A Michigan District Court judge in a ruling on Wednesday granted Churchill Downs a preliminary injunction that will allow TwinSpires.com to operate in the state, in a case that is being closely watched by the racing industry.
Judge Hala Jarbou of the U.S. District Court for the Western District of Michigan ruled that Churchill Downs had “demonstrated a likelihood of success on the merits” of its case, which argues that the Michigan Gaming Control Board does not have the authority to prohibit account wagering on horse racing in the state when the race occurs outside of Michigan.
Churchill sued the gambling board in January after the board ruled that ADWs could not operate in Michigan because the state had no licensed racetrack. Under rules adopted in 2020, Michigan required ADW companies to reach a “third-party” agreement with a licensed racetrack operator in order to take bets from residents of the state.
The case rests on an interpretation of the Interstate Horseracing Act of 1978, which was passed to protect horsemen’s rights at a time when interstate simulcasting was in its infancy. In her ruling, Jarbou wrote that the Michigan Gaming Control Board had no authority to restrict wagering in the state under the IHA.
Churchill Downs had argued that for the purposes of a race occurring out of state, the IHA requires the consent of the host track and its horsemen, the regulatory agency in the host state, and the racing commission where the wager is “accepted.” Churchill argued any wager made through TwinSpires is “accepted” in Oregon, where the company’s parimutuel hub is located.
“The IHA only requires that parimutuel wagers are lawful in each state involved in the interstate transaction; it does not require parimutuel wagering to be active,” Jarbou said, in reference to the legality of the bet in the host state and in Oregon, regardless of Michigan’s position.
In response to questions from Daily Racing Form, Brad Blackwell, an executive vice president and legal counsel for Churchill Downs Inc., released a statement in which he said that the judge's opinion “is a thoughtful and carefully reasoned decision that upholds the framework Congress established for interstate wagering on horse racing.”
He did not directly address a question about whether the company would continue to litigate the suit, but added, “We are pleased with the ruling and the guidance it will provide throughout the country."
Although the ruling did not settle the legal issues involved, racing attorneys and officials at competing account-wagering companies on Thursday said that the case could lay a new legal foundation for account wagering that is vastly different from the industry’s current practices. The officials did not want to be identified because they work for companies that have businesses that compete with TwinSpires.com.
John Ford, an experienced parimutuel technology executive who is a licensed attorney, said in a posting on a social-media site that the judge’s reasoning in the case, if it prevailed in a formal ruling, would have the effect of neutering any regulation of account-wagering by states.
“The decision throws into question whether a state can take any action against licensed out-of-state online ADW betting systems, or exercise any authority over them, or impose any requirements on them, except in very limited circumstances,” Ford wrote.
Since Churchill filed the lawsuit, the Michigan Gaming Control Board granted a license to a group that will run several brief harness meets in the state in 2025, and it allowed all ADWs other than Churchill to resume taking wagers.
Racing attorneys were most skeptical of Jarbou’s acceptance of Churchill’s argument that the bet is accepted in Oregon, given that the interpretation would leave states without any recourse to stop gambling within their borders, even if they had explicitly outlawed wagering on horse races.
That could lead ADW operators to begin taking wagers in states such as Texas, which does not allow account wagering or off-track betting, and could also lead to legal questions surrounding whether the states have any right to tax or levy surcharges on bets placed on ADW platforms, the attorneys said.
“This is a can of worms,” one of the attorneys said.
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