In a partial summary judgment, Judge S. James Otero of the U.S. District Court for the Central District of California recently ruled entry fees paid at the DerbyWars website are considered wagers under the Unlawful Internet Gambling Act of 2006. The ruling is a victory for racetrack operators, the Stronach Group, in a case that represents the first time racetracks have taken legal action against a horseracing contest site.
DerbyWars had argued its games are comparable to fantasy contests and therefore entry fees at the site do not meet the definition of bets or wagers under the 2006 law. But Otero wrote, “Having determined that DerbyWars entry fees constitute a wager, where such wagers are placed with DerbyWars in Kentucky, with respect to the outcome of a horserace, or series of up to six individual horseraces, as the case may be, taking place in California, Oregon, Maryland, and/or Florida, and where such wagers are received over the internet, the court concludes that defendants are operating an off-track betting system subject to the Interstate Horseracing Act.”
The Stronach Group argued DerbyWars broke the law by using Stronach Group’s races for its contests without compensating the tracks. The suit also contends DerbyWars impacts the racetracks’ business. The lawsuit asks for monetary damages in an amount that will be determined later at trial.
DerbyWars released a statement saying, “We are disappointed with the court’s ruling but intend to press forward with our defense and are evaluating our options to appeal the court’s order, with which we disagree. We believe DerbyWars has created a product that is innovative and advances horseracing in a sport that needs more innovation. We look forward to continue building new products and helping to grow the sport we love.”
