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In addition to the matters described below, we are also involved in ordinary routine litigation matters which are incidental to our business.
−Removed: Kater Class Action Suit
−Removed: On April 17, 2015, the Cheryl Kater v.
−Removed: Churchill Downs Incorporated class action lawsuit (the "Kater Litigation") was filed in the United District Court for the Western District of Washington (the "Washington District Court") alleging, among other claims, that the Company’s "Big Fish Casino" operated by the Company’s then-wholly owned mobile gaming subsidiary Big Fish Games, Inc.
−Removed: ("Big Fish Games") violated Washington law, including the Washington Consumer Protection Act, by facilitating unlawful gambling through virtual casino games (namely the slots, blackjack, poker, and roulette games offered through Big Fish Casino), and seeking, among other things, return of monies lost, reasonable attorney’s fees, treble damages, and injunctive relief.
−Removed: On January 9, 2018, the Company sold Big Fish Games to Aristocrat Technologies, Inc.
−Removed: ("Aristocrat"), an indirect, wholly owned subsidiary of Aristocrat Leisure Limited, an Australian corporation, pursuant to the Stock Purchase Agreement, dated as of November 29, 2017, by and among the Company, Big Fish Games and Aristocrat (the "Stock Purchase Agreement").
−Removed: Pursuant to the terms of the Stock Purchase Agreement, the Company agreed to indemnify Aristocrat for the losses and expenses associated with the Kater Litigation for Big Fish Games, which is referred to in the Stock Purchase Agreement as the "Primary Specified Litigation."
−Removed: After the Washington District Court dismissed the case with prejudice on November 19, 2015, the United States Court of Appeals for the Ninth Circuit reversed and remanded the Washington District Court’s dismissal of the complaint on March 28, 2018.
−Removed: The complaint was amended on March 20, 2019, to add Big Fish Games as a party and to assert claims on behalf of an additional plaintiff, Suzie Kelly.
−Removed: On May 22, 2020, the parties entered into an agreement in principle to settle the Kater litigation and the Thimmegowda litigation (as defined below).
−Removed: The agreement in principle remains contingent on final court approval by the Washington District Court.
−Removed: Under the terms of the settlement, which will take effect only after final court approval of the proposed class settlement:
−Removed: (i) a total of $155.0 million will be paid into a settlement fund.
−Removed: The Company will pay $124.0 million of the settlement;
−Removed: Aristocrat will pay $31.0 million of the settlement;
−Removed: (ii) all members of the nationwide settlement class who do not exclude themselves will release all claims relating to the subject matter of the lawsuits;
−Removed: and (iii) Aristocrat has agreed to specifically release the Company of any and all indemnification obligations under the Stock Purchase Agreement arising from or related to the Kater Litigation and Thimmegowda Litigation, including any claims of diminution of value of Big Fish Games and any claims by any person who opts out of the proposed class settlement.
−Removed: On August 31, 2020, the Washington District Court granted the parties' motion for preliminary approval.
−Removed: On December 14, 2020, plaintiffs filed a motion for final approval of class action settlement agreement.
−Removed: The Washington District Court entered an order granting final approval of class action settlement on February 11, 2021.
−Removed: The Company’s settlement contribution will be made by March 26, 2021.
−Removed: Thimmegowda Class Action Suit
−Removed: On February 11, 2019, the Manasa Thimmegowda v.
−Removed: Big Fish Games, Inc.
−Removed: class action lawsuit (the "Thimmegowda Litigation") was filed in the Washington District Court alleging, among other claims, that “Big Fish Casino,” which is operated by Big Fish Games, violated Washington law, including the Washington Consumer Protection Act, and seeking, among other things, return of monies lost, reasonable attorney’s fees, injunctive relief, and treble and punitive damages.
−Removed: On May 22, 2020, the parties entered into an agreement in principle to settle the Kater and Thimmegowda Litigations.
−Removed: The agreement in principle with respect to the Thimmegowda Litigation is described above, under the "Kater Class Action Suit." On August 31, 2020, the Washington District Court granted the parties' motion for preliminary approval.
