TeamChallenge sues 4 former franchisees, who sold their businesses to World Triathlon Corporation, Inc. and IRONMAN

According to an article, TEAMChallenge GmbH sued 4 former franchisees. All of them sold their businesses and triathlon events to World Triathlon Corporation, Inc. (WTC) recently and added their races to WTC's growing IRONMAN and IRONMAN 70.3 triathlon portfolio. The case, worth est. EUR 500,000 builds upon breach of contracts by all four former franchisees. The legal actions are a temporary tipping point of a more or less open conflict between both privateley held triathlon event organizations.

All affected events, e.g. Barcelona, Copenhagen, Kraichgau and Vichy switched from Challenge branding to IRONMAN. Former owners or core staff members are holding management positions at WTC's various subsidiary companies. Björn Steinmetz, a former owner of Challenge Kraichgau, is currently responsible for WTC's flagship triathlons in Frankfurt and Wiesbaden, Germany and reports to Thomas Dieckhoff, WTC'S CEO for the EMEA region. [1]

1. "Der Kampf um die Sportverrückten"

Legal review on IRONMAN's and CHALLENGE FAMILY's lottery programs

Attorney Julie Gildred, reviews in her article "3 Rules to Make Your Race Lottery Legal" former and current race lottery programs. She explains, using simple examples, why World Triathlon Corporation's IRONMAN race lottery program was considered not legal and why Germany based TEAMCHALLENGE GmbH's program could be not satisfactionary meeting all U.S. law requirements in it's current setup. [1]

At the crux of the Ironman investigation was the lottery fee (between $35 – $50/person) the WTC required to enter the lottery. In reaching the settlement, the WTC Complaint concluded that ‘probable cause exists to believe that the Lottery Proceeds are traceable to proceeds of an illegal gambling business because each lottery included a prize (the entry slot); random drawing; and consideration ($35-50/person).’

In fact, shortly after the Ironman folks down in Florida got nabbed, their largest competitor rolled out a multi-faceted lottery promotion called Roth Rewards. One of the Roth Rewards’ lottery requires the athlete complete Challenge Cedar Point Full 2015 in order to be eligible to win the race lottery slot.

Under lottery case law, it’s almost universally established that consideration exists where the purchase of a product or service is required to enter the random drawing with no alternative free method of entry.

[...] one could easily make a compelling case that by requiring an individual to register and pay for another Challenge-branded event, this also amounts to consideration making the lottery illegal. 

1. 3 Rules to Make Your Race Lottery Legal