By T. D. Thornton
The parent company of DerbyWars filed notice with the United States Central District Court of California on Monday that it will seek dismissal of two of the four complaints against it in a lawsuit filed by tracks owned by The Stronach Group, including the most serious plank of the case, which alleges violations of the Racketeer Influenced and Corrupt Organizations Act (RICO).
The Louisville-based Horse Racing Labs, LLC, waited until the court-imposed Feb. 22 deadline for filing such a request, which asks dismissal “without leave to amend” of both the RICO complaint and a complaint of Intentional Interference with a Prospective Economic Advantage. In addition, DerbyWars is petitioning to have the word “damages” stricken from some sections of the federal lawsuit.
The Stronach-vs.-DerbyWars court battle has been widely viewed as a test case to determine the legality of fantasy- and tournament-styled online gaming based on horse race results.
Proponents of fantasy racing have consistently framed the “entry fees for lucrative cash prizes” tournaments as a means to market the sport while growing interest and educating customers. Those who oppose this style of play call it a form of illegal betting that usurps the racing product without directly contributing to the sport's revenue stream.
The Feb. 22 DerbyWars court filing stated, in part: “Plaintiffs fail in their half-hearted attempt to state a claim under RICO–the 'thermonuclear device' of civil litigation…Put simply, Plaintiffs' RICO claim is based on speculation that Derby Wars's customers might bet at their tracks if not for the fantasy league option offered by Derby Wars.”
On Dec. 2, Santa Anita Park, Golden Gate Fields, Gulfstream Park, Laurel Park, Pimlico Race Course and Portland Meadows demanded a jury trial to seek unspecified monetary, punitive and exemplary damages, plus injunctive relief, from DerbyWars.
Of the suit's four complaints, the RICO allegations could be the most financially devastating to the five-year-old DerbyWars, because RICO victims are entitled to mandatory triple damages. Two other complaints involve violations of the Interstate Horse Racing Act and the California Business & Professions Code.
Mark Midland, the founder Horse Racing Labs, wrote in a Tuesday email that “we are actively working to resolve the pending litigation” with the Stronach Group.
“DerbyWars is actively working to partner with tracks and establish a model for contest sites to contribute to tracks. We have agreements in place for 2016 and are looking to add more tracks,” Midland wrote. “The Stronach Group lawsuit threatens all contests in horse racing, including the National Handicapping Championship, the Breeders' Cup Betting Challenge, all online contests, as well as contests at racetracks, including contests run at Stronach Group tracks such as Santa Anita and Gulfstream… Contests are one of the bright spots in racing and we hope to see contests continue to grow in the future.”
The petition filed on Monday asks for an April 25 court date to hear the motions to dismiss and strike. — @tdthornton
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