TwinSpires cleared as Churchill Downs wins lawsuit in Michigan
Churchill Downs Incorporated, the owner of TwinSpires, a prominent website in the growing online gambling sector, faced scrutiny in early 2024 when its operations in Michigan were investigated by the Michigan Gaming Control Board (MGCB) for allegedly violating state law. The matter escalated to a federal lawsuit, where Churchill Downs secured a favourable ruling. The Sixth Circuit Court of Appeals rejected the MGCB’s request to stay a lower court’s order, allowing TwinSpires to continue operating in Michigan while the case is ongoing.
Background to the legal dispute
The MGCB oversees gaming activities in Michigan, including casinos and racetracks. The conflict centres on Michigan’s Horse Racing Law of 1995, which mandates that online horse betting must be linked to a licensed physical racetrack within the state. The MGCB cited this law in its action against TwinSpires.
TwinSpires had previously partnered with Northville Downs, Michigan’s only active racetrack. However, following Northville’s relocation and its pending approval for the new site, the MGCB argued that TwinSpires no longer complied with the state’s legal requirements.
MGCB’s ban on TwinSpires
The MGCB suspended TwinSpires’ operations due to the absence of a licensed in-state racetrack partner. State law requires online horse betting to be associated with a physical track located within Michigan.
Churchill Downs contested this interpretation, asserting that the regulation fails to reflect the realities of modern online gambling. TwinSpires users in Michigan expressed concern over their ability to access accounts and place bets during the suspension. Although the platform remained active, its future in the state remained uncertain.
Churchill Downs responds
On 10 January, Churchill Downs filed a federal lawsuit against the MGCB, arguing that the state’s actions violated the Commerce Clause of the US Constitution. In its filing, Churchill Downs likened Michigan’s requirement for a physical racetrack to demanding that an online retailer such as Amazon open a physical store before operating in the state.
The company contended that this approach was outdated and incompatible with contemporary digital business models. The lawsuit alleged that the MGCB was restricting interstate commerce through laws that do not accurately reflect current online betting practices.
Judge Jarbou’s injunction
In February, US District Judge Hala Jarbou issued a preliminary injunction in favour of Churchill Downs, permitting TwinSpires to continue operating in Michigan while the legal proceedings unfold.
Churchill Downs welcomed the decision, while the MGCB responded by filing an appeal with the US Court of Appeals for the Sixth Circuit.
MGCB’s appeal and the Sixth Circuit’s rejection
The MGCB sought a stay of the preliminary injunction, which would have temporarily shut down TwinSpires during the appeal process. However, the Sixth Circuit Court of Appeals denied the request.
The court held that Michigan had misinterpreted the Interstate Horseracing Act (IHA), stating that the MGCB’s position conflicted with the IHA’s intent to prevent one state from interfering with another’s gambling policies.
The court remarked, “Defendants’ alternative interpretation flatly contradicts the IHA’s express intent to prevent interference by one State with the gambling policies of another.”
It concluded that inconsistencies in state regulations are overridden by federal law, specifically the IHA. Churchill Downs’ victory in this case could have broader implications for online gambling across the United States.
TwinSpires remains operational
Following the court’s decision, TwinSpires continues to operate in Michigan, allowing users to place bets as usual. Both parties are preparing for further legal proceedings, with oral arguments expected in the near future. Other online betting platforms are reassessing their compliance strategies in anticipation of potential regulatory changes.
