By T. D. Thornton
After alleging last month that a disagreement over advance-deposit wagering (ADW) hub rate fees was so egregious that it amounted to a “shakedown” that needed to be fought in federal court, a subsidiary of the gaming corporation Churchill Downs, Inc., dropped its lawsuit against Thoroughbred Owners of California (TOC) Mar. 8.
According to a “notice of voluntary dismissal” filed Monday in United States District Court (Central District, California, Western Division) by Churchill Downs Technology Initiatives Company (CDTIC), an agreement between the parties was reached Mar. 5 that apparently settles the matter “without prejudice.”
But the details of that agreement were not disclosed in court filings. And when given the opportunity on Tuesday by TDN to explain what led to the apparent resolution, neither TOC president/CEO Greg Avioli nor Scott Edelman, the CDTIC's attorney, responded to email queries.
In a spat that centered on which entity should benefit from the pandemic-related boom in at-home betting, CDTIC filed a Feb. 2 complaint asking a judge to rule that TOC couldn't use a state law to force CDI into either accepting lower rates, abandoning its recently signed agreement with Santa Anita Park, or entering into arbitration to settle the dispute. (Santa Anita itself was not a defendant in the suit.)
According to CDTIC's complaint for declaratory and injunctive relief, the dispute arose Oct. 28, 2020, when Avioli allegedly asked CDI's then-executive director of racing, Mike Ziegler, to “voluntarily return the equivalent of 1% of the total amount generated from California residents wagering on those platforms in 2020.”
In addition, according to the complaint, “Mr. Avioli proposed that all ADW providers agree to a 3% hub fee for the 2021-2022 term–a rate CDT has never agreed to in its history of operating in California.”
CDTIC had not wanted to disclose details of those hub fees in court documents, and had even been granted permission from the judge overseeing the case Feb. 9 to instead file those financial details as sealed documents that the public couldn't view. Hub fees are generally not disclosed by industry entities because such figures are deemed competitive secrets.
According to the original complaint, “TOC threatened that if CDT did not comply with its 'voluntary' request, it would demand arbitration pursuant to [a California law]. Contrary to Mr. Avioli's false characterization, the revenue ADW providers earned in 2020 was not a 'windfall,' but the result of increased demand for online wagering.”
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