Churchill Downs Subsidiary Sues Thoroughbred Owners Of California Over Simulcast Fee Dispute

A subsidiary of Churchill Downs, Inc. that operates advance deposit wagering companies TwinSpires and BetAmerica is suing Thoroughbred Owners of California for invoking state statute in an effort to bring a dispute over simulcast hub fees into binding arbitration.

Churchill Downs Technology Initiatives Company (CDTIC) filed the suit on Tuesday in United States District Court Central District of California's Western Division, seeking declaratory and injunctive relief while alleging that the arbitration provisions of California Business & Professions Code section 19604 are invalid and unenforceable because they violate the U.S. and California Constitutions' Due Process and Contracts Clauses.

The dispute centers around a hub agreement reached on Dec. 22, 2020, between Santa Anita Park and CDI's two online wagering companies, TwinSpires and BetAmerica. The agreement specified the percentage the ADW companies would receive on each dollar wagered by California residents using their platforms. By California statute, the maximum an ADW company may receive to facilitate a wager is 6.5%. The agreed-upon percentage in the agreement between the ADW companies and Santa Anita is redacted in the court filings. According to the lawsuit, TOC asked that the hub fee be reduced to 4.1%, which the complaint said “would cost Churchill Downs Technology millions of dollars and upset almost a decade of an established course of dealing between the contracting parties.”

TOC is not a party to the contract. By law, according to the complaint, an ADW provider can choose to enter into a hub agreement with a racetrack, a horsemen's organization, or both. However, under section 19604, the horsemen's organization (or racetrack) may file a written demand for arbitration within 10 days of receiving a copy of a hub contract. TOC did so on Dec. 31.

Two months earlier, on Oct. 28, the suit alleges, TOC president and CEO Greg Avioli asked Churchill Downs Inc. executive Mike Ziegler to “voluntarily return the equivalent of 1% of the total” wagered on the company's ADW platforms in 2020. “TOC threatened that if Churchill Downs Technology did not comply with its 'voluntary' request, it would demand arbitration pursuant to section 19604,” the complaint alleges, calling the effort a to retain additional revenue a “shakedown.”

In a statement issued by Avioli after the TOC learned of the lawsuit, he said: “ADW wagering in California increased by over 40% year over year statewide in 2020 while purse generation from live tracks and OTBs dropped substantially due to COVID-19 closures and restrictions. In 2020 CDTIC received over $7 million of hub fees from ADW wagers by California on Thoroughbred races. TOC's decision to exercise its arbitration rights under California law came after CDTIC declined to reach a voluntary settlement of the matter.”

The complaint suggests that California racing – not TwinSpires or BetAmerica – was the real beneficiary when wagering shifted from on-track to online during the pandemic.

“Online and telephonic wagering, known as advanced deposit wagering, has transformed horse racing in the state, and allowed the many stakeholders involved in horse racing to continue to prosper,” the complaint states. “This has been particularly true since the beginning of the COVID-19 pandemic, which led to limited races and limited spectators for months.

“ADW providers, such as TwinSpires and BetAmerica, make significant investments in technology, marketing and customer service to bring horse racing to as many fans possible, attract new fans, and make wagering on horses fun and easy,” the complaint continues. “During the COVID-19 pandemic, the ADW distribution not only kept fans engaged when they could not otherwise go to a racetrack, but also attracted and created many new fans of horseracing. Rather than appreciating this necessary and growing distribution outlet, the TOC has treated the ADW providers as competition, not as valued partners. This is bad for racing fans and horseracing as a whole.”

TOC's Avioli said the statute concerning arbitration is long established and clear.

“The specific provision in California law (Business and Professional Code 19604 et. seq.) authorizing the arbitration of hub fees is nothing new and, in fact, has been unchanged in California law for more than two decades,” Avioli said in a statement. “We intend to move forward with the hub fee arbitration in an expedited manner and believe the attempt to disrupt the arbitration by CDTIC with this last-minute federal lawsuit has no merit.”

According to section 19604, the arbitration must take place within 60 days of a formal request. The arbitrator has 15 days to render a decision on whether to maintain the contract as signed or to change the fee to the percentage requested by TOC.

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Churchill Rebranding BetAmerica Sportsbook And iGaming Under TwinSpires

Churchill Downs Incorporated (“CDI” or “Company”) (Nasdaq: CHDN) announced today it will move to a single brand strategy for its online wagering segment by rebranding the Company's sportsbook and iGaming platform as TwinSpires.

The brand transition from BetAmerica to TwinSpires will begin with CDI's online sportsbook and iGaming launch in Michigan later this month, pending final regulatory approval. BetAmerica retail and online sportsbooks operating in Colorado, Indiana, Michigan, Mississippi, New Jersey, and Pennsylvania will also transition to the TwinSpires brand during the first half of this year.

