The magistrate judge recommended tossing the CAW lawsuit. The industry will lead with the first paragraph. Here is what was in the other 67 pages.
In April I wrote that Dickey et al. v. The Stronach Group et al. was going to get dismissed, probably with prejudice. I also wrote that the industry would use that dismissal as a shield it had not earned. My exact words: Watch for it. It’s coming.
It came.
On Friday, October 23, Magistrate Judge James M. Wicks filed a 68-page Report and Recommendation in the Eastern District of New York. He recommended granting all five motions to dismiss, in full, with prejudice. The line the industry will lead with is right on page one: dismissal with prejudice because “nothing any Defendant said was untrue” and “no Plaintiff relied upon any alleged misrepresentation.”
That is the paragraph you’ll see quoted. I read the other 67 pages. You should know what is in them, because the headlines won’t tell you.
The defendants won the recommendation. They did not win a judicial endorsement of the entire CAW system. The plaintiffs lost their case, at least at this stage, largely because they failed to plead the injury and reliance their legal theories required.
There is a difference.
What This Is — and What It Isn’t
First, the scoreboard. This is not a final ruling. A magistrate judge writes a recommendation. District Judge Joan Azrack decides whether to adopt it. The parties have 14 days from service to object, which puts the deadline on or about November 6, assuming service occurred October 23 and no extension or other adjustment applies. I would be stunned if Hagens Berman doesn’t file.
Second, the recommendation has two layers. The judge found no standing, no adequately pleaded injury or causation. On its own, a dismissal for lack of Article III standing would be without prejudice. He then went through all fourteen counts on their legal merits and found every one deficient. That is where the recommendation for dismissal with prejudice comes from.
So yes, I called it in April. Dismissed. With prejudice. That’s the recommendation, not yet the final judgment. The defense had the stronger legal hand, and the magistrate agreed on nearly every point. But how the plaintiffs lost matters more than the fact that they lost.
The Piano Never Even Got Close
In my piece on the defense, I used the piano. Drop one off a building, it misses you by five feet, you can’t sue because it would have killed you if it hit. You have to prove what actually happened to you.
Judge Wicks went one step further. Not one of the seven plaintiffs alleged he ever cashed a ticket. Not one track. Not one race, date, pool, amount or result. Seven bettors from seven states, and the complaint never says any of them won a single bet.
That matters because of how a pari-mutuel pool works, and the judge laid it out plainly. The alleged CAW effect on a bettor’s payout requires a winning ticket. If you’re holding a losing ticket, it doesn’t matter whether your horse went off 3-1 or 10-1. As the court put it: “zero is zero.” So if you never allege a winning ticket, you never identify a payout that CAW participation reduced.
The court contrasted this with a Whole Foods case where the plaintiff named the stores, the products and how often he bought them. Here the plaintiffs never even said what kind of bets they made. And the judge noted something I wrote in April: according to the complaint itself, the bulk of CAW play is in the exotics. I called it “the exotic argument they never made.” The court noticed they never made it, too.
It gets worse. No plaintiff alleged ever seeing, hearing or reading any of the “fair game” statements they sued over. Several of those statements were made after the suit was filed. And the judge caught the plaintiffs offering three different theories of harm across their briefs. When your own side can’t settle on how you were hurt, a federal judge is not going to figure it out for you.
The piano didn’t miss them. They never told the court they were standing on the sidewalk. JS
What Page One Leaves Out
Here is what you won’t find in the paragraph that gets quoted.
1. The court recognized the economic harm CAW participation can impose on retail players. Stronach argued Elite’s 2024 letter to the California Horse Racing Board was only a hypothetical. That’s the letter showing how CAW players representing 20% of a pool and returning 90 cents on the dollar can push retail effective takeout from 20% to 22.5%. The judge called Stronach’s attempt to dismiss the example as hypothetical “spurious.” He noted Elite chose its numbers to model a real-life racetrack.
His reasoning was clear: in a pari-mutuel pool, higher aggregate returns to one group necessarily leave less for the others. He expressly recognized the plaintiffs’ underlying economic theory of harm.
That doesn’t establish that every pool suffers a 2.5-percentage-point increase, or that any particular plaintiff sustained that loss. But it does recognize the mechanism. The plaintiffs lost because they didn’t adequately connect the alleged harm to themselves, not because the court rejected the economics.
2. NYRA is “hardly a bystander.” NYRA argued the complaint never adequately tied it to the alleged scheme. The magistrate disagreed with that characterization, citing NYRA’s stakes in United Tote and Elite, its control of wagering rules at its three tracks, and the benefit it receives from increased handle.
That is not a finding that NYRA engaged in unlawful conduct. It is a rejection of the suggestion that NYRA had no meaningful connection to the arrangements being challenged.
And fairness requires acknowledging something else. NYRA has implemented meaningful restrictions on late CAW wagering, including its prohibition on CAW participation during the final minute before post. Those safeguards matter, and I have said so publicly.
But implementing safeguards does not eliminate legitimate questions about ownership interests, financial incentives, or transparency. Both things can be true.
3. NYRA’s immunity argument remains unresolved. NYRA argued that its status as a state actor shields it from RICO damages. The magistrate found that the issue could not properly be resolved without discovery. He also noted NYRA’s characterization of itself as a private entity in other litigation, including the Baffert case.
In April I raised the question of what accountability comes with being a state-supervised body that owns a piece of a CAW operator. NYRA’s asserted state-actor protection was not established at this stage. The court did not conclusively reject the defense, either. The question remains open. So does mine.
