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Judge Rules Belterra Owes Ohio HBPA $2.7M In ‘Deprived’ VLT Money

A money disagreement that has simmered for nearly a decade got a step closer to settlement Thursday when a federal judge ruled the Ohio Horsemen's Benevolent and Protective Association (OHBPA) is entitled to $2,769,652 in gaming revenues that the present and former owners of Belterra Park withheld between 2014 and 2018.

The dispute arose from Belterra's failure to pay the OHBPA its share of net-win video lottery terminal (VLT) commission from Belterra Park. The quarrel was exacerbated when the two sides disagreed over the rate that was supposed to be the horsemen's lawful cut and whether or not retroactivity applied to that rate, with the OHBPA alleging that Belterra's withholding of money over a four-year period amounted to “unjust enrichment.”

The Mar. 30 order by Judge Algenon Marbley in United States District Court for the Southern District of Ohio (Eastern Division) is not a final judgment. But the judge did write that, “this Court finds that statute requires Defendants to pay Plaintiff the [higher] 9.95% rate from May 1, 2014, to June 30, 2018 [and that] having found that no reasonable jury could find for Defendants on Plaintiff's unjust enrichment claim, this Court GRANTS summary judgment on this issue.”

Dave Basler, the OHBPA's executive director, told TDN via phone Friday morning that the horsemen were pleased with the ruling.

“We felt throughout that that was money that was owed to the horsemen, and felt strongly that that was something that we needed to pursue legally until it was resolved,” Basler said. “The money obviously would be a benefit to our purse account.”

The initial complaint filed Dec. 18, 2020, explained that 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.

That range of percentages was 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 the horsemen. But until a new, firm rate got set, 9% was to be used as the placeholder to determine purse proceeds, according to an escrow agreement negotiated between Belterra and the commission.

Belterra didn't open for VLT gaming until May 1, 2014, largely because the track formerly 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 complaint alleged that Belterra stalled and tried to overstate the costs it incurred fixing up the property, an allegation that Belterra denied.

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%. The OHBPA interpreted that rate to mean both retroactively and moving forward, while Belterra argued that the OHBPA was not due any retroactive funds, because Belterra and the commission had negotiated over the catch-up payments and had factored that aspect into the escrow agreement.

Four days after that final rate was established, the OHBPA did, in fact, begin receiving its full 9.95% from Belterra. But the bone of contention that led to the lawsuit had to do with the retroactivity surrounding the remaining .95% beyond the 9% stipulated in the escrow agreement. The OHBPA argued that Belterra never made good on the four-year difference between the placeholder rate and the revised rate, which is how the plaintiffs arrived at the $2,769,652 figure.

“Here, Plaintiff argues, because Belterra Park was the only racino in the state with which Plaintiff failed to reach agreement on the VLT commission rate, the parties entered a temporary 'escrow agreement' of 9% pending an administrative ruling by the Racing Commission,” the Mar. 30 order stated.

“Plaintiff maintains that the Escrow Agreement was only meant to be temporary; it could not set the commission rate because it was not a method authorized by the statute. As such, Plaintiff argues, the 9.95% commission rate must be backdated because the statute considers only one fixed rate that is to be applied from the moment the first coin is dropped,” the order stated.

The judge agreed with the HBPA's reasoning, explaining the decision this way: “This Court finds the best way to apply the statute is to do so based on its plain meaning. Plaintiff was due payment using a rate determined by the Racing Commission in the absence of an agreement with Belterra Park. The Racing Commission did eventually determine a commission rate of 9.95%. This commission rate is thus applicable for the entire period that Belterra Park operated its VLT gaming.

“Indeed, the statute provides that the Racing Commission must set the rate within six months. This did not happen. No authority indicates, however, that the Racing Commission's tardiness has any relevance to this case. As such, this Court finds that statute requires Defendants to pay Plaintiff the 9.95% rate from May 1, 2014, to June 30, 2018,” the order stated.

The OHBPA had also asked to be paid prejudgment interest on the outstanding payment. But the judge denied that request at the Mar. 30 summary judgment stage on a legal technicality because the plaintiffs failed to state whether they sought the interest “pursuant to statute or common law.”

The order did state, though, that the OHBPA could file a separate motion for prejudgment interest, which leaves that aspect of the case open for the time being.

Also unknown at this stage is whether the defendants plan to appeal. There are multiple parties involved on that side of the case.

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

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.

David Strow, Boyd's vice president of corporate communications, answered a Friday query from TDN about a possible appeal by emailing that the company did not wish to comment on the court order at this time.

