Stronach Group files federal lawsuit v. DerbyWars horseracing fantasy site

The Stronach Group has filed a federal lawsuit against the company behind horseracing fantasy site, accusing it of violating the federal Interstate Horseracing Act (IHA) of 1978.

On Wednesday, attorneys for the Stronach Group, whose properties include multiple racetracks in North America as well as the Xpressbet online advance deposit wagering business, sued Horse Racing Labs (aka Immerse) in US District Court for the Central District of California.

HRL stands accused of violating the IHA, offering wagers without a California license, intentional interference with prospective economic advantage and racketeering. Stronach’s attorneys have demanded a jury trial and are seeking unspecified damages plus court costs.

DerbyWars, which launched in 2011, operates similar to daily fantasy sports (DFS) sites, in that players assemble lineups of horses running in a series of races, then players match the performance of their lineups against those assembled by other bettors in either tournament or head-to-head contests. Like most DFS operators, DerbyWars isn’t available to players in the six states in which fantasy play is expressly forbidden.

Stronach’s complaint accuses the Delaware-registered, Kentucky-based HRL and its site of engaging in “indisputably a form of wagering on the results of horse races.” Specifically, the suit alleges that DerbyWars’ contests are a form of parlay wagering, as players rely on a collection of individual horses winning their respective races.

As such, Stronach attorneys argue that the fantasy carveout in the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) doesn’t let DerbyWars off the hook, as the UIGEA doesn’t apply to contests involving the performance of single teams or athletes, or any combination thereof. (DFS operator DraftKings, which offers contests based on single-player, single-event sports like golf and NASCAR, has been accused of similarly flaunting the UIGEA’s language on this issue.)

The UIGEA also states that none of its provisions supersede any federal or state gambling law, or legalize betting on racing that would otherwise be illegal under the IHA.

Stronach’s attorneys say that DerbyWars has never been issued wagering licenses in California, Florida, Maryland or Oregon; states in which Stronach owns and operates racetracks. Furthermore, DerbyWars has never reached a deal to pay a ‘host fee’ for accepting wagers on races offered by the Stronach companies.

The Stronach entities listed as plaintiffs include the Los Angeles Turf Club, Pacific Racing Association, Gulfstream Park Racing Association, Oregon Racing, Maryland Jockey Club of Baltimore City and the Laurel Racing Association.

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