“And They’re Off” … to the Courts?: An Analysis of Recent Kentucky Derby and Horse Racing Litigation

“Start of a Horse Race” by Rennett Stowe is licensed under CC BY 2.0

Brandon Bryer, Editor in Chief, University of Cincinnati Law Review

I. Introduction

Each May, the world looks to Churchill Downs to watch the Kentucky Derby.[1] While “the most exciting two minutes in sports” generates great thrill, it has also generated great controversy.[2] Most recently, the 2021 winner, Medina Spirit, tested positive for an anti-inflammatory medicine called betamethasone that is not permitted to be in a horses’ body fourteen days prior to a race.[3] After a second confirmed test, Medina Spirit has been disqualified and the second-place horse, Mandaloun, is soon to be declared the official victor.[4] The official shift in the running order, however, will have no bearing on the cash payouts made at the 2021 Derby.[5] Per horse racing rules and state regulations, once the Derby commission displays the results as “official,” bettors are able to cash in based on those results.[6] This deep-rooted horse racing rule ensures bettors will not be required to return their winnings should a horse later be disqualified.[7] Thus, even if the 2021 results are changed to declare Mandaloun the winner, those who have hundreds if not thousands of dollars riding on that result are simply out of luck.

Because bettors who wagered on Mandaloun have no remedy under horse racing rules, some have taken legal action. These bettors have filed numerous class action lawsuits against Medina Spirit’s decorated owner, Bob Baffert.[8] Among other arguments, the complaints seek recovery against Baffert on a theory of civil negligence.[9] This argument, however, is misplaced and courts should dismiss the negligence claims against Baffert. First, this article previews the history of horse racing disqualifications and prior lawsuits stemming from those controversies. Next, this article details the landmark lawsuits filed against Baffert for the disqualification of his horse in the 2021 Kentucky Derby. Ultimately, this article argues that while the horse racing rules indeed create a tension between those who profit from an ineligible horse and the “technical” winners, the negligence claims against Baffert are unlikely to prevail.

II. Background

Horse racing disqualifications are not new phenomena. In the 2019 Kentucky Derby, Maximum Security bounded off the final corner, veered into a separate lane, impeded the path of another horse, and was disqualified.[10] In the 1968 Derby, a post-race urinalysis test revealed that the first-place horse, Dancer’s Image, had traces of an anti-inflammatory medicine.[11] Dancer’s Image was disqualified, and the second place horse was registered as the true winner more than four years later.[12] In a 2016 horse race at Meadowlands Race Track in New Jersey, a first-place horse was later disqualified when it tested positive for performance enhancing drugs.[13] Most recently, following a twice-confirmed positive drug test, the 2021 Kentucky Derby winner Medina Spirit was officially disqualified a month after the event and is expected to have his title removed.[14]

Perhaps the most controversial facet of horse disqualification occurs off the track with the payout of bets. The degree of controversy hinges on whether a disqualification is made before or after the governing board renders the results official.[15] If the results have not been made official when a horse is disqualified, like in the case of Maximum Security’s 2019 Derby infraction, bet payouts are adjusted accordingly.[16] Those who bid on the second place horse can cash in as if the horse crossed the finish line first, and most people are happy.[17] Increasingly more common and more controversial, however, are disqualifications that are made days or weeks after the results become official. This occurred at the 2016 Meadowlands race and the Kentucky Derby in both 1968 and 2021.[18] Per horse racing regulations, bets paid according to a now-disqualified horse remain valid while those who had their horse elevated to first place get nothing more than the paper ticket as a souvenir.[19]