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’23 Legislative Push Is On for New $455M Belmont Park

The 2023 push to secure bond funding for a new Belmont Park officially kicked off on a gray, chilly November morning with a press conference at the out-of-session New York State Capitol in Albany on Thursday. The unveiling of the legislative agenda for next year was hosted by the “We Are NY Horse Racing” coalition of small businesses, labor unions, non-profits, and trade associations.

While the scope of the years-in-the-planning project was largely framed in general terms as being able to bring state-wide economic benefits at no cost to taxpayers, several details did emerge about the ongoing attempt to modernize Belmont while closing Aqueduct Racetrack so that all downstate Thoroughbred racing eventually gets consolidated at one facility that is more functional and aesthetically pleasing than the other two outdated tracks.

The first bit of news is that the cost of the Belmont overhaul has risen slightly since a similar bond bill failed to gain support in the state legislature when the 2022 session expired in June.

Jeffrey Cannizzo, the senior director of government affairs at the New York Racing Association (NYRA), said a new Belmont would require “roughly $455 million” in state-backed bonds.

That's up 1.1% from the $450 million NYRA had sought via the bill earlier this year. But considering that inflation in the United States has rocketed upward at a 7.7% rate over the past year, that cost revision seems marginal.

“Belmont Park would be taken down, starting from scratch. So we're talking a completely new grandstand and clubhouse, right sized for a modern-age racecourse,” Cannizzo said.

Cannizzo also explained that “the clubhouse will be the last part of these efforts” and that the new, streamlined version of the facility would fit within a “similar footprint.”

Alluding to the work that's already being undertaken to build infield tunnels and possibly add a synthetic racing surface inside Belmont's cavernous infield, Cannizzo described the project as being built from the “inside out” if the state grants NYRA the bonds, which would then be paid back by NYRA through its share of video lottery terminal (VLT) revenue.

“Here's the vision: No taxpayer dollars are on the line. A state asset dramatically improves, and a world-class venue side by side with UBS arena,” Cannizzo said, referencing the recently-opened neighboring home of the National Hockey League's New York Islanders that, like the track, sits atop state-owned land.

“The VLT revenue comes that directly to NYRA, it's specifically earmarked for capital projects just like this,” Cannizzo said.

But because that revenue doesn't flow to NYRA in one huge $455-million chunk, It needs help from the state in fronting the money. The bonds would also likely offer a more attractive, lower rate than if NYRA sought a loan elsewhere.

The press conference was geared to a non-racing audience, and by having representatives speak from the Business Council of New York State and the Saratoga County Chamber of Commerce, it was clear that a primary goal of We Are NY Horse Racing is to get across the message that a rebuilt Belmont will generate trickle-down benefits extending far beyond just the Thoroughbred industry and the local economy on Long Island.

Najja Thompson, the executive director of the New York Thoroughbred Breeders, Inc., warned that, “Without a strong horse racing ecosystem in New York, breeders can decide to move across state lines.”

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Proposed Bill Would Gut Flow of Slot Money to NY Racing

Backed by a number of animal rights groups, two New York state lawmakers have introduced a bill that would end payments made to the state's racing and breeding industries from slot machine or video lottery terminal (VLT) revenue.

According to a press release issued Wednesday by the animal rights group NYCLASS, the bill would cancel out the $230-million payment made annually to horse racing and breeding and will redirect the money to “help New York's taxpayers, schools, workers and other social programs.”

NYCLASS has led the effort to ban carriage horses in New York City.

The legislation is sponsored by Linda Rosenthal in the Assembly and Zellnor Myrie in the Senate. Both are Democrats representing New York City. According to NYCLASS, it has the backing of, among others, PETA, Horseracing Wrongs, the New York State Humane Association and the Worker Justice Center of New York. NYCLASS calls the bill something that “counters decades of irresponsible waste” and will “end corporate welfare for horse racing–including millionaires and billionaires.”

“It's time we put an end to multimillion dollar taxpayer-funded subsidies that prop up a dying industry,” the press release quoted Rosenthal as saying. “The industry pockets the money to enhance purses and often abuses and neglects the horses in its care, while workers toil at low-wage jobs. We must stop subsidizing this cruel business and instead reinvest the funds where they're needed most – in public education, our human services sector, community redevelopment and wage theft prevention. My legislation is a statement of New York's evolving values, and I look forward to working with State Senator Myrie and the diverse and growing coalition of advocates to see it become law.”

The consensus among industry stakeholders Wednesday was that the bill had little chance of becoming law, but many were alarmed, nonetheless.

“This would have a disastrous effect, especially on the incentives and the momentum that the New Yor- bred program and our racing and purses have had overall,” said Najja Thompson, the executive director of the New York Thoroughbred Breeders.

About $60 million, or 37.5% of all purse money paid out at the NYRA tracks, comes from VLT revenue. The percentage is much higher at Finger Lakes and at the state's many harness tracks.

