A simulcast distribution company owned by The Stronach Group suffered a setback in court on Dec. 20 when a federal judge in Arizona denied an application for a temporary restraining order that would block recently enacted legislation designed to regulate simulcasts of horse races imported into the state.
Monarch Content Management, which brokers simulcast contracts on behalf of The Stronach Group and several other tracks, sued the Arizona Department of Gaming, the Arizona Racing Commission and affiliated individuals, claiming a law passed in June 2019 was unconstitutional because it is preempted by federal law, the Interstate Horseracing Act of 1978, which regulates interstate simulcasting.
The Arizona legislation, HB 2547, amended existing horse racing law by requiring that “any simulcast of live racing into this state that originates from outside this state…must be offered to each commercial live-racing permittee in this state.”
HB 2547 also states that simulcast providers “may not engage in any anticompetitive or deceptive practice” or charge “excessive or unreasonable fees.”
At the heart of the dispute is Monarch’s decision to offer its content to Phoenix-based Turf Paradise and its network of nearly 60 off-track betting locations throughout the state but not sell signals to seven OTBs operated by Arizona Downs, the former Yavapai Downs in Prescott Valley that reopened earlier this year. While Monarch sold its content to Arizona Downs racetrack, its complaint stated that selling to the Arizona Downs OTBs “would be deleterious to the business interest of Monarch, Laurel Park, and the other out-of-state-racetracks, as the location of Arizona Downs’ OTB sites would create dilution of the wagering product, and depress the overall consumption of content.”
Lawyers for Monarch argued that the federal Interstate Horseracing Act – whose provisions include a mechanism for consent by the host track and horsemen’s groups where the live race takes place – supersedes state law. They also said HB 2547 violated the U.S. and Arizona Constitutions regarding due process, speech and contract clause and was in violation of the Dormant Commerce Clause.
In ruling against the temporary restraining order and subsequent injunctive relief, however, U.S. District Judge John J. Tuchi said Monarch did not show that it “is likely to succeed on the merits…is likely to suffer irreparable harm in the absence of preliminary relief…and an injunction is in the public interest.”
In particular, Tuchi wrote that the Interstate Horseracing Act provisions would not be violated because “the state statute only requires that if a host racing association (or its sales agent) wants to provide simulcasts of horse races for the purpose of pari-mutuel wagering, it must do so to all permittees in Arizona.”
Laurel Park and other out-of-state tracks, Tuchi said, “could choose not to consent, in which case its simulcasts would not be provided to any racetracks or OTB sites in Arizona.”
A pretrial scheduling conference has been set for Feb. 10, 2020, with both sides ordered to meet at least 21 days prior to the court appearance.
Read the Order Denying Monarch’s Application for Temporary Restraining Order
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