−Removed: On December 14, 2020, plaintiffs filed a motion for final approval of class action settlement agreement.
−Removed: The Washington District Court entered an order granting final approval of class action settlement on February 11, 2021.
−Removed: The Company’s settlement contribution will be made by March 26, 2021.
The Kentucky Horse Racing Commission, et al.
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(the "Family Foundation") intervened, and the Court subsequently granted summary judgment to the Joint Petitioners holding that the KHRC's historical racing regulations are valid under Kentucky law.
−Removed: Following an appeal to the Kentucky Court of Appeals, in February 2014 the Supreme Court of Kentucky affirmed the Court’s decision that the regulations are valid under Kentucky law, but remanded the case to the Court to determine whether operation of HRMs that were licensed during the
−Removed: pendency of the litigation constitute pari-mutuel wagering.
−Removed: The Court held a trial during the week of January 8, 2018 to determine whether the games from one of the HRM manufacturers (Encore/Exacta) are pari-mutuel, and the Court set a post-trial briefing schedule for the parties.
−Removed: The Court ordered, on August 24, 2017, that this pending litigation directly involves only the HRMs presently in use and any future HRMs proposed by the Company would not be included in the pending case.
−Removed: On October 24, 2018, the Court ruled that the HRMs in question (Encore/Exacta) are a pari-mutuel system of wagering legally permitted under Kentucky law.
−Removed: In November 2018, the Family Foundation filed a notice of appeal and subsequently filed a motion to transfer the appeal directly to the Kentucky Supreme Court, which was granted in June 2019.
−Removed: On September 24, 2020, the Kentucky Supreme Court issued an opinion reversing the Court’s opinion.
−Removed: On November 9, 2020, the KHRC and certain other defendants filed petitions for rehearing which was rejected by the Court.
−Removed: On February 3, 2021, the Court set a schedule whereby the parties shall submit proposed judgments for the Court’s consideration on or before February 24, 2021, and the parties may then submit responses to the opposing proposed judgments on or before March 5, 2021 before the Court takes the matter under submission and enters a judgment.
−Removed: The Company does not use the Exacta system in any of its historical racing machine facilities in Kentucky.
−Removed: On February 22, 2021, the Governor of the Commonwealth of Kentucky signed into law Senate Bill 120 which creates a statutory definition of pari-mutuel wagering that includes historical horse racing approved by the KHRC and addresses the Supreme Court of Kentucky's opinion.
−Removed: We do not believe that any further rulings in this case will impact our ability to operate HRM facilities in Kentucky.
+Added: Following an appeal to the Kentucky Court of Appeals, in February 2014 the Supreme Court of Kentucky affirmed the Court’s decision that the regulations are valid under Kentucky law, but remanded the case to the Court to determine whether operation of HRMs that were licensed during the pendency of the litigation constitute pari-mutuel wagering.
+Added: On October 24, 2018, the Court ruled that the HRMs in question are a pari-mutuel system of wagering legally permitted under Kentucky law.
+Added: On September 24, 2020, the Kentucky Supreme Court reversed the Court’s opinion.
+Added: On February 22, 2021, the Governor of the Commonwealth of Kentucky signed into law Senate Bill 120 which created a statutory definition of pari-mutuel wagering that includes historical horse racing approved by the KHRC and addressed the Supreme Court of Kentucky's opinion.
+Added: On remand, the Court entered final judgment on March 17, 2021, holding (i) that the Exacta system is not a form of pari-mutuel wagering under the laws that were in effect at the time of the Kentucky Supreme Court’s September 24, 2020, opinion, (ii) the final judgment would not be applied retroactively because the associations were authorized and permitted to operate the Exacta system by the KHRC, and (iii) any prospective application of the final judgment would be subject to Senate Bill 120.
+Added: Although the Family Foundation filed a notice of appeal of the final judgment, it moved to dismiss the appeal on September 13, 2021.