The New York Racing Association was quick to denounce the effort Wednesday while labeling advocates of the bill as extremists.

“NYRA will vigorously oppose this legislation in order to protect jobs for working families, preserve the horse racing economy and ensure the sport's success now and in the future,” NYRA spokesman Pat McKenna said in a statement. “Racing support payments are not subsidies. The payments from VLT revenues are made to the thoroughbred industry in part because NYRA transferred land and other intellectual property to the state in 2008, and has acted as the steward of the properties in the years since. The VLT payments are compensation for that transaction rather than subsidies. These payments further the sport's ability to serve as an economic engine–particularly in support of the tourism and hospitality industries, which have suffered significantly due to the COVID crisis.

“NYRA looks forward to the opportunity to engage New Yorkers and lawmakers in a real conversation about the massive industry connected to horse racing throughout the state. This is precisely why NYRA joined We Are NY Racing, the diverse coalition launched in September in support of horse racing.

“Organizations like NYCLASS, PETA and Horseracing Wrongs have long been philosophically opposed to horse racing and make no secret of their desire to end the sport,” he said. “This extreme agenda would deprive working families of jobs and opportunity and would negatively impact union and hourly workers at the worst possible time. Rather than a rational public policy disagreement, these groups are only interested in how best to damage horse racing to further their own political agenda. These groups are completely out of touch with the concerns of working families here in New York, and they cannot be trusted.”

Thompson, whose group is part of the We are NY Racing Coalition, said its incumbent on everyone in the industry to educate lawmakers about the positive economic impact of the sport.

“We have to make sure we educate lawmakers and the public and let them know that these are not subsidies,” he said. “They are payments made for agreements regarding intellectual property and the transfer of land. We need to continue to stress the economic impact that horse racing provides, the jobs, the land preservation, especially from breeding farms. That is the best way to counteract these fringe groups and legislation such as this that wants to do irreparable harm to our industry.”

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OHBPA Fires Back at Belterra’s Attempt to Dismiss ‘Deprived’ VLT Money Suit

The Ohio Horsemen's Benevolent and Protective Association (OHBPA) told a federal judge Mar. 23 that the present and former owners of Belterra Park are attempting to get out from under a $2.7-million lawsuit over gaming revenues that the track allegedly wrongfully withheld between 2014 and 2018 on the grounds that Ohio's statutory construct for racino revenue sharing offers horsemen no legal remedy when they are denied their fair share.

But in fact, the OHBPA states in a memorandum opposing Belterra's motion to dismiss the case, both common law and the state statute are on the side of the horsemen in allowing for exactly the sort of relief the OHBPA is seeking.

That's also what the OHBPA stated in its original Dec. 18 complaint that contended Belterra never made good on a four-year difference between a placeholder rate that was first established for video lottery terminal (VLT) gaming and an eventually revised rate.

The court filing states that the defendants “are holding [$2,769,652] in funds owed to [the OHBPA]. Belterra asserts that no claim can be made, or even exists under the law, so it gets to keep the money. An injury, perhaps, but no available relief, says Belterra. In essence, Belterra acknowledges it is the beneficiary of the windfall, then attempts to find cover from the General Assembly, the Ohio State Racing Commission, and an escrow agreement to which the OHBPA was not a party.”

The OHBPA states that Belterra's theory for dismissing the suit “rises and falls on the faulty notion that the statute at issue–Ohio Revised Code Section 3769.087(C)–essentially 'preempts the field,' and thus leaves a horsemen's association no recourse in cases of mishandled funds or revenue-sharing disputes between race tracks and horsemen. But Belterra has utterly failed to show that the statute forecloses private rights of action or common-law claims, citing no statutory language and no case law requiring such a result.

“Second, the OHBPA's Complaint states valid common-law causes of action upon which relief may be granted,” the filing continues.

“Lastly, the OHBPA states valid claims under a private-right-of-action theory. For these reasons, and those further set forth below, the Court should deny Belterra's Motion to Dismiss.”

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

According to the defendants' motion to dismiss filed Feb. 16 in United States District Court for the Southern District of Ohio (Eastern Division), the Belterra collective alleged that the “OHBPA has failed to state any viable claims against Defendants. OHBPA's cleverly labeled claims are nothing more than an attempt to plead around the fact that there is no private right of action under the relevant Ohio statute or regulation. Quite simply, OHBPA has no right to receive the “catch up” payments and only the Racing Commission is authorized to enforce [the relevant state codes] and the Resolution.”

According to the OHBPA's 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 contended.

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 alleged Belterra stalled and tried to overstate the costs it incurred fixing up the property.

The post OHBPA Fires Back at Belterra’s Attempt to Dismiss ‘Deprived’ VLT Money Suit appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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