Judge: Rosecroft Anti-Trust Suit to Continue

In a case with ramifications for the transmission of full-card simulcasts, a judge with the United States District Court in Maryland has denied Thoroughbred interests’ partial motion to dismiss an anti-trust lawsuit filed by a harness track that has suspended operations and remains in bankruptcy.

Cloverleaf Enterprises, which owns Rosecroft Raceway in Prince Georges County, Md., south of Washington, D.C., filed the suit in the spring of 2009 when it began losing simulcast signals from Thoroughbred tracks. The signals were pulled after Cloverleaf refused to pay weekly payments of $118,000 to Maryland Thoroughbred interests for the right to take the signals.

In 2006, Cloverleaf entered into a long-term agreement with the Maryland Jockey Club, Maryland Thoroughbred Horsemen’s Association, and Maryland Horse Breeders Association that allowed Rosecroft to take Thoroughbred signals. Under the deal, Rosecroft is to pay the parties $5.9 million a year.

The cross-breed agreement allows a party owed any funds to terminate it and take legal action. The Maryland Racing Commission, which has jurisdiction under the Interstate Horseracing Act of 1978, stepped in last spring and revoked Rosecroft’s license to import the races.

According to the memorandum opinion in the case, Rosecroft informed the MJC, Maryland THA, and MHBA in August 2008 it could no longer afford the weekly payments. The parties agreed to a one-time payment of $470,000 for 2008 and began renegotiating the contract, but the talks ended in 2009.

There are seven counts in the case. The first one, alleging breach of the Sherman Anti-Trust Act, will continue through the discovery phase.

Cloverleaf has alleged a conspiracy and unreasonable restriction. In his Aug. 6 opinion, Judge Richard Bennett said : “The question remains, however, whether the actions Cloverleaf alleges (the) defendants took to encourage out-of-state racetracks to deprive Rosecroft of simulcast signals of nationwide Thoroughbred horse races could state a claim for concerted activity in violation of anti-trust law.”

Maryland Thoroughbred interests contend that even if they notified out-of-state groups about the breach of contract, the complaints “do not rise to the level of creating an interference of conspiracy in violation of the Sherman Act,” the memorandum opinion states.

Bennett did, however, dismiss Cloverleaf’s claim that the MJC, Maryland THA, and MHBA breached the cross-breed contract. He said the defendants’ withdrawing consent for transmission of signals under the Maryland Horseracing Act was “patently appropriate under the agreement.”

The defendants have been granted more time to respond to the breach-of-contract claim.

Rosecroft suspended live racing in 2008 and has been unsuccessful in attempts to revive it. The court case offers a look at how much Rosecroft—and other harness tracks—rely on income from Thoroughbred simulcasts to support operations and harness racing purses.

The memorandum opinion states that in 2007 and 2008, offtrack betting revenue accounted for 95% of Rosecroft’s annual revenue, with 75% of that derived from wagers on Thoroughbred simulcasts.

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