Richter won’t dismiss Ohio HBPA’s lawsuit for $ 2.7 million in controversial VLT money

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A federal judge on Thursday denied a motion to dismiss a lawsuit by the Ohio Horsemen’s Benevolent and Protective Association (OHBPA) against the current and former owners of Belterra Park in which OHBPA is seeking to reclaim more than $ 2.7 in gaming revenue, which the Horsemen’s Group claims the track was wrongly withheld between 2014 and 2018.

As early as December 18, 2020, the OHBPA lawsuit alleged that Belterra had a four-year difference between a wildcard rate first set for video lottery terminal games (VLT) and the eventually revised rate, which was $ 2,769,652, never equalized. “These funds were withdrawn from the OHBPA, which will directly benefit horse breeding and horse racing in Ohio,” said the lawsuit.

On February 16, 2021, Belterra asked the US District Court for the Southern District of Ohio (Eastern Division) to dismiss OHBPA’s lawsuit on the grounds that “OHBPA’s cleverly stated claims are nothing more than an attempt to expose the fact to circumvent the fact that there is no private right of action under the relevant law or the corresponding ordinance of Ohio. “

On September 30, Algenon Marbley, Chief US District Judge, wrote in a 17-page court order that the Defendants owned and / or operated Belterra during that period (Boyd Gaming Corporation. Pinnacle Entertainment, Inc. and Penn National Gaming, Inc. ) not convincing enough to throw the lawsuit out of court.

“On May 1, 2014, the day Belterra Park reopened, no collective agreement had yet been reached
with OHBPA ”, it says in the court order. “Belterra therefore concluded a trust agreement with the racing committee on the same day, which ends as soon as the racing committee sets the final rate by rule. Plaintiff states that the trust agreement set aside 9% of Belterra’s VLT commission that OHBPA received on May 1, 2014.

“In November 2014, six months after the reopening of the Belterra Park, the racing committee had
has not determined the percentage of the VLT commission owed by Belterra to OHBPA. OHBPA and Belterra tried to reach an agreement on the percentage but failed. In fact, the racing commission would not fix its rate for about four years, allegedly due to various defendants’ delaying tactics. OHBPA claims that Belterra’s capital spending was an unrealistic and overly aggressive attempt to convince authorities it was entitled to the lowest statutory rate; this led to delays in the determination by the racing commission.

The order also stated: “OHBPA had no access to Belterra’s records of alleged capital expenditures and no way to expedite the tariff setting process. According to the plaintiff’s report, OHBPA and Belterra each understood that the actual rate should be determined by the law by the racing commission and that Belterra will make a “make-up payment” to OHBPA for any difference between the 9% placeholder rate in the escrow agreement and the actual rate so determined. The applicant claims that the delay in setting the statutory rate is due to Belterra’s hesitation for years to provide the State with a reasonable presentation of the investments made.

“On June 27, 2018, the racing commission passed resolution no. 2018-05. That decision set the VLT commission percentage at 9.95%. From July 1, 2018, Belterra started paying and OHBPA received the 9.95%. As the defendants emphasize, the decision does not contain any express wording that makes the higher rate retroactive to May 1, 2014. “

The judge wrote in the decision: “From the OHBPA’s point of view, Chapter 3769 gives you a right without appeal. The law entitles OHBPA to make payments, but does not provide for the procedure or the framework through which OHBPA can secure this. The legislature cannot have intended such an outcome, and this court will not enforce it …

“On the question of coherence, the court found that a private remedy would be compatible with the legal scheme. The clear motivation for section 3769.087 (C), which appears directly in the text, is to direct resources “for the benefit of breeding and racing in this state.” Here OHBPA is trying to recover funds that have been retained for purposes other than this. “

With regard to the retroactive effect, the order states: “The defendants rightly note that the law, the ordinance and the order do not provide for any catch-up payments. However, they also do not allow Defendants to pay the legal minimum while the Race Commission set the actual rate – especially in circumstances where Defendants are accused of malicious delay.

“The statutes and regulations only refer to a percentage that is between 9% and 11%, as determined by the racing commission. They do not provide a method of changing the percentage so determined, which suggests that the rate should be set – although it might not be known with certainty until the state reviews the investment reports. “

The order goes on to say: “In addition, OHBPA has alleged in bad faith that the defendant has been delayed for several years by making unrealistic and overly aggressive investments in order to convince the authorities that it was entitled to a lower final sentence to pay. Without the report, the Racing Commission was unable to determine its final rate, which allowed Defendants to continue to set aside only the legal minimum (9%) under the Trust Deed. This also supports the determination of misconduct and is sufficient for the second element …

“For all of these reasons, OHBPA has identified a plausible claim to catch up
Payments under Section 3769.087 (C). To support the defendant’s opposite position, the court would do so
must read a clause into the statutes that allows different tariffs before and after the race
Commission decision to indicate in the trust agreement that the 9% set-aside is complete
Satisfaction, and in the decision to set July 1, 2018 as the deadline. From the defendants themselves
quoted authority, none of it is allowed. “

The decision summarized: “In the end it is the plaintiff. For the reasons mentioned above, the defendant’s motion to dismiss is rejected. “

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