Sixth Circuit Affirms Dismissal of Claims Against Bob Baffert and Churchill Downs

Two weeks ago, Mystik Dan won the Kentucky Derby by a nose over Sierra Leone and Forever Young. If you didn’t watch the race and haven’t seen the finishing photo, you should check it out here and here

The 2021 Kentucky Derby also had a notable finish, albeit for less auspicious reasons. That year, Medina Spirit was the first horse to cross the finish line at the Kentucky Derby. Nine months later, however, the Kentucky Horse Racing Commission disqualified Medina Spirt because the horse tested positive for betamethasone in a post-race drug test. As a result, Maundaloun was declared the winner. Nineteen individual plaintiffs who would have won their wagers on the new order of finish brought a putative class action against Bob Baffert and Bob Baffert Racing, Inc. (who trained Medina Spirit) and Churchill Downs, Inc. (which owns the racetrack where the Derby is run). Just in time for Triple Crown season, the Sixth Circuit affirmed the dismissal of the plaintiffs’ claims for reasons that provide insight beyond horse racing. Mattera v. Baffert, No. 23-5750 (6th Cir. May 2, 2024).

The bets placed at Churchill Downs on the Derby fall into the category of pari-mutuel wagering, which means that each bettor is betting against all other bettors — not the racetrack — and the payouts for winning wagers are determined by dividing the pools based on a set formula. Under Kentucky’s regulations governing pari-mutuel wagering, only the first order of finish marked “official” counts for purposes of determining winning bets. 810 Ky. Admin. Regs. 4:040, § 17. A subsequent disqualification does not affect the payouts on wagers. 810 Ky. Admin. Regs. 4:060 § 7(1).

What does that mean for the disgruntled bettors who sued after Medina Spirit was disqualified? It essentially guts all their claims. 

The plaintiffs brought claims for negligence, breach of contract, violation of the Kentucky Consumer Protection Act, and unjust enrichment, claiming as damages their unpaid winning wagers based on the new order of finish. The Sixth Circuit, however, concluded that the plaintiffs did not have winning wagers because, under the Kentucky regulations, the first official order of finish is final for betting purposes and “[a]fter the order is marked official, neither the stewards nor the courts can turn a losing wager into a winning one.” The court therefore held that the plaintiffs “were not harmed under their sole theory of damages.” 

Each of the plaintiffs’ claims failed as a result. Their claims for negligence and breach of contract failed because damages are an essential element of both claims, and the plaintiffs were not harmed. Kentucky’s Consumer Protection Act similarly requires that plaintiffs have suffered an “ascertainable loss of money or property,” which the plaintiffs could not show because “[t]heir wagers had no value before Medina Spirit’s disqualification and still have no value after the disqualification.” And the plaintiffs’ unjust-enrichment claim failed because Churchill Downs did not retain the wagers without payment of their value “because the wagers have no value.” 

TAKEAWAY: This case shows that consumer claims can be susceptible to challenges based on a lack of damages.