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Inc. v. Massachusetts Thoroughbred Horsemen's Assn., Inc.

United States District Court, D. Massachusetts

September 28, 2016

NEW ENGLAND HORSEMEN'S BENEVOLENT AND PROTECTIVE ASSOCIATION, INC., Plaintiff,
v.
MASSACHUSETTS THOROUGHBRED HORSEMEN'S ASSOCIATION, INC. AND MIDDLEBOROUGH AGRICULTRUAL SOCIETY Defendants.

          MEMORANDUM AND ORDER ON DEFENDANTS' MOTIONS TO DISMISS

          F. Dennis Saylor IV, United States District Judge.

         This action arises out of an alleged violation of the Interstate Horseracing Act. Plaintiff New England Horsemen's Benevolent and Protective Association alleges that defendants Massachusetts Thoroughbred Horsemen's Association and Middleborough Agricultural Society violated the Interstate Horseracing Act by entering into a “purse agreement” under which defendants agreed to permit simulcasting of, and interstate off-track betting on, races hosted by Middleborough Agricultural Society at Brockton Fairgrounds racetrack. Plaintiff contends that it, and not the Massachusetts Thoroughbred Horsemen's Association, is the only group authorized by the Interstate Horseracing Act to enter into such agreements.

         Defendants have moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6). Defendants contend that plaintiff has failed to allege an actual violation of the Interstate Horseracing Act-that is, has failed to allege that any party has accepted interstate off-track wagers without first obtaining the proper consent-and that therefore the complaint does not present a federal question sufficient to confer subject-matter jurisdiction and has failed to state a claim upon which relief can be granted.

         For the reasons set forth below, the motions to dismiss will be granted.

         I. Background

         A. The Interstate Horseracing Act

         The Interstate Horseracing Act of 1978 (the “IHA”), 15 U.S.C. § 3004(a), regulates interstate off-track wagering on horseracing. In passing the IHA, “Congress recognized that the unrestricted proliferation of off-track wagering would hurt the horseracing industry by decreasing attendance at racetracks which, in turn, would reduce the number of horses needed to compete and the number of individuals employed in the industry.” Kentucky Div., Horsemen's Benev. & Protective Ass'n, Inc. v. Turfway Park Racing Ass'n, Inc., 20 F.3d 1406, 1414 (6th Cir. 1994). The IHA regulates, but does not prohibit, interstate off-track wagering by “balancing the interests of the horseracing industry against those of the interstate off-track wagering industry.” Id. Congress thus sought to support both the horseracing and interstate off-track wagering industries, but to do so in a relatively narrow way that otherwise left states in control of gambling within their borders. See id.; 15 U.S.C. § 3001.

         The IHA enlists the horseracing industry itself to help regulate the growth of interstate off-track wagering, Kentucky Div. Horsemen's Benev & Protective Ass'n, 20 F.3d at 1414, and to ensure that horsemen are compensated for their role in enabling off-track betting, Churchill Downs, Inc. v. Thoroughbred Horsemen's Group, LLC, 605 F.Supp.2d 870, 882 (W.D. Ky. 2009). To this end, the IHA prohibits off-track betting systems[1] from accepting interstate off-track wagers absent the consent of (1) “the host racing association, ”[2] (2) “the host racing commission, ”[3] and (3) “the off-track racing commission.”[4] 15 U.S.C. § 3004(a). However, a host racing association cannot provide its consent unless it first has a written agreement with “the horsemen's group” that sets forth the terms and conditions for the distribution of off-track betting revenues. 15 U.S.C. § 3004(a)(1)(A). “Horsemen's group” is defined, “with reference to the applicable host racing association, ” as “the group which represents the majority of owners and trainers racing there, for the races subject to the interstate off-track wager on any racing day.” 15 U.S.C. § 3002(12).

         B. Factual Background

         The facts are set forth as alleged in the complaint.

         The New England Horsemen's Benevolent and Protective Association, Inc. (“NEHBPA”) is a Massachusetts non-profit corporation that represents Massachusetts horsemen in contract negotiations with Massachusetts racetracks. (Compl. ¶¶ 2, 17). As stated in its bylaws, the purpose of the NEHBPA is to “advocate[] in the best interests and property rights of the horsemen” on issues such as “purse monies; purse contracts; sale of live racing signal; . . . inter-track wagering contracts and fees; off-track betting contracts and fees; . . . safety, repair and improvement of all racetrack facilities; and all other matters of interest that may affect horsemen.” (Id. ¶ 17). NEHBPA has been the sole representative of Massachusetts horsemen since its incorporation in 1992. (Id. ¶ 16). It has approximately 826 members. (Id.).

         The Massachusetts Thoroughbred Horsemen's Association, Inc. (“MassTHA”) was formed in 2015 by several members of NEHBPA who had unsuccessfully sought leadership positions in that organization's most recent elections. (Id. ¶¶ 16, 18). MassTHA has not, as of yet, held elections for executive officers or members of the Board of Directors. (Id. ¶ 19). Absent elections, William Lagorio leads MassTHA as its self-appointed president. (Id. ¶¶ 18, 19). The complaint alleges that MassTHA has few, if any, member horsemen who have consented to be represented by the organization. (Id. ¶ 4).

         In 2015, the Middleborough Agricultural Society (“MAS”) submitted an application to the Massachusetts Gaming Commission to run a fifteen-day live racing meet at the Brockton Fairgrounds racetrack in 2016. (Id. ¶ 23). The Brockton Fairgrounds track had not been used since 2001, when several thoroughbred horses were injured during a race. (Id. ¶ 9). The MAS application was granted. (Id. ¶ 25). The NEHBPA then sought to negotiate a purse agreement with MAS, hoping to reach an agreement that would include measures to ensure a safe meet at Brockton. (Id. ¶ 26).

         According to the complaint, MAS refused to negotiate with NEHBPA. (Id.). Instead, in early 2016, MAS entered into a purse agreement with MassTHA to conduct live thoroughbred racing at the Brockton Fairgrounds during 2016 and 2017. (Id. ¶ 5). The complaint alleges that MassTHA entered into the contract with MAS without any bargaining or advocacy on behalf of horsemen. (Id. ¶ 37). The contract allegedly fails to address multiple safety concerns with respect to the racetrack. (Id. ¶ 32). It also authorizes MAS to negotiate with simulcast and receiving facilities for the simulcasting of live races, and the conduct of off-track wagering on races, held at Brockton. (Id. ¶ 34). It further states that “MAS shall not be making any payments to MassTHA or the Horsemen” for any ...


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