Why does Denny Hamlin believe 23XI Racing will win its legal case against NASCAR?

Denny Hamlin, co-owner of 23XI Racing, stands firm amidst a legal battle with NASCAR due to the facts of the case being on his side. Speaking ahead of the Michigan Cup race weekend, the Joe Gibbs Racing veteran expressed unwavering belief in his team's legal battle, which has seen dramatic turns over the past year.

A federal appeals court overturned a ruling that temporarily reinstated 23XI Racing and Front Row Motorsports' charters on Thursday. Ahead of Sunday's FireKeepers Casino 400 qualification on Saturday, Hamlin stressed that the December trial is what truly matters and not the current injunction (via Kickin' the Tires):

“Nothing regarding the lawsuit, the Injunction, yes, we remain very confident in our case for December 1... We feel like the facts are on our side, and I think if you listen to the judges—even they mentioned we might be in pretty good shape.” (1:01 onwards)

The Thursday ruling by the U.S. Court of Appeals for the Fourth Circuit has been a major development. It reversed a December 18, 2024, decision that had temporarily granted 23XI Racing and Front Row Motorsports their charters, three each, including ones acquired from the now-defunct Stewart-Haas Racing.

The injunction will expire by June 27, just ahead of the Atlanta race, unless they file for a rehearing within the 14-day window (ending June 20), and unless that request is granted. Despite this, Denny Hamlin appeared calm and discussed how the ruling affects his team internally:

"We've been very transparent with all of our employees during the entire process and really every time something comes along, we communicate that before it becomes public... Nothing will change in their lives, we're going to make sure everyone's taken care of. Everyone should plan on work as scheduled." (2:46 onwards)

Without a charter, both teams could lose guaranteed spots and revenue, as well as drivers and sponsors. However, this weekend at Michigan, 23XI Racing drivers (Bubba Wallace, Tyler Reddick, Riley Herbst) and FRM entries (Todd Gilliland, Noah Gragson, Zane Smith) remain eligible to race with charter privileges.

Timeline of NASCAR's charter lawsuit battle with 23XI Racing

NASCAR Chairman Jim France (L) congratulates Denny Hamlin on selection to NASCAR's 75 Greatest Drivers list. Source: Getty

Introduced in 2016, the Charter system allows 36 teams guaranteed entry into every Cup Series race, along with a share in NASCAR's media rights revenue. Each charter represents a car and holds real financial value, some reportedly selling for over $40 million. Teams without charters, termed 'open teams,' must qualify for each race and receive less in media payouts.

23XI Racing and Front Row Motorsports did not sign NASCAR's 2025 Charter Agreement by the stipulated deadline last fall. Their primary concern stemmed from a release clause in the agreement that prohibited legal action against NASCAR. On October 2, 2024, both teams filed an antitrust lawsuit alleging that the charter system and related terms were anti-competitive.

Mitch Covington (L) with Denny Hamlin (C) and 23XI Racing president Steve Lauletta during the NASCAR Cup Series Championship. Source: Imagn

Their legal team first sought a preliminary injunction on October 9, allowing them to continue as chartered teams while the case played out. This was denied on November 8. They refiled their request on November 27, dropping their original motion and changing their legal argument. This time, the request succeeded as the court granted the injunction on December 18, restoring their chartered status.

NASCAR re-appealed, and in a hearing on May 9, judges challenged the reasoning behind 23XI and FRM's arguments. They contest the idea that signing the charter agreement without the release clause would allow them to sue while still receiving its benefits. On June 6, the appeals court ruled in favour of NASCAR, stating that the release clause did not constitute anti-competitive conduct.

As things stand, 23XI Racing and FRM will continue racing under open team status while preparing for a pivotal court date on December 1, 2025.