Some of the top personalities in US horse racing are facing a legal battle that accuses them of providing unfair advantages to computer-assisted gamblers in pari-mutuel pools, leaving regular bettors at a disadvantage.
The lawsuit claims that Churchill Downs, the New York Racing Association (NYRA), The Stronach Group, and various wagering technology companies are involved in a racketeering scheme that favors high-volume computer-assisted wagering (CAW) operations.
The defendants are seeking to dismiss the case, arguing that the plaintiffs, who are seven bettors, have not shown any actual financial harm caused by the alleged scheme.
The plaintiffs argue that the defendants have created a system that benefits high-volume CAW operations through preferential rebates, better access to betting infrastructure, and the ability to place large bets just before pools close.
This system, according to the plaintiffs, has disadvantaged regular bettors and reduced their potential returns.
Last-Second Bets
Unlike fixed-odds sports betting, pari-mutuel pools distribute bettors’ money, deduct a portion for the track, and divide the rest among winning tickets based on odds determined by the pool.
Racetracks operating pari-mutuel pools rely on wagering volume for revenue, making high-volume CAW operations valuable customers even when they consistently win.
The plaintiffs argue that CAW groups use advanced algorithms to identify favorable opportunities and place large bets just before pools close, causing odds to shift sharply to the disadvantage of regular customers.
The bettors claim that racetrack operators have ties to tote companies and platforms that serve both regular and CAW customers, allowing favored CAW customers to receive significant rebates that lower the amount they pay.
The defendants defend rebates as customer loyalty incentives similar to airline miles.
Where’s the Injury?
In their motion to dismiss, the racing companies argue that the plaintiffs have not proven that their losses were caused by the defendants.
According to the defendants, odds are determined by individual betting decisions, not by the tracks themselves.
They also argue that the plaintiffs have not provided specific examples where CAW activity resulted in smaller payouts for them.
The defendants are seeking to dismiss claims under the federal RICO Act, asserting that the bettors cannot establish a direct link between the alleged scheme and their losses.
The plaintiffs argue that there is a direct connection as the defendants control the betting infrastructure that allegedly puts regular bettors at a disadvantage.
The case is currently pending in the US District Court for the Eastern District of New York.