Lawsuit claims horse racing industry cheated bettors
A class-action lawsuit filed by Hagens Berman in the US District Court for the Eastern District of New York accuses major horse racing operators and data firms of colluding to manipulate betting pools. The suit claims this practice unfairly benefits select insiders while regular bettors lose out on fair returns.
What triggered the lawsuit
Hagens Berman, a Seattle-based law firm known for handling major class-action cases, has filed a new lawsuit targeting the horse racing industry. Led by managing partner Steve Berman, the firm has previously taken on large corporations in sectors like pharmaceuticals and technology.
The lawsuit was prompted by concerns over sudden shifts in betting odds just before races begin. This change is linked to Computer-Assisted Wagering (CAW). This system enables high-volume bettors to place rapid, data-driven bets, potentially giving them an unfair advantage over regular participants.
Berman explained, “We believe this scheme is not a victimless crime. Its victim, the average public bettor, has been caught in a modern reverse Robin Hood scenario in which a select few with inside information are stealing from average public retail bettors and giving to the already rich, a small group of bettors, and the operators of racetracks and betting platforms, the wealthy and few.”
The accused entities
The New York Racing Association (NYRA), Churchill Downs Inc., United Tote, AmTote International, and The Stronach Group are among the prominent horse racing companies named as defendants in the complaint. It is alleged that these organisations provide CAW users with special access to betting tools and data that are not available to ordinary gamblers. The complaint alleges that this unequal access has allowed certain high-volume bettors to gain an unfair advantage in wagering pools.
The lawsuit identifies three major CAW platforms as central to the alleged scheme: Elite Turf Club, which is 80 percent owned by The Stronach Group and 20 percent by NYRA; Velocity, a subsidiary of Churchill Downs; and Racing & Gaming Services, an independent operator. According to the complaint, these platforms operate within a closed system that provides select bettors with preferential access to data and betting tools.
Allegations in lawsuit
The lawsuit centres on allegations of collusion and manipulation of pari-mutuel betting pools. Hagens Berman claims the defendants used their control over data and technology to benefit select CAW users. By offering these users rebates, reduced fees, and privileged access to live betting data, the defendants allegedly created an environment where certain insiders consistently profited at the expense of regular bettors.
The lead plaintiff, Ryan Dickey, is a recreational bettor from Colorado who typically wagered around $100 per week. He represents a broader group of bettors who placed wagers in pools influenced by CAW systems without using such platforms themselves.
Role of data clearinghouses
Racetrack betting data and transactions are managed by organisations such as United Tote and AmTote International. According to the lawsuit, these companies gave CAW platforms immediate access to data, providing them a competitive advantage by enabling them to see betting activity milliseconds before others.
Hagens Berman has included claims under the Racketeer Influenced and Corrupt Organisations Act (RICO), alleging that the defendants operated a coordinated system designed to mislead bettors and benefit select insiders.
Legal remedies sought
The case emphasises how odds might change right before a race starts due to last-minute CAW bets. A bettor may, for instance, place a wager with 5-to-1 odds, only to watch those chances fall to 2-to-1 as a result of an increase in automated bets. With no chance to change the stake, this lowers the bettor’s anticipated reward.
Under RICO, the complaint seeks treble damages in addition to compensatory damages for monetary losses. It also seeks to make the horse racing betting system more transparent. Credibility and public interest in horse racing are eroding. The case may result in modifications to the way betting is regulated, enhancing fairness for regular bettors, if the allegations are validated.
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