+Added: The Kentucky Court of Appeals dismissed the appeal on January 12, 2022, and no further action is expected in this matter.
Kentucky Downs, LLC, et al.
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Plaintiffs allege that Defendants’ HRMs constitute illegal gambling and assert that they can recover for their losses and the losses of all patrons at those facilities with HRMs over a five-year period under Kentucky Revised Statutes 372.010.
−Removed: After an initial extension of the deadline to respond agreed to by the parties, the Jefferson County Circuit Court granted a further extension through March 31, 2021.
+Added: The Company filed a motion to dismiss on March 31, 2021.
+Added: On August 30, 2021, plaintiffs filed a Chapter 13 Bankruptcy Petition with the Western District of Kentucky, and filed a notice of automatic stay in the matter pending against the Company.
+Added: The Company’s motion to dismiss was remanded because of the automatic stay, which has ended.
+Added: On February 9, 2022, the Company filed a motion for oral argument on the motions to dismiss.
The Company intends to defend this matter vigorously and believes that there are meritorious legal and factual defenses against the plaintiffs' allegations and requests for relief.
Louisiana Environmental Protection Agency Non-Compliance Issue
−Removed: On December 6, 2013, we received a notice from the EPA regarding alleged CAFO non-compliance at Fair Grounds Race Course.
+Added: On December 6, 2013, we received a notice from the U.S.
+Added: Environmental Protection Agency (the "EPA") regarding alleged Concentrated Animal Feeding Operations (CAFO) non-compliance at Fair Grounds Race Course.
On October 21, 2019, we reached an agreement in principle, subject to final agreement and regulatory and court approval.
On September 29, 2020, the EPA filed a complaint and proposed consent decree, which was agreed to by both parties.
−Removed: Comments were due by January 11, 2021.
−Removed: If approved, the agreement will include a $2.8 million penalty, which has been accrued and is included in selling, general and administrative expense in our accompanying consolidated statement of comprehensive (loss) income for the year ended December 31, 2019, and accrued expense and other current liabilities in our accompanying consolidated balance sheets at December 31, 2020 and 2019.
−Removed: The consent decree would also require corrective measures to ensure compliance with applicable federal laws and regulations.
+Added: On October 5, 2021, the United States District Court for the Eastern District of Louisiana granted the EPA’s unopposed motion to approve the consent decree.
+Added: Pursuant to the consent decree, Fair Grounds paid a $2.8 million penalty, which was accrued in our consolidated statement of comprehensive income for the year ended December 31, 2019, and accrued expense and other current liabilities in our accompanying consolidated balance sheets at December 31, 2020.
+Added: The consent decree also requires corrective measures to ensure compliance with applicable federal laws and regulations.
Louisiana Horsemen's Purses Class Action Suit
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27:438, and to pay the plaintiff class such sums as it finds to reasonably represent the value of the sums due to the plaintiff class.
−Removed: On August 14, 2014, the plaintiffs filed an amendment to their petition naming the Horsemen’s Benevolent and Protective Association 1993, Inc.
−Removed: ("HBPA") as an additional defendant and alleging that HBPA is also liable to plaintiffs for the disputed purse funds.
−Removed: On October 9, 2014, HBPA and Fair Grounds Defendants filed exceptions to the suit, including an exception of primary jurisdiction seeking referral to the Louisiana Racing Commission.
−Removed: By Judgment dated November 21, 2014, the District Court granted the exception of primary jurisdiction and referred the matter to the Louisiana Racing Commission.
−Removed: On January 26, 2015, the Louisiana Fourth Circuit Court of Appeals denied the plaintiffs’ request for supervisory review of the Judgment.
−Removed: On August 24, 2015, the Louisiana Racing Commission ruled that the plaintiffs did not have standing
−Removed: or a right of action to pursue the case.
−Removed: The plaintiffs appealed this decision to the District Court, which affirmed the Louisiana Racing Commission’s ruling.
−Removed: The plaintiffs filed an appeal of the District Court’s decision with the Louisiana Fourth Circuit Court of Appeals, which reversed the Louisiana Racing Commission’s ruling and remanded the matter to the Louisiana Racing Commission for further proceedings on June 13, 2018.
