09/24/2013 10:45AM

Judge dismisses Churchill lawsuit challenging Texas ban on online gambling

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A federal court in Texas has rejected an argument by Churchill Downs Inc. that the state legislature’s ban on online gambling by Texas residents is a violation of the federal commerce clause of the U.S. Constitution.

The decision scuttles an attempt by Churchill to continue to take bets from Texas residents through its market-leading account-wagering operation, twinspires.com. Churchill filed a lawsuit last September challenging the ban on online wagering, asserting that the ban violated the commerce clause because it treated bets at “bricks-and-mortar” sites differently than those placed through Internet account-wagering operations.

Judge James R. Nowlin of the U.S. District Court for the Western District of Texas summarily rejected those arguments in an opinion issued Monday that dismissed Churchill’s suit with prejudice.

“Their argument fails because it incorrectly treats brick-and-mortar gambling as identical to Internet gambling,” Nowlin wrote. “In fact, they are two wholly different activities.”

Officials for Churchill did not immediately respond to requests for comment.

Churchill’s suit was the first to be filed by an account-wagering operator seeking to overturn state bans on Internet wagering. It also was highly unusual in that it acknowledged that Texas law had long banned Internet wagering, but that the state only began enforcing the ban in 2011, an assertion disputed by members of the state racing commission and attorney general’s office.

Nowlin wrote that states have the right to enforce different restrictions on betting depending on the means by which the bets are placed.

“There may come a day when more sophisticated means for policing the Internet come into being, but until that day comes, this court will not interfere with the state legislature’s decision to treat online betting differently than gambling that takes place at brick-and-mortar establishments,” Nowlin wrote.