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Horsemen’s Groups File Federal Lawsuit Over HISA

Organizations representing some Thoroughbred horse owners and trainers have filed a federal lawsuit to stop the Horseracing Integrity and Safety Act (HISA), signed into law in the U.S. Congress's December omnibus spending bill.

The National Horsemen's Benevolent and Protective Association (National HBPA) and state affiliates in Arizona, Arkansas, Indiana, Illinois, Louisiana, Nebraska, Oklahoma, Oregon, Pennsylvania, Washington and West Virginia are suing HISA's newly-created “Authority” to regulate the sport and the Federal Trade Commissioners. In addition, they are suing the Nominating Committee and asking the court to immediately stop them from appointing the Board members of the Authority.

They are represented by attorneys at the Liberty Justice Center, which is contending that HISA is unconstitutional because it gives powers to private individuals and a private organization in an area where only a government entity should be allowed such powers.

Notably absent from the list are horsemen's groups representing owners and trainers in the four leading racing states, New York, Kentucky, Florida and California. The New York Thoroughbred Horsemen's Association has come out in favor of HISA.

The news of the lawsuit brought an immediate and strong response from those who have been working behind the scenes for the passage of HISA, which some believe is a necessary step in order for the sport to clean itself up and prevent cheating and the use of performance-enhancing drugs.

“If they are successful and they stop this, you can kiss the horse industry goodbye,” said breeder and owner Arthur Hancock. “Look at what has happened in the past. That so many have come together to try to clean up the sport is a wonderful thing. Everyone wants a level playing field and this will give it to them. I don't know why anyone would object to that.”

“This is ridiculous,” said Hall of Fame trainer Mark Casse. “I read this and thought, 'you've got to be kidding me.' All we are trying to do is clean up our sport. Looking at the states where they are backing this, those are some of the states that most need cleaning up. I don't know how anybody could be against cleaning up our sport. I can tell you one thing, they never asked me for my opinion.”

While it remains to be seen whether or not the lawsuit succeeds in circumventing HISA, it could cause delays. The United States Anti-Doping Agency is set to begin policing the sport and testing its participants on July 1, 2022. That date could now be in jeopardy.

According to its website, The Liberty Justice Center is “a non-profit conservative public-interest litigation center that fights to protect economic liberty, private property rights, free speech, and other fundamental rights in Illinois and beyond.” According to Wikipedia, The Liberty Justice Center is an associate member of the State Policy Network, a web of state pressure groups that denote themselves as “think tanks” and drive a right-wing agenda in statehouses nationwide.

“All Americans should be concerned when Congress gives power to regulate an entire industry to a private group of industry insiders,” said Brian Kelsey, senior attorney at the Liberty Justice Center, in a statement. “This goes way beyond setting rules for the sport of horse racing. This is not the NBA or the NFL. The 'Authority' has the power to make laws, issue subpoenas and effectively tax owners with little real oversight. Placing that power in a private organization is illegal and must be stopped.”

The Jockey Club, the main proponent of HISA, also issued a statement Monday.

“We are not at all surprised by the lawsuit filed against HISA today by a number of affiliates of the National HPBA,” it read. “We are confident that the law is constitutionally sound and legal, as it is patterned precisely after other longstanding law. It's a shame that the National HPBA has chosen this expensive and time-consuming path, but it is consistent with their well known pattern of conduct that has served to block or water down needed reforms that the vast majority of the equine industry and animal welfare organizations support. It is worth noting that this suit is also brought by state HBPA affiliates that are the greatest beneficiaries of the earlier federal legislation, the Interstate Horseracing Act of 1978, which confers upon them virtually unlimited authority over interstate wagering on Thoroughbred races.”

Jeff Gural, who owns the Meadowlands and has been one of the leading voices calling for harness and Thoroughbred racing to undergo sweeping changes when it comes to integrity issues, said he does not believe the lawsuit will ultimately stop HISA.

“I think it will prevail,” he said. “I don't think they have a chance because Judges will look at this and, instinctively, will want to keep the horses from being drugged. Them going in and saying drugging horses is OK is going to be tough to sell, especially after all those people were indicted. I'm not too concerned.”

The lawsuit was filed on Monday in the U.S. District Court for the Northern District of Texas.

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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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Ohio HBPA Sues Belterra to Recoup $2.7M in VLT Money

The Ohio Horsemen’s Benevolent and Protective Association (OHBPA) filed a federal lawsuit against Belterra Park’s present and former owners Dec. 18 seeking more than $2.7 in gaming revenues that the OHBPA is claiming the track wrongfully withheld between 2014 and 2018.

“This action arises from Defendants’ failure to pay the OHBPA its share of net-win video lottery terminal [VLT] commission from Belterra Park,” states the complaint filed Friday morning in United States District Court for the Southern District of Ohio (Eastern Division). “The OHBPA has been deprived of these funds, which go directly toward the benefit of horse breeding and horse racing in Ohio.”

