NEW ORLEANS (CN) – The host of the Kentucky Derby horse race failed to show that an in-person betting requirement that effectively bans online betting in Texas hurts out-of-state tracks, the 5th Circuit ruled.
Though Texans had wagered on out-of-state races online or over the telephone since the 1990s, the state Racing Commission opted in 2011 to renew a 25-year-old in person betting requirement.
Kentucky-based Churchill Downs and Churchill Downs Technology Initiatives Company dba Twinspires.com fought the change as discriminatory in 2012, saying that in-person betting imposes a heavy tax on out-of-state tracks.
A federal judge dismissed the case, however, after finding no violation of the dormant commerce clause.
Affirming in an unpublished opinion Thursday, the 5th Circuit said Churchill lacked evidence to support its claims that the in-person betting requirements improperly favor in-state companies.
“We are unpersuaded on this record that in-person betting requirements create ‘discriminatory effects’ which would trigger strict scrutiny analysis,” the unsigned decision from the three-judge panel states.
Churchill had claimed the U.S. Constitution does not authorize wagering regulations that favor in-state tracks over out-of-state tracks. It said the law was “unconstitutionally discriminatory” since it would favor in-state tracks over out-of-state tracks.
While acknowledging the law’s consequence may result in Texas bettors’ placing more bets at state tracks, the appellate panel concluded that its effect on interstate commerce is incidental and the in-person requirement is even-handed.
“Plaintiffs have the burden of showing discriminatory effects, not merely illustrating that discriminatory effects could plausibly exist,” the panel wrote.
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