Would-Be Cherry Hill Sportsbook Operator Suffers Legal Setback

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The Battle of Cherry Hill — the year-long court fight between a shopping mall developer and the former owner of the site over whether the developer can operate a sportsbook there — tipped heavily in one side’s favor on Thursday.

That side is the former site owners, GS Park Racing and Greenwood Racing, who received a favorable, though not final, decision from a federal judge.

U.S. District Court Judge Renee Bumb found that the former owners “will likely prevail on its position that the Restrictive Covenant is enforceable.”

The “covenant” is a 20-year-old piece of a real estate deal at the one-time Garden State Park racetrack near Philadelphia that prohibits subsequent owners from offering “horse racing, simulcasting, off-track betting, wagering activities, and gambling of any sort (collectively, “Gaming”) anywhere on the GSP property.”

Cherry Hill Towne Center, the current property owners, had noted that there is no mention of sports betting and that “any sort” clause is “overly broad.”

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But Judge Bumb completely dismissed that argument, writing in her 20-page Opinion that “the covenant can only mean exactly what it says” and that “sports wagering is a ‘sort’ of wagering.”

Mall owners’ arguments dissected

The current owners also tried to make the case that only Atlantic City casinos, the state’s racetracks, and this property (as well as the site of the defunct Atlantic City Race Course) are potential sportsbook options.

But Bumb noted that that limitation is due to the state’s sports betting law, not the covenant. Also, that covenant doesn’t prevent the operation of a sportsbook at the site — it only prevents anyone other than GS Park Racing/Greenwood Racing from operating it.

Less than two weeks after the state sports betting law was passed in June 2018, the former site owners informed their successors that they attach “significant importance and value to the rights [they hold]under the Restrictive Covenants.” A meeting was then suggested.

Judge Bumb wrote that rather than participate in such a meeting, “Cherry Hill Towne Center raced to the courthouse” to file a lawsuit seeking to make the covenant go away. That led later to private mediation, which appears to have gone nowhere.

So the case of a contradiction — Cherry Hill Towne Center has a right under state law to apply for and even receive a license to operate a sportsbook, but the restriction claims it can’t do it without consent of the former owners — now weighs heavily in favor of the former owners.

The obvious compromise would be for the current owners to acquire the license, then let Greenwood Racing — which owns and operates Parx Casino and Racing in Bensalem, Pa., and also has a half-share of Freehold Raceway — run the show. Or the former owners could be compensated for erasing the covenant.

As Judge Bumb put it, “either GSPR or Cherry Hill Towne Center has the right to operate sports wagering (with the appropriate license), but not both.”

Each side seemed to expect to have the judge on their side. Only one side was right.

Consolation prize

About the only thing that Cherry Hill Towne Center got out of the Opinion was the judge’s refusal to approve a “Motion for Preliminary Injunctive Relief.”

But even that conclusion by Judge Bumb only came because, for reasons unknown, the Cherry Hill Towne Center owners have not yet even applied for the sportsbook license more than a year after that door was opened to them.

Ordinarily, that might seem like a case of not wanting to go through New Jersey’s daunting — some might even say onerous — regulatory process such as background checks and other hurdles. But one of the principal owners of the current mall is Jack Morris, a prominent real estate developer who already has a “golden ticket”: He has the formal approval of the state Division of Gaming Enforcement from his part-ownership of Hard Rock casino in Atlantic City.

This summer, the mall operators told the court they intended to apply for the sportsbook license “as soon as possible.” Yet there is no claim to the judge that the status quo has changed.

Still, Judge Bumb said the mall owners have “persuaded this Court that a declaratory judgment will help it make a significant business decision: whether to undertake the time and expense necessarily involved in applying for a sports wagering license.”

What’s next?

So when does the affluent New Jersey suburb get its sportsbook? It’s not certain it will ever get one.

As the mall owners have noted previously, Greenwood Racing’s ownership of Parx casino and racetrack complex as well as off-track betting sites in Philadelphia and in Valley Forge could lead to a business decision to pass on its option for more gambling in Cherry Hill.

That’s not what New Jersey legislators such as former state Sen. Ray Lesniak had in mind when they sponsored the initial bill to create a loophole for the Cherry Hill site.

While critics have claimed that the exemption was a favor to South Jersey power boss George Norcross and his ally Morris, Lesniak once told NJ Online Gambling that he never spoke with Norcross about that detail.

Instead, Lesniak said that he was looking for a way to lure Pennsylvania gambling dollars over to New Jersey, since the Keystone State at the time had not passed its own sports betting law.

Now both states have mobile sports betting as well as brick-and-mortar options, lessening the potential tax revenue from a Cherry Hill sportsbook.

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John Brennan

John Brennan has covered NJ and NY sports business and gaming since 2002 and was a Pulitzer Prize Finalist in 2008, while reporting for The Bergen County Record.

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