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Wednesday, April 17, 2024 | Back issues
Courthouse News Service Courthouse News Service

Fantasy Horserace Site Called a Racket

LOS ANGELES (CN) - Owners of Santa Anita and Pimlico racetracks sued a fantasy horserace site, claiming DerbyWars' interstate betting games are a racketeering operation that violate the Interstate Horseracing Act.

Eight racing associations, including Los Angeles Turf Club, Gulfstream Park Racing Association, the Maryland Jockey Club of Baltimore City and Laurel Racing Association, sued Horse Racing Labs, a Delaware LLC dba DerbyWars, on Dec. 2 in Federal Court.

The racetrack owners and operators claim DerbyWars is an illegal interstate sports betting operation, based on the outcome of races at their parks, without their consent.

Los Angeles Turf Club and Los Angeles Turf Club II own Santa Anita racetrack. The Maryland Jockey Club of Baltimore City and Laurel Racing Association hold the Preakness Stakes at Pimlico Park.

DerbyWars, they say, "is indisputably a form of wagering on the results of horse races, which is not in compliance with federal or state laws, because the consents required under the Interstate Horseracing Act have not been given and DerbyWars does not hold a license permitting it to accept wagers from California, Florida, Maryland or Oregon."

DerbyWars players pay to enter pools and choose the outcomes of real races to move up or down a leader board for a chance to win cash prizes. DerbyWars keeps a percentage of the money pooled for each tournament or duel between players, but does not give a percentage to the tracks where the races are run.

The Federal Wire Act (18 U.S.C. § 1084) prohibits the transmission of wagering information across state lines. The Interstate Horseracing Act of 1978 created the only exception to it, by allowing off-track pari-mutuel wagering in one state on races held in another state, according to the racing associations.

That exception applies only to operations that have the consent of the host racing association and its horsemen's group, the host racing commission, and the off-track racing commission, the racing organizations say in the complaint.

California's Business & Professions Code allows licensed racing associations and advance deposit wagering outfits to accept wagers only on horse races in California, and Florida, Maryland and Oregon have similarly restrictive laws.

"DerbyWars does not hold, nor has it ever held, a license to conduct wagering on horse racing in California, Maryland or Oregon," the racing organizations say.

The traditional racetracks say licensed pari-mutuel wagering outfits pay them a "host fee" based on a percentage of the "handle," or total wagers placed on their races, but DerbyWars pays them nothing.

DerbyWars describes itself on its website as a fantasy sports league in which its clients predict the outcomes of races held around the country and can participate in pools or go one-on-one against other DerbyWars clients.

The racing associations say DerbyWars does not meet the definition of fantasy sports, as defined by the Unlawful Internet Gambling Enforcement Act of 2006, because bets are placed on actual horses, jockeys and events, instead of the concocted fantasy teams and events, such as fantasy football games, that are popular among fans of football, baseball and other professional sports, which also have come under legal attack recently across the nation.

The racing associations seek restitution, an injunction, and treble and punitive damages for RICO violations, violations of the Interstate Horse Racing Act and the California Business and Professions Code, and interference with prospective economic advantage.

They are represented by Richard Specter with Corbett, Steelman & Specter, of Irvine, who was not available by telephone on Friday.

DerbyWars did not return a phone call seeking comment.

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