Court ruling allows Churchill to keep operating account-wagering platform in Michigan
A federal district court has upheld a ruling that continues to allow Churchill Downs’s account-wagering company to operate in Michigan.
In a decision dated Dec. 16, the U.S. District Court for the Sixth Circuit ruled that a lower court was right to issue an injunction preventing the Michigan Gaming Control Board from revoking a license held by Churchill’s Twinspires.com, one of the dominant account-wagering platforms in the U.S. In the ruling, the Sixth Circuit said that Churchill was likely to prevail in a suit filed against the gambling board because Michigan’s account-wagering regulatory scheme – which requires an agreement with a track hosting live racing in the state – interferes with the federal Interstate Horseracing Act “by bolting on an additional consent for wager acceptances.”
“The Supreme Court has disapproved of states tailoring regulation to target federal schemes," the ruling said. “And courts have found conflict preemption when states tailor statutes to interfere with federal methods, even if states share federal aims.”
While the Sixth Circuit ruling does not resolve the issues in the case, its language underlines the primacy of the Interstate Horseracing Act, which was passed by Congress in 1978 to regulate wagering across state lines at the advent of full-card simulcasting. The act requires consent from regulators in the state where bets are accepted, as well as the tracks and horsemen in the state.
On Jan. 1, the MGCB notified all account-wagering companies operating in the state that they could not accept bets from Michigan residents because the only operating racetrack in the state had allowed its license to lapse. Among all account-wagering companies, Churchill refused, and the board then revoked its license.
Churchill filed a lawsuit to prevent the revocation, and it won in a lower court. The gambling board appealed.
The issue became more complicated when Northville Downs, the only racetrack in Michigan, was approved for a license later in the year. Account-wagering companies were then allowed to operate again in the state, but the MGCB continued to insist on Churchill’s license revocation.
The Sixth Circuit ruling skirts a primary issue in the case argued by Churchill concerning the location of the wager. Wagers placed through Twinspires are commingled at its hub in Oregon, and Churchill had said that Oregon’s regulations – not Michigan's – applied to the bets. But the Sixth Circuit ruling implied that the issue was non-germane due to Michigan’s unique regulation tying an account-wagering license to a live racetrack.
“Michigan can’t condition the legality of interstate wagers on state requirements that add to the IHA’s consent scheme,” the Sixth Circuit wrote. “A license requirement for third-party facilitators doesn’t regulate ‘forms of gambling.' . . . It regulates how off-track betting platforms accept interstate wagers. So Michigan’s requirement is more like a plug-and-play supplement to the federal scheme than an earnest effort to regulate its residents’ conduct.”
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