A federal judge has granted TwinSpires a preliminary injunction preventing Michigan from enforcing its rules for online racebooks taking bets on horse races run outside the state, saying those requirements are unconstitutional.
Chief United States District Judge Hala Jarbou issued an opinion and order in the matter on Wednesday in the U.S. District Court for the Western District of Michigan.
In addition to stopping Michigan from enforcing its licensing requirements for advance deposit wagering (ADW), the order blocks Michigan from sanctioning TwinSpires for taking bets from state residents on horse races in other parts of the U.S.
Judge Jarbou wrote that the Churchill Downs Inc.-owned TwinSpires – which is suing over Michigan’s licensing requirements – had shown a likelihood of success, that the operator faces harm, and that the injunction would prevent harm to others and advance the public interest.
“When a wager is placed in Michigan, but the wager is placed on an out-of-state race, and the wager is accepted out-of-state, TwinSpires does not need [the Michigan Gaming Control Board’s] consent,” Judge Jarbou wrote in her opinion. “The Executive Director and Attorney General’s attempt to force TwinSpires to obtain an additional licensing is unconstitutional as it violates the preemptive elements of the [federal Interstate Horseracing Act].”
The Michigan Gaming Control Board (MGCB) had not responded to a request for comment on the decision as of Thursday evening. It is possible the injunction could be appealed.
An early lead
In the meantime, though, the ruling is a victory for TwinSpires, which is trying to fight off Michigan’s statutory requirements for taking bets on horse races run outside the state. The company is seeking a permanent injunction from the court and declarations that Michigan’s licensing requirements are unconstitutional.
TwinSpires argues the requirements violate the U.S. Constitution because the Interstate Horseracing Act of 1978 (IHA) preempts the state’s rules and conflict with federal powers regarding interstate commerce. The legal and regulatory fight has attracted the attention of authorities outside of Michigan as well.
"Chief Judge Jarbou’s opinion is a thoughtful and carefully-reasoned decision that upholds the framework Congress established for interstate wagering on horse races," said Brad Blackwell, executive vice president and general counsel at Churchill Downs, in a statement to Covers on Thursday. "We are pleased with the court's ruling and the guidance it will provide to courts throughout the country."
Michigan, meanwhile, is pushing back against TwinSpires’ claims and trying to get the company to stop taking pari-mutuel bets from locals on horse races run outside the state, such as the Kentucky Derby or any other race happening beyond Michigan’s borders. The Michigan side also argues the IHA does not stop a state from imposing additional requirements for interstate off-track wagering.
Michigan tweaked its horse racing law in 2019, and requires a “third-party facilitator” licensee like TwinSpires to partner with an entity licensed for a race meeting in the state. As a result, Michigan law now states that only race meeting licensees and third-party facilitators can take pari-mutuel wagers, Judge Jarbou noted.
So, while TwinSpires has been taking bets from Michiganders since the early 2010s, the online racebook contracted with Michigan's only operating track to meet the new licensing requirements. That track is Northville Downs, but it temporarily lost its operating license while moving locations.
Due to this, there were no licensed racetracks in Michigan to start 2025, and therefore no potential partners for TwinSpires and other third-party facilitators. The MGCB told the online racebooks they could not take bets from Michigan residents, and while three did so (such as FanDuel Racing), TwinSpires did not.
Claiming foul
The MGCB then suspended TwinSpires’ license in early January, and the company sued on Jan. 12 and sought a preliminary injunction to stop the state from enforcing its licensing requirements. The MGCB's executive director filed his own lawsuit and sought a temporary restraining order against TwinSpires in a state court, but that case was removed to federal court and then transferred to the Western District, where TwinSpires’ lawsuit was filed.
Michigan is arguing TwinSpires is flouting its requirements and should be subject to penalties, including fines and licensing suspensions. TwinSpires has said it only ever obtained its Michigan license “voluntarily,” and that Michigan’s rules run afoul of the constitution.
Under the IHA, the company claims it has the “consents” it needs to take bets from Michiganders on out-of-state races. This includes a nod from Oregon, where the company’s “wagering hub” is licensed and located and where it argues it accepts interstate off-track wagers.
Complicating things is that after TwinSpires sued, Northville Downs received a license on Jan. 31, allowing third-party facilitators to take bets again with the state’s blessing. There is one exception, TwinSpires, the license for which remains suspended by the MGCB because of the ongoing litigation.
“An order forcing TwinSpires to cease operations in Michigan would cause TwinSpires to continue to lose its competitive place in the Michigan pari-mutuel wagering sector,” Judge Jarbou wrote. “This harm is exacerbated now that the MGCB has reinstated Northville Downs’s licenses, allowing TwinSpires’s competitors to accept wagers while maintaining its summary suspension of TwinSpires’s license. If shut down, TwinSpires would be the only online wagering platform that could not accept bets from Michiganders.”
Hold all tickets
While Judge Jarbou sided with TwinSpires on its preemption arguments, she did not when it came to the company’s points on interstate commerce.
The judge noted Michigan’s licensing requirements for so-called “third-party facilitators” like TwinSpires are the same for both in-state or out-of-state entities, and that, since the requirements are preempted by the IHA, would apply only to wagers placed on races run in Michigan or accepted in the state.
“[T]he licensing requirements, when applied to wagers either placed on Michigan races or accepted in Michigan, do not violate the dormant Commerce Clause,” Judge Jarbou wrote.
That said, the judge also wrote that “once a state allows gambling on horse races, Congress regulates the procedure for accepting an interstate off-track wager by identifying the only entities an off-track betting system needs consent from.”
TwinSpires argues it has these consents. Michigan can’t add additional boxes to check, Judge Jarbou wrote.
“Congress established an exclusive, uniform process through which off-track betting systems could accept interstate off-track wagers,” the judge’s opinion says. “The IHA prohibits states from adding supplemental requirements.”
