Major Horse Racetracks Use Computer-Assisted Wagering to Rig Betting Pools in Favor of Privileged Insiders, Lawsuit Claims

New to ClassAction.org? Read our Newswire Disclaimer

A proposed class action lawsuit alleges that a handful of major racetrack owners have been using computer-assisted wagering platforms (CAW) to siphon funds into the hands of an “insider” group and out of the pockets of the average public bettor.

Get class action lawsuit and class action settlement news sent to your inbox – sign up for ClassAction.org’s free weekly newsletter.

The 42-page complaint contends that three major horse racing groups—The Stronach Group, Churchill Downs and The New York Racing Association— and their subsidiaries have engaged in a pattern of illegal racketeering activity built on the separation of betting pools and access to information between insider groups and typical bettors. The lawsuit says that the diversion of money from the everyday bettor to the insider betting group is achieved through CAW strategies, which operate beyond the capabilities and knowledge of any one bettor.

“Because of the unfair advantages provided to members of the Insider Betting Group they receive an inordinate share of the pools, taking profits that should rightfully should [sic] have been the property of Class Members,” the suit alleges.

In the United States, betting on horse racing is pursuant to pari-mutuel, or mutual betting, laws, whereby the house does not set odds or risks (like a traditional sportsbook or casino might), but rather takes a set percentage of the total amount bet on each race, the complaint explains. Consequently, odds can change up to the start of a race, and payouts are determined by the number of people betting on each race or event and the total amount of money in the corresponding pool, the suit says. Per the case, this system of betting was created in France to minimize the greed of bookmakers and place control of money back into the hands of the bettor.

The plaintiff, a Colorado resident, has 15 to 20 years of horse betting experience, and up until the past 18 months had regularly gambled on races using the TwinSpires (which is owned by Churchill Downs) website. However, the plaintiff ceased these bets when he started noticing manipulation of the betting pools and did not receive “payout based on the odds one would expect from a betting system free from any agreement or scheme that rigged payouts to favor certain groups,” the case states.

With advancements such as computer technology and cell phones, the sports betting market has radically developed in recent decades in a manner that has made gambling more accessible, technical and profitable in ways that continue to prey on naïve gamblers, the lawsuit relays.

Customized CAW platforms, for instance, achieve this with “professional teams using models, direct tote connections, and automation to fire thousands of highly targeted bets—often in the final seconds before pools close,” the complaint details. Furthermore, the three main CAW platforms that service the majority of the alleged insider betting groups in the United States are almost entirely owned by the same three major horse racing groups, according to the complaint.

The approach used by the insiders is, as a result, systematically impossible for everyday players to recreate, the suit notes.

“The net effect of all of these advantages allows the Insider Betting Group members to enjoy cheaper prices, faster execution, better information, and scale—advantages that compound in a pari-mutuel system, where one side’s edge directly reduces the other’s,” the complaint explains. “The insiders do not just enjoy higher margins but are playing an entirely different game to the detriment of retail players.”

The horse racing antitrust class action lawsuit looks to cover any United States resident who placed wagers on thoroughbred horse races in betting pools that were influenced by computer-assisted wagering while not using any CAW account.

Check out ClassAction.org’s lawsuit list for the latest open class actions.