NJ Horsemen Have Inside Track On $3.4 mm Payout, Look Like Longshot For $150 mm More

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For all of the times that someone has been said to “win the battle but lose the war,” the New Jersey Thoroughbred Horsemen’s Association seems to be headed toward a new twist: win the battle but never get to fight the rest of the war.

On the core issue of a $3.4 million bond in the long-running New Jersey sports betting case, inquiries by three U.S. Third Circuit Court of Appeals judges in Philadelphia on Tuesday strongly seemed to suggest that the horsemen would prevail over the NCAA and four professional sports leagues that are trying to resist paying up.

But it’s likely the effort by the horsemen to collect nearly $150 million in additional damages will prove futile.

Ron Riccio, attorney for the horsemen, spent several minutes fielding questions on the bond before trying to advance the argument that the “bad faith” by the leagues shown in their 2012 depositions should open the door for discovery in the case — and a potentially large payday for his clients.

But Judge Marjorie Rendell was skeptical because in a 2014 ruling U.S. District Court Judge Michael Shipp — who has sided with the leagues on numerous occasions — sidestepped the damages issue.

“We’re a reviewing court,” Rendell said of the Third Circuit’s role. “We don’t address avoided issues.”

Six years of damages, two weeks of repayment?

The position suggested by Rendell could produce a curious result, from a layman’s perspective. The horsemen wanted to begin offering sports betting at Monmouth Park in mid-2012, as was permitted by a new state law. Yet they had to wait six years, until June 2018, before Gov. Phil Murphy was able to make the first bet.

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The $3.4 million, however, would only cover damages for a two-week period in late 2014 — the time in between when Shipp ordered the leagues to post the bond and when Shipp issued a permanent injunction.

Judge Theodore McKee made a passing reference on Tuesday to “Schrodinger’s Cat” as the hearing concluded, which seemed appropriate.

Rendell called the case “sui generis,” or in a class by itself, while the judges and attorneys at least four times called the case some variation of “highly unusual.”

The issue is that while the Professional and Amateur Sports Protection Act of 1992 was on the books until the U.S. Supreme Court struck it down last year, that court’s ruling means that at no time was sports betting ever actually banned or mostly banned in every state outside of Nevada.

All parties acted as if it was, per PASPA, but that was sort of an alternative universe. In the “real” world, New Jersey passed a sports betting law in 2012, the horsemen (as well as the state’s other racetracks and casinos) should have been allowed to offer it, and only the leagues’ lawsuit backed by an unconstitutional law prevented that from happening.

Back to the future

Jeffrey Mishkin, attorney for the leagues, presented the situation on Tuesday from Shipp’s vantage point in 2014: Shipp had already ruled against the horsemen (and the state), and a Third Circuit panel had agreed with him. So based on that premise, the judge was right to prevent the horsemen from going forward with the betting.

Mishkin added that there is no way to expect him or Shipp to have been “prescient enough” in 2014 to realize that the Supreme Court would upend the entire case four years later.

“I don’t know what else the district court judge could have done,” Judge David Porter said in agreement.

But Rendell flipped the focus to the horsemen, noting that based on the Supreme Court’s ruling, they had repeatedly been “wrongfully enjoined” from offering sports betting.

“They had a right to do it all along,” Rendell said, adding that whether Shipp — brother of former Arizona Cardinals running back Marcel Shipp — made a mistake in issuing the injunction based on previous court rulings was not an issue at hand.

McKee had an amusing retort to Riccio’s observation that the leagues themselves conceded in court filings that they were “very rich.”

“With that Sunday Ticket [premium TV package], they have a lot of my money,” McKee said.

Family matters

Rendell was one of the two judges — the other is President Trump’s sister, which is just one of the remarkable quirks in the saga — whose 2015 ruling affirming the constitutionality of PASPA was rejected by the Supreme Court.

Yet Rendell — her friends call her “Midge” — seemed quite content to accept that ruling as the law of the land as she made her inquiries. One reason became clear later. Rendell tossed in a comment about Justice Samuel Alito, who authored the majority opinion in the Supreme Court sports betting case, having found that “we were right” as far as the state’s second sports betting law in reality being a “de facto authorization” of sports betting in spite of the removal of an oversight role for the state.

Of course, Alito found that irrelevant because PASPA was unconstitutional in the first place. It seems relevant to Rendell, however.

(In another quirk, Rendell’s former husband is ex-Pennsylvania Gov. Ed Rendell. He led the fight to bring casinos to his state, and the first of them opened their doors in 2006. That proved to be such a crushing blow to the Atlantic City casino industry that state lawmakers such as ex-state Sen. Ray Lesniak began seeking ways to aid the industry. One of those was passage of the very sports betting law that Marjorie Rendell would rule on years later.)

Meanwhile, this week a sports law professor raised an interesting question about the very testimony from various league commissioners in 2012 that buttressed those 2014 arguments: Is it time for those depositions to be unsealed?

Photo by Sheila Fitzgerald / Shutterstock.com

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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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