to Appeal Court Ruling Suspends Taking Bets in Texas

By , Blood-Horse announced Sept. 24 that it is suspending wagering activity from Texas residents effective Wednesday, Sept. 25, following the dismissal of a federal lawsuit in which it challenged that state’s ban on Internet gambling.

“As a result of an adverse court ruling in Texas, is suspending wagering activity from Texas residents effective Wednesday, Sept. 25,” a statement from a Churchill Downs Inc. and said. “We will file an appeal and are optimistic that our legal arguments will prevail.”

In his Sept. 23 opinion dismissing the Churchill suit, Judge James R. Nowlin of the U.S. District Court for the Western District of Texas, rejected all of arguments by CDI and that the Texas ban violated the Commerce Clause of the U.S. Constitution.

The suit was filed last fall after the Texas Racing Commission began enforcing a state law that requires all wagering on horse races by Texas residents to be placed in person. The court ruling noted that while the “in-person” bet provision had been in effect since 1986, it was amended by the legislature in 2011 to specifically prohibit Internet and telephone gambling on horse racing in the state. continued to accept wagers from Texas residents and was issued a subpoena in June 2012, the court records indicate. Following a subsequent meeting in which commission representatives informed Churchill and that it would begin enforcing the Internet gambling ban, the track-operating company filed suit.

In the suit, Churchill contended the “in-person” requirement violates the Commerce Clause of the U.S. Constitution and is therefore unenforceable.

Noting that a state law such as the one being challenged in Texas violates the Commerce Clause if it mandates “differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter,” Nowlin said the activities being treated differently must be “substantially similar.”

“Plaintiffs assert that the Act impermissibly discriminates against Churchill Downs by treating out-of-state gambling website differently than in-state brick-and-mortar gambling establishments. Their argument fails because it incorrectly treats brick-and-mortar gambling as identical to Internet gambling. In fact, they are two wholly different activities,” Nowlin wrote, supporting his conclusion with a litany of differences between the two.