NJ Horsemen Tell Court Of ‘Lies’ By Leagues On Sports Betting

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The sports world is a lot different today than it was in mid-2012, when the commissioners of four pro sports leagues and the president of the NCAA were deposed in the long-running New Jersey sports betting lawsuit.

Yet — as proven once again by Friday’s filing by the state’s thoroughbred horsemen to the U.S. Third Circuit Court of Appeals — those depositions remain at the core of a $150 million lawsuit against the leagues.

“These sworn statements were false” and “None of this was true” are mantras found throughout the 69-page filing, which asserts that the commissioners knowingly lied under oath about supposed “irreparable injury” that would come to the leagues should New Jersey ever get to join Nevada in offering widespread sports betting.

What the commissioners were saying always seemed to be a stretch. Since the leagues had prospered with Las Vegas being an international mecca for gamblers to bet legally — and a thriving illegal market hadn’t seemed to deter the leagues, either — how could Monmouth Park offering the same as the case played out in court harm the leagues so badly?

Of course, now eight states have legal sports betting and at least that many more may join the fray in 2019, and the sports world has continued to revolve on its axis.

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But is it possible that the league leaders testified in good faith, only to be proven wrong? The horsemen say the way to find out is to be allowed “full discovery” to investigate what the leagues really thought about gambling legalization way back then.

Breaking down the filing

As we have written before, the lawsuit really has two components: a $3.4 million bond put up by the leagues for a four-week period in late-2014, and a possible $147 million in further damages over a period of more than three years.

It only takes getting to the top of page 2 to find the horsemen claiming to already have “provided uncontroverted evidence of double dealing” by the leagues.

The $3.4 million bond award seemed like a slam dunk after last May’s ruling by the U.S. Supreme Court that the Professional and Amateur Sports Protection Act (PASPA) passed by Congress in 1992 was unconstitutional, when six judges found that the federal law “commandeered” states into doing their bidding in enforcing prohibitions on gambling.

Since racetrack officials had wrongly, in retrospect, been prevented from offering sports betting during that period, they should immediately collect that initial bounty, right?

Not so fast, said U.S. District Court Judge Michael Shipp (brother of former Arizona Cardinals running back Marcel Shipp); the racetracks will get nothing and like it, to put it colloquially.

One of the many complications in this saga is that the temporary restraining order and posting of bond in 2014 is related to the case known as “Christie II.”

In 2012, the leagues had sued New Jersey based on a new state law that directly challenged the constitutionality of PASPA — that’s “Christie I.” Shipp ruled for the leagues, as did a Third Circuit panel by a 2-1 margin in 2013. So the state went back to the drawing board, taking and running with an observation of the majority opinion that there was a way to get around PASPA — the 2012 state law just wasn’t it, the judge wrote for the majority. That led to a 2014 state law, Christie II, that repealed all sports gambling laws as it pertained to the state’s racetracks and Atlantic City casinos. If they wanted to run their own private sports betting operations with no state regulatory oversight, so be it.

‘Lies’ by the leagues?

The horsemen called the revived claims of harm by the leagues from Christie II “lies because at the same time as the Leagues claimed they would suffer irreparable injury … they were actively fueling and profiting from the very activity they were seeking to enjoin.”

But Shipp again sided with the leagues. And he found, in response to a last-minute question by the horsemen’s attorney Ron Riccio following the issuance of the temporary restraining order, that the laws also prohibited betting on sports such as soccer, tennis, golf, and boxing that were not even involved in the case.

A new Third Circuit panel — one that included Maryanne Trump Barry, sister of Donald Trump — affirmed Shipp’s ruling.

Fast forward to May 2018, when the Supreme Court threw out PASPA. Shipp’s denial of the bond money six months later was based in part on the fact that the Court voided the original state sports betting law while the TRO and bond was based on “Christie II.”

Riccio dismantles this reasoning using a 1983 case called Coyne-Delany Co. v. Capital Development that the judge had used to buttress his argument — a strategic decision by the judge that Riccio calls “incomprehensible.” He also colorfully writes, “The Leagues lost in the Supreme Court. When it came time, however, for the Leagues to honor their contract and pay up for the risk they willingly, knowingly, and confidently assumed when they chose to seek an injunction against [the horsemen], they welched.”

Of course, the real money here is not in the bond; it’s in the daily damages sought from late-2014 until the May 2018 Supreme Court ruling.

And one of the ways to show “bad faith” by the leagues, a key component of the horsemen’s legal argument, is to point out the leagues having a financial stake in what the horsemen call “fantasy sports betting” with DraftKings and FanDuel. Adds Riccio: “Fantasy sports betting is gambling.”

The NFL plays games in London, where gambling is legal, and has approved the Oakland Raiders’ move to Las Vegas, the same city where the NHL’s Vegas Golden Knights proved wildly popular in their inaugural 2017-’18 season in part because of the ease of legally gambling on their games. Plus the NCAA, the horsemen assert, “does nothing to stop the spread of March Madness gambling.”

True statements — or just ‘not outrageously false’?

When the leagues opposed the bond motion, they “did not protest that their own sworn statements were true, only that they were not outrageously false,” Riccio wrote in his filing, adding that he wants the Court to rule whether “the Leagues’ false sworn statements are or are not outrageous.”

In partnering with daily fantasy sports companies and embracing Las Vegas, Riccio wrote that “it’s obvious that what the Leagues did was to choose the pursuit of profits over the requirement of candor before the tribunal. They fabricated a story to support their claim of irreparable injury.”

Them’s fighting words, of course, and we eagerly wait to see how fiercely league attorneys defend against such claims. If the Court orders full discovery in the case, what might we learn about each league’s thinking at the executive level on the future of legalized gambling?

In other words, do the leagues want to double down on their claims that they — wrongly, it seems so far — would suffer irreparable injury should legal sports betting be permitted outside Nevada?

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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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