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BP Business Economic Loss Claim Appeal 2017-9: Racetrack Denied as “Gaming” Business Even though No Proof of Betting

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The following is an Appeal Panel Decision issued pursuant to Section 6 of the BP Deepwater Horizon Economic & Property Damages Settlement Agreement and the Rules Governing the BP Appeals Process. Links may have been added to assist the reader. The original decision may be found here, as well as a glossary of BP Settlement terms

Claimant appeals the denial of its BEL claim on account of the finding by the Settlement Program (“the SP”) that primary business activity was the operation of a racetrack, which is one of the examples of an excluded “Gaming” business under Section 2.2.4.3 of the Settlement Agreement. That section more particularly defines a “Gaming” business as one “identified by the NAICS codes listed on Exhibit 18.” That exhibit, in turn, includes among its listing of “Gaming Industry” NAICS codes, “711212-Racetracks,” which is the Code the SP selected as the most appropriate for operations. That industry is defined as comprising establishments primarily engaged in operating racetracks, but which “may also present and/or promote the events.”
Among the listed examples are “motorcycle racetracks.” argues that it should not be categorized as a “Gaming” business because not only does it not promote gambling at its facility, it absolutely prohibits it. gave the following descriptions of its business operations in various submissions to the SP during the claim evaluation process: “The business is promoting P&Ls reflect that on a consistent basis over the years 2007-2011, the majority of its revenue is listed on the line item “Motocross.” Many of the several other line item revenue streams are clearly motocross related, such as “Trophy/Plaque Sales” and “Video/Photography Income.”
Claimant  argues that, on the whole, its business is one of family-oriented activities of which the motocross racing is one feature, but which also include on occasion a car show, a 5K “mud run,” obstacle courses and climbing, and teaching motorbike riding. For that reason, it argues it should be assigned a NAICS code of “711300-Promoters of Performing Arts, Sports, and Similar Events.” “711300” is the Business Activity Code lists on its tax returns but BP says it is not a valid NAICS code.
Regardless, Policy 480 v. 2 authorizes the SP to select the NAICS code that “most accurately describes the Entity’s primary business activities,” without any presumptions based on the NAICS code the entity used on its 2010 tax return. The panelist deems the SP’s selection of the “Racetracks” NAICS code for primary business activities was a reasonable, if not the only reasonable, choice. That being so, the denial of claim as an excluded one is automatic under the terms of the Settlement Agreement and Exhibit 18. The fact that no gambling takes place in connection with the motocross events is irrelevant. That is the explicit holding of the Fifth Circuit Court of Appeals in its August 31, 2016 opinion in Appeal No. 16-30101, involving a similar business operation: there the claimant owned a 740-acre motorsport park which it rented out for a variety of automotive events. “Notably, the grounds include a 2.38 mile road course and a 22 acre proving ground, which [claimant] leases out for public spectator races.” The Court’s analysis in the end was , “[a]s noted by the Appeal Panel, nothing in Exhibit 18’s definition of ‘racetracks’ limits it to racetracks that involve gambling activities. [Claimant’s] assertion that it is not involved in ‘gaming’ and therefore cannot be excluded misses the point: Section 2.2.4.3, through Exhibit 18, defines ‘gaming’ as including establishments ‘primarily engaged in operating racetracks’ and those that ‘present and/or promote the events’; [Claimant] is therefore, by definition, involved in gaming.” The district court’s refusal to overturn the Appeal Panel’s holding to that effect was affirmed. Therefore, based on that clear binding precedent, arguments based on the absence of“gaming” at the activities it presents and/or promotes, are beside the point and its exclusion as a member ofthe “Gaming” industry must be upheld. Appeal denied.

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