Derby Wars reaches revenue-sharing deals with several tracks

Derby Wars, the online contest site that recently reached a settlement with the major racetrack operator The Stronach Group, has negotiated revenue-sharing deals with a handful of racetracks, including the tracks operated by the New York Racing Association, the company said on Friday.

Mark Midland, the co-founder and chief executive of Derby Wars, would not disclose the financial terms of the agreements. In addition to the three NYRA tracks, Derby Wars announced agreements with Monmouth Park and The Meadowlands in New Jersey; Ellis Park and Kentucky Downs in Kentucky; Louisiana Downs; and Fairmount Park in southern Illinois.

The agreements allow Derby Wars to use content from the tracks in their contests, which require customers to post entry fees to compete against other contestants. Under the agreements, Derby Wars will provide a share of those fees to the racetracks whose races are used in the contests, with a cut of those revenues also provided to the tracks’ horsemen, the company said.

The fees are not expected to be a major revenue source for tracks and their horsemen, given the size of the market for online contests and the relatively paltry prizes, when compared to handle figures on the races.

Although Derby Wars had reached several similar revenue-sharing agreements with tracks last year, the company had previously used racing content from many tracks without making payments to tracks and their horsemen. That led The Stronach Group to file a lawsuit against the company late in 2015 seeking the payments, alleging that Derby Wars was violating the federal Interstate Horseracing Act, which provides protections to tracks and horsemen for full-card simulcasting.

Derby Wars and The Stronach Group settled the lawsuit two weeks ago, one month after a judge sided with The Stronach Group’s argument that Derby Wars should be considered a simulcast site under the Interstate Horseracing Act. While the settlement applied strictly to The Stronach Group, the acknowledgment by Derby Wars of its standing as a simulcast site essentially required the company to seek revenue-sharing deals with other tracks.

The settlement has also had an effect on companies that conduct handicapping contests, such as Daily Racing Form. Those companies have said they are seeking agreements with tracks as well.

Midland said on Friday that Derby Wars is in ongoing negotiations with other tracks.

“We’re talking to a lot of different tracks, and we are looking forward to announcing more agreements in the weeks ahead,” Midland said.