Magistrate Report Sets Back 'Rigged Betting' Lawsuit

A federal magistrate judge recommended dismissal of a class action lawsuit accusing major players in the Thoroughbred gambling industry of unlawfully reaping profits through their participation in computer-assisted wagering. The lawsuit alleges Churchill Downs Inc., United Tote Company, New York Racing Association, AmTote International, Elite Turf Club, Elite Turf Club NV, The Stronach Group, and Racing and Gaming Services (St. Kitts) of engaging in fraud and racketeering that results in betting pools rigged against ordinary bettors. Previous reporting at BloodHorse defines CAW as betting from players who rely on computer algorithms to scan wagering pools and find value relative to any handicapping opinion. They typically are large-volume players who receive large rebates based on that significant handle. They also typically have the advantage of being the final players in the pools, as their computers allow for hundreds or thousands of wagers to be placed through multiple pools just before they are closed. READ: Lawsuit Argues CAW Amounts to Rigging Betting Pools The recommendation of Magistrate James M. Wicks was filed in the United States District Court for the Eastern District of New York. It is subject to review by the federal district judge assigned to the case so long as objections are timely filed. Wicks agreed with multiple arguments advanced by the defendants, primarily that plaintiffs led by Ryan Dickey did not allege a factual injury and thus do not have legal standing to bring the lawsuit; and even if they were able to prove gambling losses, blaming defendants for the losses is too speculative to allow relief. READ: Major Players Look for Dismissal of CAW Lawsuit "Plaintiffs do not allege that they ever held a winning ticket" that was diminished in value by large CAW bets, Wicks wrote. "The Court cannot assume Plaintiffs were impacted by the alleged rigging scheme. On this basis alone, the FAC (first amended complaint) should be dismissed, albeit without prejudice." However, although Wicks' report would allow plaintiffs to amend their complaint again in order to allege specific damages, he also found any such injury cannot be sufficiently traced to actions of the defendants. "Having determined that the FAC as a whole fails to establish both injury in fact and traceability, the undersigned respectfully recommends dismissal of all claims by all Plaintiffs against all Defendants," Wicks wrote. Wicks went further, writing that even if plaintiffs have standing and can prove causation of damages, their allegations of fraud and racketeering fail to meet legal standards. "(A) ‘bare bones statement’ of conspiracy will not withstand a motion to dismiss, and sufficient facts must be alleged to allow the defendant to form a response," he wrote. He reiterated that plaintiffs only pleaded "theoretical economic injury," not actual damages that must be proven to sustain claims of fraudulent or racketeering behavior. The magistrate also recommended dismissal of state law claims based on alleged violations of statutes in California, Colorado, Florida, Illinois, New York, Ohio, and Pennsylvania, along with common law claims of conversion, unjust enrichment, and conspiracy. Plaintiffs in the lawsuit are Dickey, Nicholas Seevers, Michael O'Brien, Tammy Monnin, Randall Raynolds, Joseph Paladino, Mike Zelen, and others similarly situated. Wicks submitted the 68-page report just 14 days after oral arguments were held Oct. 9.