Texas judge rejects Churchill Downs’ challenge of online wagering law

TAGs: Churchill Downs, churchill downs incorporated, texas, Twinspires,

churchill-downs-texasLouisville, Kentucky-based horseracing operator Churchill Downs Inc. (CDI) has lost its challenge of a Texas law preventing the company from accepting online wagers from state residents. Last October, CDI filed suit in US District Court in Austin, seeking to overturn a 1986 law requiring Texas horse bettors to place their wagers in person at a racetrack. Though the Texas Racing Act predated the rise of the internet, it was amended in 2011 specifically to include online wagers in the list of unacceptable betting methods. CDI’s suit argued that blocking access to their online wagering site amounted to protectionism intended to benefit Texas-based wagering operations.

On Monday, Judge James R. Nowlin dismissed CDI’s argument with prejudice, saying the Texas law didn’t violate the US Constitution’s interstate commerce clause because land-based and online wagering weren’t “substantially similar.” Nowlin rejected CDI’s argument that betting was betting, saying land-based and internet gambling were “two wholly different activities.” Nowlin said the day might come “when more sophisticated means for policing the internet come into being,” but until then, states had the right to apply different restrictions to different methods of betting. (Read Nowlin’s ruling in full here.)

Nowlin argued that CDI wasn’t being unfairly singled out, as the law applied similar restrictions on Texas companies wishing to offer online wagers. Nowlin also said CDI retained the option of utilizing the state’s legal simulcast wagering system to access bettors. CDI had argued that the necessity of partnering with a local track operator was “tantamount to forcing Pepsi to sell its soda only through Coke vending machines, only if Coke consents, and only if Pepsi agrees to endure whatever marketing conditions Coke might demand and pay whatever fee Coke might impose.” Guess Nowlin’s more of a Mountain Dew dude, then.

Nowlin betrayed his personal bias by injecting a little pejorative hyperbole into his decision, suggesting that in those halcyon pre-internet days, a gambler at least “had to go to the trouble of driving somewhere to place his bet. The internet allows the addict to get his fix 24/7/365, all without leaving the comfort of his own home.” Nowlin also channeled his inner Adelson by claiming that all underage gamblers need to wager online is “Dad’s credit card and date of birth.”

CDI has already vowed to appeal the ruling “and are optimistic that our legal arguments will prevail.” In the meantime, it has suspended online wagering activity by Texas residents effective Wednesday, Sept. 25.


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