Earlier this summer, the New Jersey Thoroughbred Horsemen’s Association (NJTHA) filed a lawsuit claiming the major sports leagues and the NCAA “wrongfully” blocked Monmouth Park from taking sports bets.
The leagues are saying not so fast.
On Monday, the NCAA, NFL, NBA, MLB, and NHL filed a brief with the US District Court of New Jersey opposing NJTHA’s claim that they are owed $150 million.
The brief contains four key points discrediting NJTHA’s attempt at seeking damages. But the 24-page document boils down to this one line:
“NJTHA is not entitled to recover anything from the injunction bond, and its motion should be denied.”
Looking back: NJTHA seeks reparations
Not long after the US Supreme Court overturned the Professional and Amateur Sports Protection Act (PAPSA), the NJTHA filed a claim in federal court.
The owners of Monmouth Park asked US District Court Judge Michael Shipp to sanction the leagues for acting in bad faith.
The court filing says:
“The commissioners falsely described to this court in meticulous detail the catastrophic consequences they swore would follow from the spread of sports betting. None of this was close to being true.
“Behind this court’s back, each commissioner’s league and team owners made huge profits from the spread of sports betting, both on the outcome of their games and their players’ performances in their games.”
The filing also requests an evidentiary hearing to assess the total damages accrued from Oct. 26, 2014 – May 18, 2018. The dates represent the period sports betting was illegal under a temporary restraining order (TRO) issued while New Jersey was challenging PASPA and before SCOTUS issued its first ruling.
The action seeks the payment of a $3.4 million bond posted by the leagues. The bond was to cover damages during a four-week period when the TRO was in effect. Additionally, the NJTHA seeks $139 million in damages for lost revenue from November 2014 – May 2018.
Toward the end of May, attorneys for the leagues filed a response to the claim. It said the assertions by NJTHA were “meritless, if not frivolous.” The leagues were given until July 16 to file a formal response.
The four key points in the league’s response
The leagues waited until the last day to file its formal response to the action. It outlines four reasons the NJTHA is not eligible to recover damages from the bond or other damages it seeks.
First, the liability under the bond expired when the court upheld PASPA in November 2014.
“To the extent that NJTHA seeks damages for the period after November 21, 2014, when the TRO expired and this Court entered final judgment in the case, NJTHA’s motion must be denied.”
Second, the attempt by the NJTHA to expand its damages claim outside of the amount of the bond is meritless. The NJTHA claims the leagues acted in bad faith by making a profit of sports betting behind the Court’s back. The facts, according to the leagues, do not support the assertion.
“When it issued the TRO, this Court was fully aware that some of the Leagues participated in fantasy sports, held sporting events … where sports betting is legal, had not (according to NJTHA) curbed the proliferation of sports pools on championships like March Madness, and/or recognized that sports betting may eventually be more broadly legalized.”
Third, the Third Circuit issued the TRO based on the assumption the leagues were likely to prevail, and PASPA would remain the law. Its eventual ruling upheld PASPA, which negates the claim that the NJTHA was wrongfully prevented from offering sports betting.
“NJTHA cannot establish as a matter of law that it was ‘wrongfully enjoined,’ a predicate for any recovery at all against the bond.”
Finally, should NJTHA prevail, damages should be limited to the amount of the bond during the time of the TRO.
“The law is clear that the entry of a bond merely sets the ceiling for a wrongfully enjoined party’s total recovery (including any interest).”
It’s a long way from over
Judging by the initial war of words and Monday’s response, the lawsuit by the NJTHA is just getting started.
The claim for damages gets complicated by several courts upholding the constitutionality of PASPA before the US Supreme Court issued its decision.
Additionally, the amount of damages the NJTHA seeks is an estimate at best. There is no factual basis to support that revenues for NJ sports betting would be as high as claimed.
Of course, when a decision is finally handed down, it is likely to be appealed by the losing party. Evidentiary hearings and the appeal process could drag this battle out for years.