09/29/2014 10:02AM

Court upholds Texas ban on Internet, phone wagering

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A federal court of appeals has affirmed a lower court’s ruling that Texas can prohibit companies like Churchill Downs Inc. from taking wagers from state residents over the Internet and phone.

The U.S. Fifth Circuit Court of Appeals ruled Sept. 24 that a Texas law banning Internet and phone wagering did not violate the Constitution’s protections on interstate commerce, while acknowledging that case law on potential violations of the commerce clause are “quite simply, a mess.” A district court in Texas had previously ruled against Churchill in the matter.

Churchill challenged the Texas law two years ago in the hopes of continuing to take bets from the state’s residents through its market-leading account-wagering operation, twinspires.com. Churchill had argued that the law banning Internet and telephone wagers treated “bricks-and-mortar” sites differently from online operations. While betting over the Internet is banned in Texas, offtrack betting is legal, though in a limited scope.

The court of appeals ruling said that Churchill had failed to demonstrate that Texas law amounted to discrimination.

“Plaintiffs have the burden of showing discriminatory effects, not merely illustrating that discriminatory effects plausibly exist,” the three-judge court ruled.

Following the original ruling in September 2013, Churchill closed off twinspires.com to Texas bettors.

Courtney Norris, a spokeswoman for Churchill Downs, said the company will “continue the appeals process, but we have not finalized our decision.”

The court ruled that Churchill must pay the costs for the state of Texas to defend itself. 

rvraynmary More than 1 year ago
we have he same prohibitions on internet betting here in Arizona. The 2013 Legislature passed a law permitting telephone betting thru Turf Paradise. to date, no one has been able to figure out how this will work. Stay tuned. Texans my want to watch this.
Matthew Hood More than 1 year ago
The OTB's in Texas are using secured data lines to transmit wagers, aka the internet. Churchill should argue that if these outlets are allowed to make wagers why not them in just a different way. If the court still disagrees, why not set up a small office in Dallas or Houston where Texas wagers are funneled through this office and then through the main pools? There best route now may be to petition the Texas racing commission for an OTB license and go that way.
Chad mc rory More than 1 year ago
I cannot even buy a Racing Form in North Carolina but there is a State Lottery. Old Timey?
Wonderagain More than 1 year ago
Discriminatory and burdensome state laws prohibiting account wagering in states where interstate simulcasting is legal hurt the consumer aka horseplayer. Our Founding Fathers included the dormant Commerce Clause in the U.S. Constitution to protect the consumer (horseplayer) from these types of discriminatory and burdensome state laws enacted to protect local interests (tracks, horsemen and OTB's). That said Texas was probably not best place to make this precedent-setting legal challenge.
Joan More than 1 year ago
They do go to the neighboring states, better purses. Racing in Texas is on a downhill slide. I am from Texas, love racing and have to go to the track to place ANY bet on the horses. Someday we will come out of the dark ages, but probably not in my lifetime.
Nascar19661 More than 1 year ago
Yet the state of Texas has lottery. All the horsemen should go to the neighboring states.