03/24/2009 11:00PM

Churchill suit gets go-ahead from court

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In a ruling that may undermine the contention of some horsemen's groups that they are exempt from antitrust laws, a Kentucky judge has ruled that a lawsuit filed by Churchill Downs Inc. against the Kentucky Horsemen's Benevolent and Protective Association and Thoroughbred Horsemen's Group can proceed.

Judge John G. Heyburn, who has presided over several high-profile racing-related cases as the U.S. District Court Judge for the Western District of Kentucky, set aside the motion of those two groups to dismiss Churchill's suit in a ruling issued March 20. In doing so, Heyburn also cast doubt on the horsemen's groups' contention that the federal Interstate Horseracing Act exempted the groups from antitrust behavior, though he also wrote that "there are many facts and economic relations as yet unknown" that could affect a final ruling in the case, which has not yet been scheduled for trial.

Heyburn wrote that "the court ultimately concludes that neither the cases cited nor the particular logic of them provide reason enough to extend antitrust immunity to state horsemen groups exercising their IHA powers in concert."

Bennett Liebman, an expert on racing law at the Government Law Center in Albany, N.Y., said on Wednesday that Heyburn's language reflected other court cases in which harness horsemen had argued for the same exemption but lost.

"This has been an issue that has been lingering around for quite awhile on the Thoroughbred side without a resolution," Liebman said. "The question has been, when are we going to get a more definitive answer?"

Churchill Downs filed the lawsuit in April last year after the horsemen's association vetoed contracts between Churchill and account-wagering companies. The vetoes prohibited Churchill from sending its signal to the companies, which resulted in a full blackout of the Churchill signal last year, with the exception of the Kentucky Derby and several other stakes races.

Churchill contended that the Kentucky Horsemen's Benevolent and Protective Association and Thoroughbred Horsemen's Group were operating in violation of the Sherman Anti-Trust Act by conspiring to prevent Churchill from selling its signal. The Thoroughbred Horsemen's Group is an agency that conducts negotiations on behalf of horsemen's groups with account-wagering companies. The group has been pushing the companies to agree to distribute at least one-third of all revenue from all account-wagering to horsemen.