By T. D. Thornton
A federal judge on Thursday denied a motion to dismiss a lawsuit filed by the Ohio Horsemen's Benevolent and Protective Association (OHBPA) against the present and former owners of Belterra Park that involves the OHBPA trying to recoup more than $2.7 in gaming revenues that the horsemen's group alleges the track wrongfully withheld between 2014 and 2018.
Back on Dec. 18, 2020, the OHBPA's suit contended that Belterra never made good on a four-year difference between a placeholder rate first established for video lottery terminal (VLT) gaming and the eventually revised rate, which it claimed totals $2,769,652. “The OHBPA has been deprived of these funds, which go directly toward the benefit of horse breeding and horse racing in Ohio,” the lawsuit stated.
On Feb. 16, 2021, Belterra had asked the United States District Court for the Southern District of Ohio (Eastern Division) to dismiss the OHBPA's suit, alleging that “OHBPA's cleverly labeled claims are nothing more than an attempt to plead around the fact that there is no private right of action under the relevant Ohio statute or regulation.”
On Sept. 30, Chief U.S. District Judge Algenon Marbley wrote in a 17-page court order that the defendants who owned and/or operated Belterra during that time frame (Boyd Gaming Corporation. Pinnacle Entertainment, Inc., and Penn National Gaming, Inc.) did not present a strong enough case to get the lawsuit thrown out of court.
“On May 1, 2014, the day that Belterra Park reopened, no rate agreement had been reached
with OHBPA,” the court order stated. “Belterra therefore entered into an Escrow Agreement with the Racing Commission on that same day, which would terminate once the Racing Commission set the final rate by rule. Plaintiff states that the Escrow Agreement set aside 9% of Belterra's VLT commission, which OHBPA began receiving on May 1, 2014.
“By November 2014, six months after Belterra Park reopened, the Racing Commission had
not set the percentage of Belterra's VLT commission owed to OHBPA. OHBPA and Belterra tried to reach an agreement on the percentage but failed to do so. In fact, the Racing Commission would not set its rate for about four years, allegedly due to various delay tactics employed by Defendants. OHBPA maintains that Belterra's capital expenditure submissions were unrealistic and overly aggressive attempts to persuade the authorities that it was entitled to the lowest statutory rate; this caused delays in the determination by the Racing Commission.
The order continued: “OHBPA had no access to Belterra's records of purported capital expenditures and no way to expedite the rate-setting process. By Plaintiff's account, OHBPA and Belterra each understood that, pursuant to the statute, the actual rate was to be set by the Racing Commission, and that Belterra would need to make a 'catch-up' payment to OHBPA for any difference between the 9% placeholder rate in the Escrow Agreement and the actual rate so set. Plaintiff contends that the delay in setting the statutory rate was due to Belterra's years of stalling before providing to the State a reasonable submission of capital expenditures incurred.
“On June 27, 2018, the Racing Commission passed Resolution No. 2018-05. This resolution set the VLT commission percentage at 9.95%. As of July 1, 2018, Belterra began paying, and OHBPA began receiving, the 9.95%. As Defendants emphasize, the resolution does not contain any express language making the higher rate retroactive to May 1, 2014.”
The judge wrote in the order that, “From OHBPA's standpoint, Chapter 3769 gives them a right without a remedy. The law entitles OHBPA to payments but does not provide the procedure or framework by which OHBPA can secure them. The legislature cannot have intended such an outcome, and this Court will not compel it…
“On the consistency question, the Court determines that a private remedy would be consistent with the legislative scheme. The clear motivation for Section 3769.087(C), appearing directly in the text, is to direct resources 'for the benefit of breeding and racing in this state.' OHBPA seeks here to recover funds withheld in derogation of that purpose.”
Regarding retroactivity, the order stated that, “Defendants correctly observe that the statute, regulation, and resolution do not specify catch-up payments. But nor do they grant Defendants leave to pay the statutory minimum while the Racing Commission determined the actual rate—especially under circumstances where Defendants are alleged to have engaged in bad-faith delay.
“The statute and regulation refer to only one percentage rate, falling between 9% and 11% as determined by the Racing Commission. They do not provide any method for changing the percentage so determined, which suggests that the rate is intended to be fixed—even if it could not be known to a certainty until the State had reviewed the capital expenditure reports.”
The order continued: “Moreover, as to wrongfulness, OHBPA has alleged bad faith in Defendants' multi-year delay, using unrealistic and overly aggressive capital expenditures in an apparent effort to persuade authorities that it was entitled to pay a lower final rate. Without the report, the Racing Commission could not determine its final rate, which allowed Defendants to continue setting aside only the statutory minimum (9%) per the Escrow Agreement. This too supports a finding of wrongful conduct, satisfying the second element…
“For all of these reasons, OHBPA has established a plausible entitlement to catch-up
payments under Section 3769.087(C). To support Defendants' contrary position, the Court would
need to read a clause into the statute allowing for different rates before and after the Racing
Commission's determination, into the Escrow Agreement to state that the 9% set-aside is in full
satisfaction, and into the resolution to set an effective date of July 1, 2018. By Defendants' own
cited authority, none of this is permissible.”
The order summed up: “Across the finish, it's Plaintiff. For the reasons set forth above, Defendants' Motion to Dismiss is denied.”