Churchill Downs and the New York Racing Association (NYRA) are among several horse racing companies trying to get a federal court to dismiss a lawsuit claiming that computer-assisted wagering (CAW) operations get unfair advantages in pari-mutuel betting pools.
Horseplayers Challenge Alleged CAW Advantages in Betting Pools
The class action suit was filed last year by horseplayer Ryan Dickey on behalf of seven bettors. The lawsuit alleges that Churchill Downs, NYRA, The Stronach Group, and several wagering technology companies violated federal and state laws through their relationships with CAW operations, as reported by Blood Horse.
The defendants filed motions to dismiss in June. The filings were made public in the federal court docket in September. The case is being tried in the US District Court for the Eastern District of New York.
The crux of the argument is the pari-mutuel betting activity of the CAW companies. Pari-mutuel systems pool the bets together, unlike fixed-odds wagering. When the track has taken its cut, the money left is divided among the winning tickets.
The plaintiffs argue that large CAW operators are given preferential treatment through mechanisms such as rebates and access to cutting-edge wagering technology. Additionally, they say that these customers can place a large number of bets right before betting is about to close.
The complaint says that such activity can change the final odds after regular bettors have already placed their bets. The plaintiffs also say relationships between racetracks, advance-deposit wagering platforms and tote companies give some defendants substantial leverage over the infrastructure that supports the pools.
CAW Lawsuit Could Test Horse Racing’s Betting Infrastructure
The complaint cites the business relationships between Churchill Downs, Stronach and NYRA as evidence of this structure. Churchill Downs runs racetracks and has wagering and tote businesses, and Stronach and NYRA also have stakes in various parts of the betting network.
The defendants challenge the lawsuit’s fundamental premise. They argue in their filings that plaintiffs have not shown direct financial injury from the alleged conduct.
They also contend that the bettors have failed to identify specific wagers for which the CAW activity caused measurable reductions in their returns. The defendants argued that the final payouts are the result of choices by a multitude of bettors and cannot be blamed on racetrack operators or technology companies.
The companies are also contesting the lawsuit’s claims under the federal Racketeer Influenced and Corrupt Organizations Act (RICO). They say the allegations do not meet the legal elements of that type of claim. In addition, claims under laws in seven states and common-law theories are challenged.
The dispute could have broader implications for the growing reliance on high-volume, technology-driven wagering in the horse racing industry. CAW operators have emerged as major participants in racing pools, and the plaintiffs’ argument revolves around whether their business models create an uneven playing field for traditional horse players.
The court will hear arguments on the motions to dismiss on October 9. No decision has been made on the merits of the allegations, and the defendants’ motions are now asking the court to dismiss the case before it even gets to the merits.