Although disqualifications have existed since horse racing began, lawsuits by disgruntled bettors are rather novel. In fact, the 2016 Meadowlands race gave rise to a “first of its kind” lawsuit.[20] In March 2018, Jeffrey Tretter bet that a certain four-some of horses would finish first, second, third, and fourth.[21] While the horses finished in the precise order that Tretter had bet on, they finished second, third, fourth, and fifth behind a first-place horse that was disqualified a few days later for use of performance enhancing drugs.[22] Once the first-place horse was disqualified, the updated official results matched Tretter’s winning order precisely.[23] But due to the long-standing rule of not reappropriating funds based on post-race disqualifications, the track refused to honor his now-winning ticket.[24] The payout would have been $31,835.[25]

Financed by the People for the Ethical Treatment of Animals (“PETA”), Tretter filed suit against the disqualified horse’s trainer and owner in the U.S. District Court for the District of New Jersey.[26] The complaint’s primary theory of liability was fraud and racketeering.[27] Although it was a unique lawsuit, the case was never decided on its merits but rather settled in August 2020 for $20,000.[28] In a written statement following the settlement, PETA and Tretter stated that “bettors must organize and go after the cheats for every verifiable dime that was lost.”[29] The lawsuit’s goal was to help “clean up harness racing” and hold owners and trainers accountable for “blatant cheating.”[30]

The Tretter case settlement could not have come at a more inopportune time for Hall of Fame racehorse owner, Bob Baffert. Baffert is the owner of Medina Spirit, the disqualified horse who failed post-race tests at the 2021 Kentucky Derby.[31] At face value, the Tretter case serves as a thorn in the side precedent for Baffert’s defense against a growing number of lawsuits. To date, Baffert and his company, Zedan Racing, are named as defendants in three class action lawsuits before federal courts in Kentucky and California.[32] Among other claims, the complaints seek recovery on theories of negligence, namely that Baffert “failed to care” for Medina Spirit prior to the running of the Derby.[33] While no formal answer has been filed, Baffert has publicly stated that neither he nor his racing staff ever administered the substance to Medina Spirit.[34] Baffert has publicly maintained that the only way Medina Spirit would have tested positive is if an ointment or feed handled by a third party accidently contained betamethasone.[35]

III. Discussion

The Baffert lawsuits seem similar to the Tretter settlement, but there are substantial differences. If the Tretter case is truly destined to serve as a blueprint for future horse racing litigation, the Baffert lawsuits are poor test vehicles. Regardless of one’s view on Baffert’s history, competitive practices, or veracity, he nor his company is liable for negligence stemming from the 2021 Kentucky Derby. At present, the known facts do not lend themselves well to a favorable outcome for the class of bettors, and courts should dismiss those claims against Baffert.

To support a cause of action for civil negligence, the plaintiff class must demonstrate that Baffert had a duty of care to bettors, that he breached that duty, the breach resulted in damages, and Baffert’s breach was the cause of those damages.[36] The bettors are able to demonstrate a financial harm and for purposes of this article, it is assumed that Baffert owed a duty to the betting community. The plaintiff class will struggle, however, to prove either causation element, thus defeating any claim of negligence against Baffert.[37]

To prevail, the plaintiff class would have to prove both factual cause and legal cause. As to factual cause, the class would have to demonstrate that without the presence of betamethasone in Medina Spirit, Mandaloun would have won the race and therefore, all of those bets would have been honored. For two primary reasons, the plaintiffs cannot do so. First, the nature of the drug test failure is crucial. In fact, it is somewhat misleading to assert that Medina Spirit failed a “drug” test. Rather, Baffert’s horse failed post-Derby testing for the presence of betamethasone, an anti-inflammatory. Unlike in the Tretter case where the winning horse was disqualified for a performance enhancing drug, Baffert’s horse tested positive for a relatively harmless substance that is commonly used in the industry.[38] Second, Medina Spirit’s tests reveal a miniscule presence of betamethasone.[39] The confirmed test results demonstrate that there were only 21 picograms per millimeter of plasma.[40] A single picogram is one-trillionth of a standard gram.[41] That amount is so tiny, experts are skeptical that it would have provided any performance enhancement to Medina Spirit at the 2021 Derby.[42] Unlike in the Tretter case where the winning horse’s victory was arguably due to the use of a performance enhancing drug, it is likely that such a small amount of an anti-inflammatory provided zero performance boost to Medina Spirit’s race.[43] Thus, even if one hypothetically concedes that Baffert injected the betamethasone into Medina Spirit himself, it is unlikely that the plaintiff class could show that such negligence was the but-for cause of their second-place horse not winning.