According to the complaint, when VLT gaming was first legalized by Ohio in 2009, the state authorized racinos to retain 66.5% of revenues, with “between 9% and 11%” of those net-win proceeds to then be paid to Thoroughbred and Standardbred entities.

Those percentages were set five years before any actual VLT gaming happened at Belterra, and in 2012 the state authorized the Ohio State Racing Commission to set the actual rate that would go to purses, based upon that 9-11% range. But until a new, firm rate got set, 9% was to be used as the placeholder to determine purse proceeds.

“At all relevant times, the OHBPA and Belterra Park each understood that, pursuant to the statute, the actual percentage rate was to be set at some future time, and that Belterra Park would need to make a ‘true-up’ payment to the OHBPA for any difference between the 9% placeholder rate and a statutorily-set rate that was greater than 9%,” the suit contends.

Belterra didn’t open for VLT gaming until May 1, 2014, largely because the former track known as River Downs was undergoing a substantial renovation to rebrand the property as Belterra Park Gaming & Entertainment Center. The capital expenditures for that project were to be a factor in determining the new calculation rate for purse money, but the suit alleges Belterra stalled and tried to overstate the costs it incurred fixing up the property.

The complaint continues, “Upon information and belief, the delay in setting the statutory rate was due to Belterra Park’s years-long delay in providing to the Ohio Facilities Construction Commission a submission of reasonable capital expenditures incurred, such capital expenditures being the basis for the setting of the percentage rate.”

“Belterra’s submissions were unrealistic and overly aggressive attempts to persuade the authorities that it was entitled to a lower statutory rate; this caused delays in the determination by the Racing Commission,” the complaint alleges. “The OHBPA had no access to Belterra Park’s records of purported capital expenditures, and no way to expedite the rate-setting

process.”

Eventually, on June 27, 2018, the racing commission set the percentage of Belterra Park’s net-win VLT commission that it owed to the OHBPA at 9.95% (both retroactively and moving forward, according to the suit).

And four days after that rate was established, the OHBPA did, in fact, begin receiving its full 9.95% from Belterra.

But the bone of contention has to do with retroactivity: The OHBPA is arguing that Belterra never made good on the four-year difference between the placeholder rate and the revised rate, which it claims totals $2,769,652.

“The OHBPA has demanded the difference between the 9% placeholder rate and the 9.95% rate set pursuant to the statute in its negotiations with Belterra at various times since May 1, 2014, by, for example, proposing alternative methods of receiving the earmarked funds,” the suit contends. “Indeed, the Racing Commission itself has acknowledged that the true-up payment from Belterra Park is due and has asked the OHBPA if it would accept installment payments on the past-due amount.”

“The OHBPA has a right to possess the Converted Funds, which are identifiable and traceable, yet Defendants continue to withhold the Converted Funds from the OHBPA,” the complaint asserts.

In addition, the OHBPA is asking the court to make Belterra and the other defendants pay $25,000 in damages, plus pre- and post-judgment interest and the OHBPA’s attorney fees and court costs.

Belterra Park itself is named as a defendant, as is the racino’s current owner/operator, Boyd Gaming Corporation.

David Strow, Boyd’s vice president of corporate communications, answered a request for comment from TDN by emailing that it is company policy not to discuss pending litigation.

Pinnacle Entertainment, Inc., (which, according to the suit, owned Belterra between 2011 and 2018) and Penn National Gaming, Inc. (which, according to the suit, briefly had an ownership interest in Belterra in 2018), are also listed as defendants.

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Spanish Race Caller Sues NYRA Over Wage Inequity Compared To White Counterpart

Race caller Luis Grandison filed a lawsuit against the New York Racing Association in the Brooklyn Federal Court on Tuesday, alleging that he was paid less than half as much as his white, English-speaking counterparts, reports the New York Daily News.

The suit states that Grandison was paid an annual salary of $60,000, while his white, English-speaking counterpart Larry Collmus has a salary estimated to be over $200,000.

Grandison, a black native of Panama, had been employed by NYRA to call races in Spanish since 2014. He requested and was denied a raise in 2018. This year, Grandison was furloughed in March due to the coronavirus pandemic. He was terminated in June, prior to the resumption of racing in the state of New York.

“Grandison has performed the exact same primary duty of race calling … at NYRA in Spanish that his white American counterparts performed in English in the same racetracks, under the same management, using the same oratory skills, and using the same NYRA simulcast network,” the suit reads. “The only difference between Grandison and, for example, Larry Collmus is that the former is a Black Latino speaking in Spanish whereas the latter is a white American speaking in English. Their primary work duty of race calling was otherwise identical.”