CDI Includes Kentucky Horsemen in Suit

CDI Includes Kentucky Horsemen in Suit

Churchill Downs Inc. has amended its lawsuit against Florida horsemen and the Thoroughbred Horsemen’s Group to include certain Kentucky horsemen associations and officers, an action in which all defendants are charged with violating federal antitrust laws.

The amended complaint, which was filed May 14 in the U.S. District Court for the Western District of Kentucky in Louisville, adds to its list of defendants the Kentucky Horsemen’s Benevolent and Protective Association, the Kentucky Thoroughbred Association, as well as Kentucky HBPA officers Rick Hiles and Martin A. Maline, and KTA executive director David L. Switzer.

The amended complaint contains similar language to the original one filed April 24, charging all defendants with violating the federal Sherman Antitrust Act by conspiring to have the THG negotiate for horsemen on contracts for dividing revenues from advance deposit wagering companies, which specialize in Internet and telephone wagering.

“In order to coerce ADW operators to accept the collusively-set price for signals, the THG and certain of its co-conspirators have undertaken a joint boycott …,” the complaint said. “These horsemen’s groups have made their demands clear: they will not permit ADW operators to accept wagers on that track’s races unless the ADW operator agrees to pay a fee equal to one-third of the takeout to the horsemen through contributions to purses.”

Hiles declined to comment when reached by phone, as did Switzer. Lexington attorney Douglas L. McSwain, who represents the National HBPA and has signed onto represent the defendants in the original lawsuit, said the amended complaint carries much of the same language as the first.

“I still don’t think it stakes a claim,” said McSwain, who was part of a panel that addressed a May 13 public forum attended by more than 150 Kentucky horsemen and others. “I would expect there to be legal challenges on our side to the sufficiency of this complaint.”

Specifically, McSwain feels that the Interstate Horseracing Act of 1978 "trumps" the authority of federal antitrust laws, an opinion he said a Kentucky federal judge confirmed in 2007 lawsuit the Choctaw Indian Nation brought against the Kentucky HBPA over an unrelated signal dispute.

“We don’t believe that antitrust laws are applicable in the context of horsemen’s consent rights,” McSwain said. “The antirust laws are premised on concept that there is free and open commerce on all items of trade. That is the exact opposite that goes on with interstate horseracing, which is governed by IHRA. It says that no commerce is to go across state lines, unless specific groups have given consent.”

Horsemen are seeking a one-third slice of the takeout revenue generated through the wagers of a selected group of ADWs. So far, no tracks or ADWs have agreed to the demands, resulting in the shut off of signals at Calder Race Course, Churchill Downs, Lone Star Park, Presque Isle Downs, River Downs, and Thistledown, with Louisiana Downs expected to join the list in the next day or two.

"The KHBPA and KTA continue to block the Churchill Downs signal from being offered to national ADW platforms and Calder, despite the fact that since our entry into the ADW business last year we have nearly doubled host fees paid by ADW businesses to our racetracks and horsemen partners," said CDI executive vice president Steve Sexton in a news release.

The original lawsuit targeted Florida HBPA and its officers, as well as the THG and its officers, over actions that resulted in the withholding of both ADW and interstate simulcast signals at Calder Race Course. The THG has been assigned negotiating rights by many of its 18 member horsemen's groups.

In addition to CDI and Calder, the plaintiffs include Churchill Downs Technology Initiatives Co., which incorporates CDI’s ADW platforms under the brand.

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