Stronach Group, DerbyWars in Settlement Talks

Officials say they are "heading down a path" to a settlement.

The Stronach Group and horse racing contest site DerbyWars may be on a path toward settling their pending lawsuit, according to comments made by officials from each organization Feb. 24 during and after a California Horse Racing Board committee meeting.

In a conversation about pending legislation that could have an impact on horse racing in California during a Legislative, Legal and Regulations Committee meeting at Santa Anita Park, The Stronach Group representative Scott Daruty said talks of a settlement between the two parties have begun.

ANGST: Stronach Tracks Sue Contest Site DerbyWars

"We've had some discussions with them on potential settlement and they seem open to paying compensation to the racing industry," said Daruty, who represented The Stronach Group tracks Santa Anita and Golden Gate Fields at the CHRB meeting. "While there's no agreement reachedI wouldn't even describe it as particularly closewe're heading down a path that will get us there."

Daruty also reemphasized his position regarding horse racing contest sites that use racetracks' results without having to pay fees similar to advance deposit wagering operations during a conversation relating to AB 1437, a bill that would "enact the Internet Fantasy Sports Games Consumer Protection Act." Daruty, along with CHRB members and staff, felt the bill, as currently formulated, could provide a loophole to sites that use public information to conduct contests with entry fees and cash prizes.

"The concern is it would be a vehicle for fantasy horse racing to exist completely outside of CHRB (overview) and if that's a good idea or not is something staff is considering," said CHRB general counsel Philip Laird.

"The contests are being conducted on the product of the racetrack and the horsemen, with no compensation and no permission," Daruty added. "We do believe there would be an amendment on this bill that wouldn't allow horse racing without certain approvals."

DerbyWars chief executive officer Mark Midland, although not in attendance at the CHRB session, agreed that the website is willing to pay what essentially amounts to fees paid by other ADWs.

"DerbyWars has made it clear to The Stronach Group that we are willing to contribute financially for using its tracks in contests," Midland said. "DerbyWars is currently not a content rights holder, and contributing to the tracks will bring access to data and live video, which will be key to engage increasingly larger groups of new fans through contests."

Also during the meeting:

  • The committee moved forward on a proposal to require microchip identifiers in racehorses. The proposal will be addressed during the full CHRB meeting Feb. 25, where it could be approved and sent to a 45-day comment period. Beginning in 2017 The Jockey Club will require microchips to register foals. Jeff Salmon, from the CHRB's Track Safety Program, said he'd like the microchip program for all racehorses "to be up and running, and fully implemented, by 2018."

  • The committee supported pursuing legislation that would make the conducting of unauthorized match races with wagering a felony, instead of a misdemeanor. The CHRB has received several inquiries about illegal gambling on these races—reportedly conducted on private ranches and farms, and mostly with Quarter Horses—and has investigated the matter, but currently relies on local law enforcement agencies to enforce the statute. Match races on private property are allowed, but gambling on those races is not. Laird said investigations have identified "more than 30 licensees that are known to participate in these match races... Given the opportunity, we will not hesitate to prosecute any of the people participating in this."

  • Santa Anita is seeking approval to offer gambling on an Arabian race in April. Under its current licensing, Santa Anita is allowed to conduct Arabian races, but cannot yet offer wagering on those races.