NJ Horsemen Give Up On Dream Of $150 Million Payday From Sports Leagues

After 2½ years of battling in court over a prize worth up to $150 million, New Jersey’s thoroughbred horsemen and five sports organizations — including the NFL and NCAA — collectively have decided they don’t feel like, well, gambling after all.

In a surprising climax to a contentious case, a bland three-page filing on Friday quietly set the stage for a dismissal.

In the “Stipulation and [Proposed] Order” — which merely needs a rubber stamp from a federal judge — the parties report about “the matter having been amicably resolved.”

The New Jersey Thoroughbred Horsemen’s Association motion for damages in excess of a 2014 bond — one designed to cover damages for a 30-day period — is to be dismissed without prejudice immediately. Furthermore, within 30 days of the judge’s approval, an Order of Dismissal will convert to a dismissal “with prejudice,” meaning that the charges can never be revived in court.

Horsemen make hay with settlement

So what do the horsemen get out of it?

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A simultaneous release of the full amount of the $3.4 million bond posted seven years ago — not quite the windfall once sought.

A ruling last month by U.S. Magistrate Judge Freda L. Wolfson may have triggered the deal. Wolfson had taken over the reins last summer from U.S. District Court Judge Michael Shipp, who ruled in favor of the sports organizations — which also included MLB, NBA, and NHL — on numerous occasions.

A pair of U.S. Third Circuit Court of Appeals panels had upheld Shipp’s rulings, though both times by mere 2-1 margins. The U.S. Supreme Court agreed to hear the case in 2017, and invalidated the Professional and Amateur Sports Protection Act of 1992 in May 2018.

That opened the door for any state to offer Las Vegas-style sports betting, and no state has taken greater advantage than New Jersey, where in November a U.S. record $931.6 million in wagers was taken at Atlantic City casinos, the state’s three racetracks, and on almost two dozen mobile apps.

New judge, same as the old judge?

In her ruling, Wolfson set a Jan. 13 date for a hearing to begin review of the amount of bond damages that the horsemen might receive.

“I am not satisfied that, based on this written record, [the New Jersey Thoroughbred Horsemen’s Association] has carried its burden of proving its damages are up to the bond amount, particularly since [the leagues] have not had an opportunity to challenge NJTHA’s experts,” Wolfson wrote.

Wolfson granted the leagues “limited discovery” to challenge the damage amount calculations of Chris Grove, the horsemen’s expert, via deposition.

Only after that dispute was solved, Wolfson added, might any request for damages be considered.

The ruling did not suggest that the horsemen were guaranteed any more success with Wolfson than they had with Shipp (the brother of former Arizona Cardinals running back Marcel Shipp).

The leagues have disputed Grove’s damage estimates, and the horsemen may have felt that the risk of seeing that $3.4 million dwindle was too risky.

For the leagues, getting out from under a $150 million threat — no matter how unlikely it was that they would lose — clearly would be worth mere six-figure payouts from each.

The high point for the horsemen

In retrospect, the complication in the case came from yet another Third Circuit ruling (with yet another 2-1 vote) that was announced in September 2019.

In another case involving an overruling of Shipp, Judge Marjorie Rendell, writing for the majority, found that the horsemen could seek damages for far beyond the four-week period of the bond in 2014.

That’s because from late 2014 until mid-2018, the horsemen could not offer sports betting at Monmouth Park.

Rendell noted that such a prohibition came about because the courts had relied on PASPA, the 1992 law that ultimately was found to have been invalid from the day it was signed into law.

“Whether a party is wrongfully enjoined depends upon whether it turns out that that party had a right all along to conduct the activity it was enjoined from doing,” Rendell wrote. “The entire concept of ‘wrongfully enjoined’ envisions a look back from the ultimate conclusion of the case: Should the enjoined party have been permitted to do what it was prevented from doing? Thus, whether a party was wrongfully enjoined depends upon the final judgment on the merits.

“Did it turn out that NJTHA had the right all along to do what they were enjoined from doing? There is no way that the answer to that question could be ‘no.’”

That seemed to give the horsemen new life, and hope for damages to be collected from 2014-18 — until Wolfson’s ruling, perhaps. Dennis Drazin, who runs Monmouth Park for the horsemen, did not reply to a request from NJ Online Gambling for comment.

Ten years later, it’s finally over

If the horsemen received any more than the $3.4 million of bond money in the deal, it’s not evident in the terse court filing — which asks the court to direct all parties to bear their own legal expenses.

But ultimately, the horsemen, in tandem with former New Jersey Gov. Chris Christie and the state’s attorney general’s office, took on the big sports “Goliaths” and won — revolutionizing gambling nationwide.

In the end, that, and the full amount of the bond money, proved to be enough for the horsemen. So a chapter that began with a now decade-old statewide referendum in New Jersey on sports betting finally has come to an end.

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