As any good plaintiff’s attorney would argue in response, perhaps the correct causation inquiry is not whether or not Medina Spirit would have won with betamethasone in his system, but rather whether Baffert knew or should have known that the presence of betamethasone would disqualify his winning horse, thus leaving those who bet on the second place horse without recourse. That argument can also be dismissed because it would fail the legal cause element of negligence. Legal cause is all about foreseeability—did the defendant have a reasonable certainty that his conduct would cause the harm or is the causal chain too attenuated?[44] To demonstrate proximate cause, the plaintiff class would have to demonstrate that it was reasonably foreseeable that the almost non-existent level of betamethasone would propel Baffert’s horse to victory in the Kentucky Derby only to later be disqualified, thus leaving the second-place bettors empty handed.

As the phrasing of the standard suggests, this is a tall task for the plaintiff class to surmount. The Kentucky Derby is regarded not only as the most exciting two minutes in sports, but also as a wildly unpredictable event. Anyone’s guess on what horse will be victorious is as good as the next person’s. In fact, six other horses had better odds to win than Medina Spirit.[45] Further undermining any argument of reasonable foreseeability is that unlike a performance enhancing substance, a mundane anti-inflammatory like betamethasone would not have improved Medina Spirit’s odds. Even with betamethasone in the bloodstream, it cannot be said that Medina Spirit’s victory and subsequent disqualification was foreseeable enough to justify holding Baffert liable for millions of dollars in bet payouts. Rather, if the plaintiffs take issue with the horse betting rules and procedures that resulted in this legal conundrum, Churchill Downs or the horse racing governance body, not Baffert, ought to be their target.[46] Irrespective of the arguments made, the plaintiffs cannot sustain a claim of negligence against Baffert.  

IV. Conclusion

Current horse betting rules create unfortunate predicaments where tempers run high and financial losses can be substantial. It is therefore unsurprising that legal action soon follows. While those who bet on Mandaloun at the 2021 Derby are validated in their frustration, litigation may not be the best avenue for change. Perhaps more detailed, thorough pre-race substance testing would provide more certainty in horse race betting. Perhaps a solution lies in banning horse owners such as Baffert from competition at the Derby—as Churchill Downs has announced that it will.[47] But a habit of suing horse owners on long-shot negligence theories is unlikely to provide a remedy or vindicate anyone’s interests. Under a straightforward analysis, courts should deny recent claims that Bob Baffert is liable for negligence to second-place Derby bettors.

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[1] History & Tradition, The Race, Kentucky Derby, https://www.kentuckyderby.com/history/the-race (last visited June 6, 2020).

[2] Grason Passmore, Experts discuss latest Kentucky Derby controversy; what it could mean for future of horse racing, WKYT (May 9, 2021), https://www.wkyt.com/2021/05/10/experts-discuss-latest-kentucky-derby-controversy-what-it-could-mean-for-future-of-horse-racing.

[3] Ed Barkowitz, If Medina Spirit is disqualified, Kentucky Derby betting losers will not collect, The Philadelphia Inquirer (May 20, 2021), https://www.inquirer.com/sports/medina-spirit-disqualified-betting-betamethasone-kentucky-derby-20210510.html.

[4] Id.

[5] Victor Mather, A Derby Winner’s Drug Test Won’t Affect Any Bets. Here’s Why, The New York Times (May 12, 2021), https://www.nytimes.com/2021/05/10/sports/horse-racing/kentucky-derby-bets-medina-spirit.html.

[6] Id.

