PA PID and PAHBPA Revenue Sharing Dispute Referred to Court

An ongoing dispute between Presque Isle Downs and Casino (PID) and the Pennsylvania Horsemen’s Benevolent and Protective Association (PAHBPA) saw a federal lawsuit filed by the racino operator in the US District Court of Eastern District of Pennsylvania.

Lawsuit to Counter PAHBPA Claims

The civil complaint filed by PID Thursday seeks to block allegations from PAHBPA stated in a 2020 “demand for arbitration” letter sent by the association that “PID has breached and is currently breaching the Live Racing Agreement as a result of patrons located at PID placing wagers through PID’s racing vendor and corporate affiliate CDTIC, as opposed to in the racetrack enclosure in PID.”

The dispute around revenue sharing from advance-deposit wagers (ADW) at the racetrack arose after allegations from PAHBPA that PID is steering on-track patrons via messages and other marketing initiatives to place bets through platforms such as TwinSpires, a sports betting brand owned by Churchill Downs Technology Initiatives Company (CDTIC), an affiliate of PID’s parent company, Churchill Downs Incorporated (CDI).

In addition, PAHBPA claims the market source fee negotiated in a collateral agreement between both CDI’s affiliates PID and CDTIC does not reflect industry standards and, as PID does not treat the ADW wagers as being made on-track and hence under the Live Racing Agreement, the association is deprived of benefits and is seeking “in excess of $75,000 beyond the contractually negotiated and agreed on a percentage of revenue sharing as to source market fees”.

Having failed to hash out a solution for the past 16 months after both sides organized grievance committees, the dispute reached federal court, where PID also requires the association to pay for legal costs related to the sought by court declaratory judgment that there are no material claims to be submitted for arbitration as per the arbitration clause in the Live Racing Agreement.

Money Grab without Legal Merit

Labeling PAHBPA’s claims as “a money grab without legal merit,” seeking to “renegotiate through arbitration a long-standing contractual provision” regarding the percentage the association receives from source market fees, PID outlined in the document that PAHBPA neither sought to negotiate into the Live Racing Agreement any consent or veto rights related to source market fees, nor the agreement has provisions for a minimum source market fee PID should receive from a third-party vendor.

Moreover, prior to the collateral agreement with CDTIC, PAHBPA never received any source market fee percentage under the Live Racing Agreement, PID continued, and what the association negotiated was to receive a fixed percentage from the fees revenue PAHBPA has already received from PID.

The Live Racing Agreement between PID and PAHBPA dates back to 2007, 12 years before PID was acquired by CDI, but has been amended seven times since, with the most recent one in May 2021.

The Presque Isle Downs and Casino became victim to an anonymous call Saturday night, claiming a bomb was planted on the premises, which led to the building being evacuated by Pennsylvania police. After no bomb was found, the property resumed operations.