New Jersey advocates of sports wagering won an epic battle to legalize betting. Now the victors want the spoils.
Monmouth Park, the New Jersey racetrack that launched the state's first legal sportsbook last month after the landmark decision, is attempting to recover more than $150 million in revenue it says it lost because it was "wrongfully" blocked from taking sports bets since 2014.
The racetrack's owner, the New Jersey Thoroughbred Horsemen's Association Inc., has taken aim at the NCAA and professional sports leagues including the NFL, the NBA, and Major League Baseball. For starters, Monmouth wants the leagues to cough up a $3.4 million bond they took out in 2014 when they sued to block New Jersey's law legalizing sports betting.
"The leagues made a losing bet," the racetrack owner says in its federal court filing. "It's time to pay up."
The leagues have until July 16 to file a formal response to Monmouth Park's claim. In a letter to the judge hearing the matter, the leagues called Monmouth's request for compensation "meritless, if not frivolous."
Monmouth's filing in May singled out NFL commissioner Roger Goodell, NBA commissioner Adam Silver, former Major League Baseball commissioner Bud Selig, NHL commissioner Gary Bettman, and NCAA president Mark Emmert as hypocritically describing the evils of sports betting at the same time their sports were getting cozy with the industry.
The racetrack says that while the major sports leagues were fighting New Jersey's gambling law, calling it a threat to the integrity of their games, the leagues were building close relationships with the fantasy sports industry, which promotes fan contests on individual athletes' performance that critics liken to wagering.
"The commissioners falsely described to this court in meticulous detail the catastrophic consequences they swore would follow from the spread of sports betting," the racetrack's attorney, Ronald J. Riccio, said in his filing. "None of this was close to being true.
"Behind this court's back, each commissioner's league and team owners made huge profits from the spread of sports betting, both on the outcome of their games and their players' performances in their games," the Monmouth filing says. At the same time, the racetrack says, New Jersey's horse-racing industry "came perilously close to being destroyed."
The leagues, through their attorney, Jeffrey A. Mishkin, declined to comment. In his letter to the judge, Mishkin brushed off Monmouth Park for "reviving well-worn arguments" concerning the leagues' involvement in fantasy sports, which he said the courts have "repeatedly rejected."
The NBA, the NHL, and MLB have ownership stakes in either DraftKings or FanDuel, the two major venues for daily fantasy gaming. Two NFL team owners, Jerry Jones of the Dallas Cowboys and Robert Kraft of the New England Patriots, also own stakes in DraftKings. Many teams, including the Eagles, Phillies, and 76ers, have formed partnerships with the fantasy sports schemes.
And Monmouth says the NCAA, despite "sanctimonious" policies frowning on sports betting, has done nothing to discourage ubiquitous, albeit illegal, betting on the annual men's college basketball tournament, which it called the "single-largest sports betting event in the United States."
The Supreme Court decision in May ended New Jersey's seven-year battle to legalize sports wagering, ruling that the Professional and Amateur Sports Protection Act of 1992 was unconstitutional. The federal law banned sports gambling in most of the country.
The case stemmed from a 2014 lawsuit filed by the NCAA and the professional sports leagues seeking to block New Jersey's law, which legalized sports betting at Atlantic City casinos and at racetracks. New Jersey's first attempt to legalize sports wagering, passed in 2012, was thrown out by the courts.
While the suit was being argued, U.S. District Judge Michael A. Shipp blocked Monmouth Park from taking bets, but briefly required the leagues to put up an injunction bond to guarantee the racetrack would be compensated if it were eventually found to have been "wrongfully enjoined" from accepting wagers.
Shipp set the injunction bond at $3.4 million, based upon a calculation that the racetrack would lose $850,000 a week by being prevented from opening a sportsbook. After Shipp decided the lawsuit in favor of the leagues, he declined the leagues' request to discharge the bond while the case was under appeal.
The lawsuit took more than three years to wind through the appeals court system before the Supreme Court ruled the federal law unconstitutional. Now, Monmouth is seeking to recover damages for the 3½ years it says it was wrongfully blocked from its legal right to take sports bets.
For the racetrack, the $3.4 million guaranteed by the injunction bond is just an appetizer. Monmouth's consultants estimate it was unable to take $150 million in wagering revenue during the court delay, not including revenue from parking, admissions, and food and beverage sales. The racetrack's workforce has declined by 100 employees since 2014, to 800 at the end of 2017.
"Since the leagues' obviously knew that their two-faced, bad-faith conduct significantly harmed Monmouth Park and its workers, compensatory and punitive damages together with counsel fees, costs of suit, and restitution by the leagues should be awarded above the bond amount," it argues.
Mishkin, the attorney for the leagues, signaled he will argue that Monmouth Park was not "wrongfully enjoined" when the court blocked the racetrack from betting. The federal law was still constitutional at the time, and the leagues were not engaged in bad faith by challenging New Jersey's law, said Mishkin, a partner in Skadden, Arps, Slate, Meagher & Flom in New York.
A month after the court ruling, Monmouth opened its sportsbook on June 14, operated by William Hill US. The public is scheduled to get a glimpse this week of the handle when the New Jersey Division of Gaming Enforcement is scheduled to reveal the total sum bet during the first month of wagering, which also started at two Atlantic City casinos, the Borgata and Ocean Resort.
"All I can tell you is that the lines have been long," said Riccio, Monmouth's attorney. "It's a big business."