The deadline for the parent company of DerbyWars to respond to a federal civil lawsuit over the legality of its online fantasy horse racing tournaments has been extended by one month, from Jan. 22 to Feb. 22.
The United States Central District Court of California granted the request on Friday after the defendant, Horse Racing Labs, LLC, filed a petition citing ongoing settlement negotiations between its executives and the representatives of six racetracks owned by The Stronach Group that could lead to “specific terms of an agreement and potential resolution of this lawsuit.”
The Stronach-owned tracks (Santa Anita Park, Golden Gate Fields, Gulfstream Park, Laurel Park, Pimlico Race Course and Portland Meadows) sued the company that owns and operates DerbyWars Dec. 2. The four-count complaint alleges that “bets” made through the Louisville-based online fantasy horse racing portal constitute “racketeering activity” that violates the Racketeer Influenced and Corrupt Organizations Act (RICO), and that DerbyWars is “indisputably a form of wagering” that operates without the tracks' consent in violation of the Interstate Horse Racing Act of 1978.
Two other complaints in the suit allege violations of California Business & Professions Code and Intentional Interference with Prospective Economic Advantage, which is a law that covers third-party disruptions of profitable business relationships.
The “stipulation to extend time” document that the defendant filed with the court on Jan. 12 includes a clause that points out that the plaintiff tracks jointly support the request for extra time in the interest of being able to “informally resolve” the plaintiffs' claims without having to go through the court system.
The petition also includes a timeline that explains how representatives of Horse Racing Labs flew to Los Angeles for a meeting with Stronach representatives Jan. 11, and an explanation of how “the parties have agreed to engage in additional in-person meetings” to give both sides “an opportunity to resolve this matter efficiently and expeditiously, to avoid unnecessary motion practice, and to preserve this Court's and the parties' resources.”
But the defendant's filing also included a caveat that “if the parties are unable to informally resolve Plaintiffs' claims, Horse Racing Labs presently intends to file, among possible other motions, a motion to dismiss the Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure and a motion to transfer pursuant to 28 U.S.C. section 1404(a).”
The court had already extended DerbyWars' deadline to respond once, from Dec. 22 to Jan 22.
“Both parties agreed that the settlement discussions were significantly substantive to warrant the submission of an extension,” Mark Midland, the founder of DerbyWars, wrote in an email in response to a TDN request for comment on Monday.
“Online contests, including those run by several industry groups, have taken place for several years without an established model of financial contribution to the industry,” Midland wrote. “As the leading contest operator, DerbyWars is looking to establish a model where contest sites can contribute to tracks. We are working with several tracks, including the Stronach Group, to establish agreements for 2016.”
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