[7] Id.

[8] Natalie Voss, Baffert the Center of Two More Civil Suits in Federal Court in Medina Spirit Case, Paulick Report (May 26, 2021), https://www.paulickreport.com/news/the-biz/baffert-the-center-of-two-more-civil-suits-in-federal-court-in-medina-spirit-case.

[9] Id. The complaints also seek relief on theories of breach of contract, fraud, and liability under the federal racketeering law, the Racketeer Influenced and Corrupt Organizations Act. Id. Because the litigation is at an adolescent stage and not many facts are know, this article only analyzes the negligence claims against Baffert.

[10] Dylan Scott, The unprecedented disqualification of a Kentucky Derby winner, explained, Vox (May 6, 2019), https://www.vox.com/2019/5/6/18531087/kentucky-derby-winner-video-replay-maximum-security-disqualified.

[11] Gary Graves, Another horse racing scandal? Bob Baffert suspended, Derby winner may be disqualified, York Dispatch (May 9, 2021), https://www.yorkdispatch.com/story/sports/2021/05/09/another-horse-racing-scandal-derby-winner-may-disqualified/5014548001.

[12] Mather, supra note 5.

[13] Man who lost bets due to horse doping at Meadowlands settles suit for $20K, (Aug. 12, 2020), https://www.nj
.com/sports/2020/08/man-who-lost-bets-due-to-horse-doping-at-meadowlands-settles-suit-for-20k.html.

[14] Ryan Gaydos, Medina Spirit’s elevated betamethasone levels confirmed in second sample, lawyer says, Fox News (June 2, 2021), https://www.foxnews.com/sports/medina-spirit-betamethasone-levels-confirmed-second-sample.

[15] Mather, supra note 5.

[16] Id.

[17] Id.

[18] Id.

[19] Id.

[20] supra, note 13.

[21] Id.

[22] Id.

[23] Id.

[24] Id.

[25] Id.

[26] supra, note 13.

[27] Id.

[28] Id.

[29] Id.

[30] Id.

[31] Voss, supra note 8.

[32] Id.

[33] Id.  

[34] Aristos Georgiou, What Is Betamethasone and How Is It Used in Horses?, Newsweek (May 10, 2021), https://www.newsweek.com/what-betamethasone-horses-medina-spirit-kentucky-derby-1590150.

[35] Gaydos, supra note 14.

[36] Blackmon v. Tri-Arc Food Systems, Inc., 782 S.E.2d 741, 745 (N.C. Ct. App. 2016).

[37] Notably, a plaintiff would have to prove that Baffert’s actions or inactions were both the but-for and proximate cause of their damages. This article focuses solely on the but-for cause standard.

[38] Georgiou, supra note 34.

[39] Id.

[40] Id.

[41] Id.

[42] Id.

[43] CJ Daniels, What is Betamethasone? Here’s what experts say about the drug found in Medina Spirit, WHAS11 (May 9, 2021), https://www.whas11.com/article/sports/horses/betamethasone-medina-spirit-kentucky-derby-winner-bob-baffert-trainer/417-5e45ed1e-5625-4901-925c-4fbc45254210.

[44] Blackmon, 782 S.E.2d at 745.

[45] 2021 Kentucky Derby odds, best predications, CBS SPORTS (May 1, 2021), https://www.cbssports.com/general/
news/2021-kentucky-derby-odds-best-predictions-expert-who-hit-9-derby-oaks-doubles-shares-picks.

[46] In fact, one of the lawsuits against Baffert includes a negligence claim against Churchill Downs.

[47] Dan Mangan, Churchill Downs bans Bob Baffert after 2nd positive drug test for Kentucky Derby winner Medina Spirit, CNBC (June 2, 2021), https://www.cnbc.com/2021/06/02/churchill-downs-suspends-bob-baffert-for-2-years-as-kentucky-derby-winner-medina-spirit-fails-2nd-drug-test.html.