By John Wolohan & Chris Powers
Runners in next year’s New York City Marathon and Half Marathon races can expect an increase in entry fees for the first time since 2012, thanks to a settlement reached in September 2016 among the parties to a lawsuit.
In Konopa v. New York Road Runners Inc., Case Number 1:16-cv-00450, two runners from Utah, Charles Konopa and Matthew Clark, who were not selected to run in the race through the race’s lottery-style entry process, filed a lawsuit against the New York Road Runners (NYRR), the organizers of the NYC Marathon. Konopa entered the Lottery in 2014 and Clark entered the Lottery in 2011 and 2015. A copy of the complaint can be found at: http://thetmca.com/files/2016/01/16-cv-00450-Document-1-3.pdf
Since 2010, the NYRR required all prospective runners to pay a non-refundable $11 fee to enter their names into a lottery. Runners whose names were chosen were allowed to enter the race, but those whose names were not selected received nothing. The NYRR kept the $11 as a processing fee, which was the centre of the dispute. Runners could also qualify for entry to the Marathon by achieving a qualifying time in another Marathon or raising enough money for certain charities to earn a place.
Konopa and Clark claimed that the NYRR’s lottery system violated the New York State Constitution, which prohibits any “lottery or sale of lottery tickets, pool-selling, book-making, or any other kind of gambling, except lotteries operated by the state”( N.Y. Const., art. I, § 9).
The New York State Criminal Statute defines a “lottery” as an “unlawful gambling scheme in which the players pay or agree to pay something of value for chances … to receive something of value” (N.Y. Crim Law 225.00(10)). The Statute defines “something of value” as “any money or property, any token, object or article exchangeable for money or property, or any form of credit or promise directly or indirectly contemplating transfer of money or property or of any interest therein, or involving extension of a service, entertainment or a privilege of playing at a game or scheme without charge” (N.Y. Crim. Law 225.00(6)).
Konopa and Clark claimed that NYRR lottery entrants were paying something of value (an $11 processing fee) in exchange for a chance to receive something of value (the privilege of receiving entry into the marathon). In the opinion of Konopa and Clark, both the processing fee and the chance to participate in the race were covered under the statutory language and thus unconstitutional. In essence, the lawsuit alleged that the marathon organizers were running an illegal lottery that enabled NYRR to make millions of dollars from the non-refunded processing fees. According to the complaint, more than 80,000 would-be runners enter the lottery each year, with only 18% being chosen to compete, resulting in a windfall for NYRR at the expense of the runners. For example, if 80,000 runners entered and only 18% or 14,400 were selected, that means in an average year the NYRR lottery would generate over $720,000 for the NYRR.
To win their case, Konopa and Clark would have been required to show that the Marathon registration process constituted a bona fide business transaction borne out of necessity because the Marathon has substantially more prospective entrants than it can allow to participate and whether the $11 fee was a legitimate cost for that transaction. In looking at the amount of money the lottery generated each year, it would have been easy to show that the NYRR was making money off the lottery above the cost of the transaction. The court also could have analysed whether the other methods of entry were enough to eliminate the chance aspect of the lottery.
Under the letter of the law, Konopa and Clark probably had a winning argument, although as is always the case with matters of interpretation, it was not a guarantee. The terms of the settlement, however, seem to imply that the NYRR was worried about the case.
To settle the case, the NYRR agreed that entry fees will rise from $122-$133 to $130-$145 for the Half Marathon and from $227-$266 to $255-$295 for the Marathon in 2017. Runners, who utilised the lottery system from 2010-2015, will receive a credit, ranging from $1.25 to $11 of their next entry fee. In addition, the NYRR has also agreed to improve disclosure of its processes, donate $100,000 to the city parks foundation and pay plaintiffs’ legal fees. Finally, the NYRR will not charge runners a fee to enter the race lottery for at least three years, while it applies for a state lottery license. The cost of the license to the NYRR is $3.1 million. While the case does not establish any legal precedent, and no laws were created because the parties settled before trial, as a practical matter, this case is likely to affect the administration of the race and other marathons for years to come.
Attorney John T. Wolohan (firstname.lastname@example.org) is a professor of sports law in the David B. Falk College for Sport and Human Dynamics at Syracuse University and an adjunct Professor in the Syracuse University College of Law, New York. Chris Powers is a third year student in the Syracuse University College of Law.