Sports Leagues Again Protest NJ Horsemen’s $150M Lawsuit

In the battle against the horsemen, the NFL, NCAA, and three other leagues issued a filing this week to the U.S. Third Circuit Court.
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A May 2018 ruling by the U.S. Supreme Court voided a 26-year-old federal law and opened the door for any state to offer Las Vegas-style sports betting.

But in New Jersey, the battle still rages.

The NFL, NCAA, and three other sports leagues issued a filing on Wednesday to the U.S. Third Circuit Court of Appeals that rejects the bid by New Jersey’s thoroughbred horsemen to receive $150 mm in lost revenue due to a 2014 court order preventing Monmouth Park from offering sports betting.

There really are two money figures at stake here.

The first is the $3.4 mm bond posted by the leagues in late 2014 to compensate the horsemen should the temporary restraining order issued by U.S. District Court Judge Michael Shipp be proven to be unsound.

The rest is compensatory damages for not just the one-month period relevant to the bond, but for more than three years of delays before Monmouth Park was able to take its first legal bet last June.

The leagues’ attorneys deride the horsemen’s lawsuit as a “blunderbuss motion” that shoots for the moon when it doesn’t even even deserve the stars, basically.

The ‘you’ll get nothing and like it’ motion

First, the leagues contest that they owe anything. Part of that is because the 2014 court order was based on the second version of New Jersey’s sports betting law being impermissible. The Supreme Court agreed, in passing, instead focusing on the first version that the Court found should not have been rejected by the lower courts.

Second, they say that the horsemen would have to prove that they really would have lost $3.4 mm in a month in 2014 if not for the restraining order.

The leagues say that the notion that the leagues ever accepted the $3.4 mm is “simply wrong.”

“No discovery was obtained to test [the horsemen’s] alleged predictions as to its likely profits from a sportsbook at Monmouth Park in autumn 2014,” they argue.

The core of the case, though, is whether the leagues were “lying to the Court” when officials sought to prevent legal sports betting in New Jersey.

From a layman’s perspective, the horsemen make a strong case. The leagues have daily fantasy sports partners, the NFL holds games in London where sports betting is legal and has a team relocating to Las Vegas, the NHL already has a team there, the NCAA seems to do little if anything to discourage gambling on its March Madness basketball tournament, and so on.

Also, as horsemen attorney Ron Riccio puts it: “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.”

But as the leagues’ attorneys say, the horsemen have “fought this fight before, and consistently lost it.”

Are the leagues being hypocritical?

In a previous Third Circuit Court ruling in 2015, a panel found that “It is not ‘unconscionable’ for the leagues to support fantasy sports and hold events in Las Vegas or London.”

The leagues say that therefore the horsemen are barred by “the doctrines of collateral estoppel” from getting yet another bite at the same apple.

In the real world, the leagues’ ever-changing stance on gambling, such as cutting deals with casino operators, makes their claims to abhorrence to sports betting rather implausible. But will that matter to an appeals court that is deferential to previous rulings in its own circuit?

The horsemen referenced two cases in which damages beyond a bond amount were justified, and the leagues agree that in those cases there was proof of “intentionally and demonstrably false statements of objective fact.”

But the leagues say there are no such issues here.

And as a kicker, they hold up a potential trophy that is a quirk in the New Jersey sports betting law – “the irrefutable fact that even New Jersey’s sports wagering law exempted college sporting events that take place in New Jersey or in which any New Jersey college team participates, regardless of where the event takes place – fully supports the leagues’ concerns that state-authorized and state-sponsored sports gambling would increase the risks to which the leagues would be exposed.”

The real reason for that carveout is a combination of things. In part, it was deference to former Princeton University and New York Knicks basketball star Bill Bradley, who as U.S. Senator from New Jersey authored the very Professional and Amateur Sports Protection Act of 1992 that was repealed by the Supreme Court.

It also was written to ensure that potentially skittish Rutgers University alumni in the New Jersey Legislature – and there are many – would not withhold yes votes to avoid hearing it from school administrators.

The bottom line was that New Jersey was very eager to get a law signed – as Governor Christie did in Jan. 2012 – to goad the leagues into a federal court fight.

The leagues took the bait, and after six years and $10 mm or so in New Jersey legal fees, the state won.

But might a Third Circuit panel buy into that carveout as evidence of reasons for the leagues to have protested legal sports betting?

If it does, the horsemen could be left as collateral damage rather than receiving damages.

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