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Federal Preemption is a Sure Bet in Horse Racing Dispute

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By Robyn Hagan Cain on January 25, 2012 3:30 PM

The Sixth Circuit Court of Appeals ruled this week that the Interstate Horseracing Act of 1978, which gives "horsemen's groups" veto power over horse-racing simulcasts, trumps an Ohio state law that vests final simulcast approval authority with a state racing commission.

Why does an Ohio horse racing case matter?

Aside from a feel-good, philosophical no-man-is-an-island perspective, this case matters because the Sixth Circuit also has authority over federal cases arising out of Kentucky, home of Churchill Downs and the Derby. That detail was not lost on the Sixth Circuit panel.

The Horseman's Benevolent & Protective Association is a group that represents racehorse owners and trainers. It is also a "horsemen's group" for the purpose of the Interstate Horseracing Act.

In the '90s, the Association amended its agreement with the Beulah Park racetrack in Grove City, Ohio to provide for a "regular contractual process" in which the Association periodically would grant or withhold consent to simulcast Beulah Park races to betting facilities outside of Ohio. If the track wanted to simulcast races to out-of-state betting facilities, it would send a letter to the Association with the proposed simulcast terms, and the Association would grant or withhold consent.

When the Association withheld consent for an off-track wagering agreement with several out-of-state betting sites in 2006, Beulah Park complained to the Ohio Racing Commission that the Association was being unreasonable. The Commission agreed, and authorized Beulah Park to simulcast races under state law.

The Association sued, claiming that Beulah Park and the Commission were violating the Interstate Horseracing Act, which required that a horsemen's group give consent to a track before the track could agree to interstate off-track betting.

The Sixth Circuit Court of Appeals agreed with the Association, finding that the Interstate Horseracing Act preempted Ohio law.

Ohio claimed that the Interstate Horseracing Act only requires the consent of the host racing association for off-track betting. While the Sixth Circuit agreed that Ohio's stance was technically true, no betting can occur under the federal law if a horsemen's group refuses to sign a written agreement with the host track for any reason, including a refusal to consent to off-track betting. "In practice," the court concluded, "the Act does require the consent of the horsemen's group."

This wasn't the first time the Sixth Circuit Court of Appeals recognized that federal preemption empowers a horsemen's group to say "neigh" to off-track betting. The court reached a similar conclusion in 1994 in Kentucky Division, Horsemen's Benevolent & Protective Association v. Turfway Park Racing Association.

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