A federal judge on Wednesday ruled that the Michigan Gaming Control Board (MGCB) is unconstitutionally violating the Interstate Horseracing Act (IHA) by requiring the advance-deposit wagering (ADW) platform TwinSpires to partner with a racetrack in that state before accepting simulcast wagers from Michigan residents. The judge further issued a preliminary injunction ordering the MGCB not to enforce the contested Michigan Horse Racing Law (MHRL) licensing requirement or to issue any sanctions against the Churchill Downs, Inc. (CDI) subsidiary for accepting bets.

The Feb. 19 order only pertained to the TwinSpires motion for a preliminary injunction. It did not decide the overall, underlying case.

“The IHA establishes the exclusive procedure by which off-track betting systems (like TwinSpires) accept interstate off-track wagers,” wrote Chief United States District Judge Hala Jarbou in a 35-page opinion out of U.S. District Court for the Western District of Michigan. “When someone in Michigan places a wager on an out-of-state race, and they place this wager through an off-track betting system that accepts the wager out of state, under the IHA, the off-track betting system needs consent from the racetrack, the regulating entity in the racetrack’s state, and the regulating entity in the state where the system accepted the wager, not the MGCB.

“By requiring a third-party facilitator license for such transactions, Michigan has acted contrary to the IHA,” the judge continued. “The Executive Director’s attempt to force TwinSpires to obtain a license before accepting bets of this nature is unconstitutional, akin to adding an additional consent to the IHA’s exclusive process.

“TwinSpires may need a license to accept wagers for races on Michigan racetracks under section 3004 of the IHA,” the opinion continued. “But the Executive Director cannot penalize or prevent TwinSpires for accepting a wager outside of Michigan when the race is not at a Michigan racetrack. TwinSpires has demonstrated a likelihood of success on the merits, that imminent and concrete irreparable harm would occur without a preliminary injunction, and that a preliminary injunction would prevent harm to others and advance the public interest.”

The Jan. 12 lawsuit by Churchill Downs Technology Initiatives Company-plus a still-pending, entirely separate lawsuit brought five days later by the MGCB against TwinSpires-both stem from the fact that at the start of 2025, Michigan’s law requiring ADWs to partner with a racetrack in the state couldn’t be fulfilled by any ADW operator.

That’s because there hasn’t been any Thoroughbred racing in Michigan since 2018, and Standardbred races last ran in February 2024.

TwinSpires (and other ADWs) had previously partnered with the now-demolished and to-be-developed Northville Downs, whose license-holders as of Jan. 1 were planning to-but had not yet received at that time-approval for the required 30 days of Standardbred racing at a different location so that all parties could be eligible for ADW and simulcasting in 2025.

On Dec. 23, 2024, the MGCB notified all licensed ADWs to cease offering wagering for Michigan residents effective Jan. 1, 2025. The shutdown was to be temporary until the harness track licensing issue got resolved.

While ADW operators Xpressbet, NYRA Bets, and TVG Network voluntarily complied with the order, TwinSpires did not. After a week of continuing to take bets against the order, the MGCB suspended the TwinSpires license Jan. 7.

On Jan. 31, Northville Downs received its licensing, allowing third-party facilitators to accept wagers in accordance with the MHRL license requirement. However, the MGCB continued to maintain its suspension against TwinSpires, stating in a Jan. 17 court complaint that, “A summary suspension is not optional to the aggrieved party but rather is an immediate suspension pending a prompt hearing.”

The federal judge summed up both sides’ legal arguments in the Feb. 19 opinion:

“TwinSpires asserts that compliance with the third-party facilitator license requirement was unnecessary because of the preemptive effect of the IHA and that any related sanctions would be unconstitutional. TwinSpires claims it voluntarily acquiesced to the MHRL license requirement to promote a good relationship with the MGCB and stimulate growth in Michigan’s horse race industry,” Jarbou wrote.

“Defendants disagree. According to Defendants, the IHA does not restrict a state’s ability to require additional consent for interstate off-track wagers. Because TwinSpires has accepted wagers that were placed in Michigan, Defendants argue that TwinSpires has violated the MHRL.

Defendants argue that TwinSpires accepts wagers in Michigan and therefore needs consent (via a license) from Michigan regulatory entities,” Jarbou wrote.

The opinion continued: “The IHA governs interstate off-track wagers placed in Michigan. However, when TwinSpires filed its motion for preliminary injunction, there were no licensed racetracks in Michigan, and TwinSpires accepted pari-mutuel wagers that were placed in Michigan without a recognized third-party facilitator license. Given the attempted enforcement actions against TwinSpires for these transactions, the Court will explain why-even when no entities could accept wagers in Michigan-interstate off-track pari-mutuel wagers remained lawful and subject to the IHA’s exclusive regulations.

“The IHA only requires that pari-mutuel wagers are lawful in each state involved in the interstate transaction; it does not require pari-mutuel wagering to be active,” the opinion continued.

“As is relevant for the case before the Court, while no entity could accept pari-mutuel wagers within Michigan’s borders when Northville Downs’s licenses were suspended, Michigan does not prevent residents from placing such wagers out of state. Thus, even if the Court were to adopt Defendants’ interpretation of MHRL section 431.317(a), pari-mutuel wagers remained lawful throughout January (particularly those wagers accepted out of state for races that took place out of state).

“As discussed above, the IHA is concerned with the lawful status of pari-mutuel wagers, not whether any entity is accepting wagers in a state. Under either interpretation of the MHRL language, pari-mutuel wagers were lawful in Michigan even when Northville Downs did not have its licenses,” the opinion stated.

“Congress established an exclusive, uniform process through which off-track betting systems could accept interstate off-track wagers. The IHA prohibits states from adding supplemental requirements,” the judge wrote, adding at a different point in the opinion, “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. 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,” the judge wrote.

“If the Court does not issue a preliminary injunction, TwinSpires faces a concrete and imminent threat of state action forcing it to cease operations in Michigan. Not only is such action an unconstitutional intrusion on TwinSpires’s rights to accept certain interstate off-track wagers under the IHA (given the statute’s preemptive character), TwinSpires has also demonstrated that it has already lost customer goodwill and its competitive market share.

“These are incalculable injuries that constitute irreparable harm,” the opinion continued. “The Executive Director’s continued public allegations and attempts to sanction TwinSpires will only exacerbate these harms. TwinSpires has demonstrated certain and immediate irreparable harm; a preliminary injunction is warranted to prevent further harm…”

“TwinSpires has demonstrated a likelihood to succeed on the merits of its constitutional claim and has established irreparable harm,” the opinion stated. “The preliminary injunction would protect TwinSpires’s rights, as well as the rights of Michiganders to place interstate off-track wagers via the IHA. Thus, issuing a preliminary injunction would prevent harm to others and

advance the public interest.”

TDN requested comment from both CDI and the MGCB. Neither responded prior to deadline for this story.