The TwinSpires brand has been utilized by CDI's online pari-mutuel wagering business since 2007. TwinSpires is widely recognized within the online betting world for its access to premier world-wide horse racing content, nearly 150 years of wagering history for handicapping races and unique customer experiences at the Kentucky Derby. TwinSpires players will continue to enjoy the same internally-developed, industry-leading technology platform for horse racing wagering and exceptional customer service to which they've become accustomed. For online sports betting and iGaming, customers will experience a new technology platform powered by GAN Limited and Kambi Group PLC.

“Our TwinSpires brand has consistently delivered over 13 years and is associated with more than a century of wagering experience. That history and heritage offers a unique point of difference in a competitive space,” said Bill Mudd, President and Chief Operating Officer of CDI. “We remain focused on building a profitable sports betting and iGaming business that provides our customers with an integrated experience alongside our horse racing wagering platform. The transition to TwinSpires not only generates marketing efficiencies, but also allows us to deliver a more complete overall experience to our growing online wagering customer base.”

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$2 Total Investment Nets $328,146 Pick 6 Payoff At Churchill Downs

Christmas arrived early for one lucky TwinSpires advance deposit wagering customer who turned 20 cents into a whopping $328,146 playing the races at Churchill Downs in Louisville, Ky., on Thanksgiving.

The player's good fortune came from hitting the Pick 6, a bet type that requires the horseplayer to correctly pick the winner of six successive races.

The TwinSpires horseplayer spent a total of $2 on Pick 6 tickets, and as luck would have it, one of his 20 cent straight wagers hit the jackpot.

“It's incredible that this player was able to hit this massive win with a straight 20 cent ticket,” said TwinSpires handicapper, Ed DeRosa. “People often play thousands of different combinations in a Pick 6 wager, so this player can thank his lucky stars he's been able to turn two dimes into a life-changing windfall.”

Thursday's Thanksgiving Pick 6 at Churchill Downs was staged on Races 6-11, and the winning numbers were 6-5-9-3-1-4.

Churchill Downs offers the Pick 6 on the final six races of each day's card. Horseplayers can watch and wager on the Pick 6 with TwinSpires.

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Twinspires Triple Crown Throwdown: Kentucky Derby

Ed DeRosa of Brisnet.com takes on TDN’s Steve Sherack and Brian DiDonato as they handicap Triple Crown prep races plus the big three races themselves. The three will make $100 Win/Place bets in the preps and $200 Win/Place bets in the Kentucky Derby, Preakness and Belmont. Highest bankroll at the end wins.

DeRosa – Bankroll: $5480 – Pegasus ResultSkyscanner made no impact at a big price.

GI Kentucky Derby – Tiz the Law is my pick to win the GI Kentucky Derby. He is the most likely winner, and my wagers will go through him attempting to hook up other non favorites with him (i.e., I think other favorites are less likely to win their races than Tiz the Law is to win the Derby). But this is a win-place exercise, and Max Player gives us our best chance to catch Brian, as he might pay more to place than Tiz the Law would to win and place. Clockers have noted the work Steve Asmussen has put into Max Player since joining his barn, and as a colt who’s always run his race behind Tiz the Law, he feels more like a should-be third choice than the likely fifth choice. Selection: #2 Max Player (30-1).

Sherack – Bankroll: $4110 – Pegasus Result – Granted, the competition wasn’t much, but still nice to see Pneumatic run the kind of race I knew he was capable of.

GI Kentucky Derby – I’m not nearly as confident as I was a month ago prior to Tiz the Law’s jaw-dropping win in the GI Runhappy Travers S., but it’s still Honor A. P. for me. While the Shared Belief S. was obviously a disappointing result for the stunning dark bay, especially following his breakthrough win in the GI Runhappy Santa Anita Derby, it was never going to be the right kind of spot for him cutting back in distance and facing only three rivals ahead of his main objective on the first Saturday in September. Can he improve off his visually impressive win in the Santa Anita Derby and take the necessary leap forward to take on Tiz the Law at 1 1/4 miles here? I’m betting that he does. Ny Traffic is my longshot for underneath. Selection: #16 Honor A. P. (5-1). 

DiDonato Bankroll: $5500 – Pegasus ResultBig City Bob didn’t do anything.

GI Kentucky Derby – Since I’ve got this huge $20 lead to protect, I’m going to chalk out and go with Tiz the Law. I just don’t see a knock on him–especially now that he’s proven over 10 panels and in fact ran his best race ever at that distance. Maybe he’s a bounce candidate, but he certainly wasn’t all out in Saratoga and his recent breezes have been super strong. He’s the tactical type who almost always works out a good trip and the post doesn’t bother me–good luck if you’re trying to beat him. I think Honor A. P. is by far the second most likely winner, but that’s not an interesting opinion either. Money Moves and Max Player are the price horses I’ll likely include underneath to try to spice things up. Selection: #17 Tiz the Law (3-5).

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