4. Churchill’s class-action waiver didn’t get decided. In April I asked why an entity eliminates a legal mechanism it isn’t worried about. CDI argued the TwinSpires terms barred six plaintiffs from proceeding as a class. The magistrate declined to resolve that argument at this stage because the waiver was outside the complaint.
The question is still open. So is mine. None of that is on page one.
Where the Court Cut Against Me
We don’t sugarcoat here, and that includes my own work. Parts of this recommendation make the case I laid out in April harder.
Rebates. I wrote that the real fraud argument lives in rebate transparency. The judge agreed with Stronach that rebate payments to CAW players do not themselves reduce what a retail winner is paid on a particular ticket. The economic effect he recognized runs through the distribution of returns from the pari-mutuel pool, not through the rebate check itself.
Then he used the long history of rebates against the plaintiffs on timing. He treated the rebate system as the central allegation connecting the insiders’ advantage to the defendants. Because the complaint acknowledges that rebates to large players have existed since the 1990s, he concluded the RICO claim was time-barred.
My answer: knowing rebates exist is not knowing the price.
Nobody publicly discloses the complete negotiated pricing arrangements available to the largest wagering groups. That’s the disclosure gap I wrote about. But anyone contemplating another lawsuit has to confront the court’s reasoning, not pretend it isn’t there.
The data feed. Out of the statements the plaintiffs challenged, the judge identified one sufficiently concrete to potentially be false: Elite president Scott Daruty’s assertion that there is “one and only one data feed.”
He nevertheless found the allegations insufficient. The complaint never adequately explained the dedicated links and API connections it described, or established that the defendants supplied an informational advantage rather than the CAW teams purchasing their own infrastructure.
That is a crack, not a wall. A complaint supported by specific evidence about tote access, data availability, and who provides what would present questions the magistrate did not resolve here. Whether it would support a viable claim is another matter.
The “rigged” framing. The judge noted that tracks have restricted late CAW play, including NYRA’s prohibition on CAW wagering in the final minute before post. The plaintiffs characterized those changes as admissions. The court did not treat them as proof of fraud. Neither would I.
I’d treat them as evidence that operators recognized concerns worth addressing through changes to their wagering rules. That’s a governance story, not automatically a racketeering one. Same thing I said in April.
Sharks and Minnows
The line from this recommendation that should keep racing executives up at night isn’t about RICO. It’s about you. In discussing the plaintiffs’ claims, the judge reasoned that gamblers cannot reasonably assume they will profit in the long run or that they will compete against equally equipped participants. He wrote that the plaintiffs’ quarrel was “with capitalism itself” and cited Flash Boys. Then came the sharks and minnows. Legally, he’s making a point about reasonable expectations and reliance. Nobody can reasonably believe a betting pool is free of sharper, faster, better-funded players. I said the same thing in April when I wrote that unfair and illegal are not the same word.
But read that reasoning as a business.
A federal judge has now invoked sharks and minnows to explain the competitive realities of wagering. Fair enough. But if racing’s answer to its customers is that they should simply accept being the minnows, the industry shouldn’t be surprised when those customers find another pond.
I’ve made my living on the other side of that line, with well over $3 million in Pick 6 scores. I know what it takes. Racing does not survive on sharks alone. It needs new players walking in believing they have a fair shot if they do the work. There is nothing wrong with losing to a better handicapper. There is nothing wrong with losing to someone who studies harder, has a larger bankroll, or develops better tools. But there is a difference between competing against someone who built a better mousetrap and competing in a system where the operator has financial interests in businesses serving certain participants on terms unavailable to others.
That distinction matters. Winning in court and winning the customer are two different races.
Final Thoughts
I am no lawyer, and I’ll say it again: the defense had the stronger hand, and the magistrate’s recommendation went substantially the way I expected. RICO was the wrong weapon. The complaint never connected a specific dollar of harm to a specific plaintiff in the manner the court required.
That’s on plaintiffs’ counsel, not on the horseplayer.
But here’s what the industry now has in writing, in a federal magistrate’s recommendation, in the same document it will be quoting:
- The economic mechanism by which higher CAW returns increase effective takeout for other bettors was recognized.
- Elite’s 2.5% illustration was not dismissed as a meaningless hypothetical; the court noted its connection to real-world racetrack conditions.
- NYRA was described as “hardly a bystander” in relation to the challenged arrangements, without any finding of unlawful conduct.
- Whether NYRA can invoke state-actor protection against RICO damages remains unresolved.
That is not a judicial endorsement of the status quo.
And it leaves questions for anyone considering future litigation: specific winning tickets, identifiable pools, properly pleaded injury, the role of exotic wagers, documented tote access, and a viable legal theory supported by actual facts.
None of that guarantees another lawsuit would succeed. It does show why this one faced the obstacles it did.
Objections are due on or about November 6, subject to the applicable service date and any extensions. Judge Azrack has the final say. I’ll be reading every page of whatever gets filed, not just the first paragraph.
Six months ago, I wrote that this was the right grievance and the wrong lawsuit.
The magistrate has now recommended dismissal.
The legal arguments were tested. The plaintiffs came up short. The underlying questions about pricing, access, transparency, and the long-term health of pari-mutuel wagering remain.
The wall still has cracks. Now a federal magistrate has identified some of them.
You get it or you don’t.
RELATED: The Right Grievance. The Wrong Lawsuit. | The Other Side of the Rail on CAW Litigation
Source: Report and Recommendation, Dickey et al. v. The Stronach Group, Inc., et al., No. 2:25-cv-05962 (JMA) (JMW), E.D.N.Y., ECF No. 86, filed October 23, 2026.
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