Judge Orders BUSR to Pay Stronach Group $3.64 Million

In a ruling that figures to provide some measure of protection for tracks and horsemen in the fight against unlicensed wagering on their signals, a United States district court has ruled that a bet-taking entity known as BUSR should pay $3.64 million to the 1/ST Racing-affiliated owners of Santa Anita Park and the former Golden Gate Fields. Judge Fred W. Slaughter of the U.S. District Court for the Central District of California ruled Nov. 13 that entity BUSR (sometimes referred to as Bet U.S. Racing) pay compensatory damages of $1.79 million to Pacific Racing Association, owner of the former Golden Gate Fields; and $1.85 million to Los Angeles Turf Club, owner of Santa Anita Park. BUSR is not licensed by the California Horse Racing Board. Both of those track owners fall under The Stronach Group or 1/ST Racing banner. The ruling was made against "a non-appearing party," as representatives of BUSR did not mount a defense in the lawsuit. At one point in the suit, BUSR is partially defined as an "unknown form." Its website says it is an "international gaming company with offices in the United Kingdom and the Americas." Horse racing's business model relies on money generated by licensed outlets that agree to pay host fees and commissions in order to offer wagering on those track simulcasts. Those payments help keep tracks in business and fund purses. The track owners had argued that BUSR violated standards of the Interstate Horseracing Act. In arriving at its ruling, the court noted that, "plaintiffs grant consent under the IHA only to operators who agree to pay plaintiffs compensation for accepting interstate off-track wagers on horse races conducted by plaintiffs." The court found that "BUSR accepts bets from out-of-state bettors on plaintiffs' races without plaintiffs' consent." Not everything went the tracks' way. They also had alleged violations of the Racketeer Influenced and Corrupt Organizations Act which provides cause of action to any person in his business or property injured by a violation of the statute. The tracks argued that the site violated RICO laws in conducting its business by interstate telephone, wires, and Internet in a variety of ways, including online credit card charges and related payment methods. The court said without specific allegations identifying specific wires or mailings in furtherance of the scheme—or similar detail in several other arguments the tracks used to tie the case to RICO—the tracks failed to adequately allege the predicate act of wire fraud. For that reason—a difficult hurdle to clear in a civil case—the court found the tracks' RICO claims inappropriate. Also, the court found that BUSR's accepting wagers from California residents without authorization of the CHRB is not appropriately brought under the IHA. This finding led to the somewhat odd outcome of an injunction ruling that prohibits BUSR from accepting racing wagers on Santa Anita races going forward from "persons outside of California but otherwise within the United States." The court noted that injunctive relief "should be narrowly tailored to remedy the specific harms shown by the plaintiffs." The $3.6 million in compensatory damages was determined by the court's finding that $5,000 a race day was an appropriate amount to compensate for the harm plaintiffs sustained by BUSR's acceptance of improper wagers. The tracks said BUSR accepted wagers on 358 days at Golden Gate and 370 days at Santa Anita. The case also saw the track owners pursue damages against the site US Racing, described as a marketing arm for BUSR. The court found that the US Racing site did not violate the IHA and is a separate entity from BUSR. With that, the court did not find any damages against US Racing. An expert familiar with this case and similar cases noted the ruling may give BUSR some pause or see it reconstituted under a new banner, but either way, there will be little chance of collecting the assigned damages. Still, the court's finding in favor of default judgement under the IHA in favor of the tracks to the tune of $3.5 million should provide some protection of U.S. racing signals in an ever-changing internet landscape. The court noted the CHRB called unlicensed wagering on races "a continuing scourge on the California horse racing industry" because it's "difficult for legitimate industry participants to compete with unlicensed wagering platforms." The Stronach Group has been willing to go to court to protect its racing product. In 2017, the operator of the handicapping contest site DerbyWars, under a court-approved settlement, agreed to pay at least $500,000 to tracks owned by The Stronach Group, which filed suit in December 2015. In that case, a U.S. District Court Judge for the Central District of California agreed with The Stronach Group that entry fees paid by players at the handicapping contest site, DerbyWars, constituted a wager, subject to the rule of the Interstate Horseracing Act.