic devices the same day they were seized. After being informed his threat was itself a crime, Robinson retracted his threat hours later.”

After he became aware the FBI was investigating him, prosecutors say Robinson continued distributing adulterated and misbranded drugs, generating “millions of dollars in revenue.”

Prosecutors had requested the maximum available sentence of five years in prison, while Robinson's defense team, pointing out his lack of prior criminal convictions, suggested he serve no time. Defense attorneys painted a picture of a man who had risen to business success from near-homelessness and who battled depression and chronic traumatic encephalopathy (CTE) due to injuries sustained in the United States Navy. Letters from friends and family framed Robinson as a caring person who gave liberally to charity and financially supported family members.

Although Robinson had no criminal history, prosecutors did note that he was court martialed in 1998 and dishonorably discharged from the Navy after he admitted to reselling anabolic steroids to other enlisted members of the Navy.

One character reference letter in support of Robinson's defense came from New Vocations Racehorse Adoption Program, where executive director Dot Morgan wrote that Robinson “donated a massive amount of his compounded omeprazole ulcer treatment” to the program in 2010 and 2011. In 2014, HorsePreRace and HorseGold (of which Robinson was president) were the recipients of warning letters from the Food and Drug Administration warning them to stop marketing omeprazole and other products designed to act as prescription drugs because they were not approved as mass manufacturers of drugs.

Another letter, from Robinson's psychiatrist, highlighted the defendant's feelings for horses.

“From my three years of work with Mr. Robinson, I have become aware of his great knowledge of and love for racehorses,” wrote Dr. Ronald E. DeMao. “Horses and horse racing have literally “been his life.” It is inconceivable to me that he would ever do anything to intentionally harm a horse. In fact, he has developed products to aid in the physical health and rehabilitation of horses. I have heard him speak in very pejorative terms about others who 'dope' or harshly train racehorses.”

Robinson is required to surrender himself on Sept. 7, 2021 to begin his sentence. He will have another three years of supervised release after serving his time.

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