−Removed: The Louisiana Fourth Circuit Court of Appeals denied the Fair Grounds Defendants’ Motion for Rehearing on July 12, 2018 and the Louisiana Supreme Court denied the Fair Grounds Defendants’ Writ of Certiorari seeking review of that decision on November 14, 2018.
−Removed: The parties had previously attempted to mediate the matter in October 2018 but were unsuccessful.
−Removed: Thereafter, the parties resumed informal settlement discussions, and, as a result, the Company established an accrual for an immaterial amount in the third quarter of 2019.
−Removed: The parties submitted a settlement agreement to the District Court on February 14, 2020, following the Louisiana Racing Commission’s approval to transfer the matter to the District Court for approval and administration of the settlement agreement on February 12, 2020.
−Removed: At a hearing on February 18, 2020, the District Court granted preliminary approval of the settlement agreement and set certain deadlines relating to actions to be taken by class members.
+Added: The Louisiana Fourth Circuit Court of Appeals reversed the Louisiana Racing Commission’s previous ruling that the plaintiffs did not have standing and remanded the matter to the Louisiana Racing Commission for further proceedings on June 13, 2018.
+Added: The Company established an accrual for an immaterial amount in the third quarter of 2019.
+Added: The parties submitted a settlement agreement to the District Court on February 14, 2020, following the Louisiana Racing Commission’s approval to transfer the matter to the District Court for approval and administration of the settlement agreement.
+Added: On February 18, 2020, the District Court granted preliminary approval of the settlement agreement.
The settlement agreement requires, among other items, the Fair Grounds Defendants to (i) pay a certain out-of-pocket amount that is within the amount for which we established an accrual in the third quarter of 2019, and (ii) support legislation that allocates a specified amount of video poker purse funds to quarter horse purses for races at Fair Grounds with maximum annual payout caps that are not deemed material.
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The settlement includes a release of claims against the Fair Grounds Defendants in connection with the proceeding, although individual plaintiffs may opt-out.
−Removed: If there are opt-out claims in excess of $50,000, the settlement will be voided, unless the parties agree to stipulate otherwise.
−Removed: The settlement agreement is subject to certain conditions, including court approval.
−Removed: After the parties entered into the settlement, legal counsel for six objecting plaintiffs filed an amended petition with the District Court.
−Removed: After a hearing on July 20, 2020, the District Court dismissed the amended petition.
−Removed: The objecting plaintiffs filed a notice of their intention to seek a writ with the Louisiana Court of Appeals for the Fourth Circuit related to the dismissal of the amended petition, which was denied.
−Removed: The fairness hearing with the District Court relating to the terms of the settlement agreement occurred on October 7, 2020, and November 17, 2020, and the parties have submitted post-trial briefing and proposed final judgments.
Objecting plaintiffs have filed a notice of appeal of the February 2020 Order appointing class counsel certifying a class for settlement purposes.
On January 28, 2021, the District Court issued a Final Order and Judgement approving the settlement.
−Removed: The objector’s appellant brief in support of their appeal of the February 2020 preliminary approval was filed on February 9, 2021, and the Fair Grounds Defendants’ brief is due on March 1, 2021.
−Removed: The objectors have until April 9, 2021, to file a notice of appeal of the January 28, 2021 Final Order and Judgment.
+Added: Their objectors filed a notice of appeal of the Final Order and Judgment that was consolidated with the earlier-filed appeal of the February 2020 order appointing class counsel and certifying a class for settlement purposes.
+Added: On December 22, 2021, the Fourth Circuit Court of Appeal entered an order affirming the orders of the District Court and approving the settlement.
+Added: On January 7, 2022, the Fourth Circuit Court of Appeal denied the objectors’ motion for remand and application for rehearing.
+Added: On February 6, 2022, the objectors filed a writ of certiorari with the Louisiana Supreme Court.
MINE SAFETY DISCLOSURES
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.