AmTote files suit against Kentucky Downs, Encore Gaming

The bet-processing company AmTote has filed a lawsuit alleging breach of contract and intellectual-property theft against Kentucky Downs and a company associated with the track over the operation of Kentucky Downs’s historical-racing betting machines.

The federal lawsuit, filed last Friday in U.S. District Court in the Western District of Kentucky, alleges “breach of contract, tortious interference with an existing contract, and threatened and actual misappropriation of trade secrets” against Kentucky Downs and Encore Gaming, a company owned in part by Ray Reid, a partner in Kentucky Downs.

The suit was prompted by a decision earlier this year by Kentucky Downs to replace AmTote as its bet-processing company. After an executive session, the Kentucky Horse Racing Commission on March 30 approved Kentucky Downs’s request to tab Encore to run its betting systems and provide the track with hundreds of historical-racing machines, slot-machine-like devices that use the results of previously run horse races to generate random numbers determining payouts to bettors.

AmTote, which is based in Maryland and owned by The Stronach Group, stated in the suit that Kentucky Downs officials passed on knowledge of AmTote’s internal operations and source code to Encore, which then used that information to build a competing bet-processing system. The suit states that Encore, which announced in early March that it intended to enter the market to provide historical-racing machines to tracks, could not have built a competitive bet-processing system and its historical-racing machines without the information.

“Encore could not feasibly have developed these products and services using available time and resources except with reference to and reliance on AmTote’s confidential and proprietary information,” the suit alleges.

Through a spokesman, Encore released a statement late Tuesday calling the allegations in the suit “one-hundred percent false” and promising to defend itself against the litigation.

“It is unfortunate that AmTote decided to file a lawsuit without obtaining facts or opening a dialogue with Encore,” the statement read. It went on to say that Encore had developed its technology “from the ground up.”

Kentucky Downs has boosted purses at its brief summer meet to almost $1 million a day using revenue from its historical-racing machines, which run all year long at the track’s casino-type parlor. After receiving approval from the KHRC to replace AmTote, Kentucky Downs installed 500 machines provided by Encore.

The historical-racing machines previously operated by Kentucky Downs were provided by a partnership of AmTote and Race Tech, a company controlled by the Cella family, which owns Oaklawn Park.