Accusing prominent players in the American horse racing industry of conspiring to “destroy value for retail bettors” in a rigged system centred around so-called computer-assisted wagering (CAW) platforms, the national law firm Hagens Berman filed a class-action complaint against them on Friday.
The Stronach Group, the Canadian owners of racetracks in California, Florida, and Maryland; Churchill Downs, the publicly traded company best known for owning the Churchill Downs Racetrack, the site of the Kentucky Derby; the New York Racing Association (NYRA), the nonprofit organization that conducts thoroughbred racing at New York’s three major tracks; AmTote International, a Stronach Group subsidiary that serves as a data clearinghouse for wagering pools at racetracks; and United Tote, another data clearinghouse owned by Churchill Downs and NYRA, are named defendants in the lawsuit, which was filed in the Eastern District of New York.
These organizations are targeted because of their connections to two significant CAW platforms that are utilized by enigmatic, wealthy gamblers: Velocity, a fully owned subsidiary of Churchill Downs, and the Elite Turf Club, which is 80% owned by the Stronach Group and 20% by NYRA. Racing & Gaming Services, a third CAW platform, is also listed as a defendant.
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The lawsuit claims that in an unlawful plot to manipulate betting pools and cheat regular bettors, racetrack owners and operators, along with their subsidiary data clearinghouses, grant their associated CAW platforms a number of benefits and preferential treatment.
Last-minute, high-volume betting
Based on computer analysis, well-funded, professional betting teams use CAW platforms to make incredibly clever and prescient bets. These platforms are able to handle several bets just seconds before a race starts in order to maximize earnings because of unique, direct links to clearinghouse data and real-time race feeds. According to the complaint, their operations now generate close to $4 billion a year, or roughly one-third of all horse racing betting in the United States.
According to the lawsuit, the special treatment that bettors receive through CAW platforms equates to “no-risk, no-loss” wagering because they are usually charged lesser fees and receive rebates that are not available to other bettors. The lawsuit also notes that “[t]he identity and make-up” of CAW platform users are “kept secret, and the sources of their funds are not publicly known,” further obscuring them and their operations.
By allegedly using the basic underpinnings of horse race betting to deny conventional bettors equitable winnings, the defendants are accused of violating the Racketeer Influenced and Corrupt Organizations Act. The house does not determine the odds for horse racing, unlike at a sportsbook. In a system called pari-mutuel betting, the bettors themselves set them.
