Michigan ruling could dramatically alter ADW landscape
by Bob Duff
A year-long court battle over advance deposit wagering (ADW) in Michigan recently went in favor of Twin Spires, which won the right to continue to offer ADW wagering throughout the Great Lakes State.
Not only that, this court ruling could prove to be landscape-altering for the world of ADW across the U.S. market.
In January of 2025, the Michigan Gaming Control Board (MGCB), the regulators of horse racing in the state, suspended all ADW operations in Michigan, since there was no longer any form of live horse racing in the state. Northville Downs, the last remaining operating racetrack in the state, had ceased to offer live racing in 2024.
Michigan horse racing rules stated that all ADW operations must be done in conjunction with a racetrack offering live racing. Twin Spires, officially known as Churchill Downs Technology Initiatives Company, immediately filed suit in United States District Court, Western District of Michigan, Southern Division, arguing that the MGCB violated the United States Constitution through their enforcement of licensing provisions in the Michigan Horse Racing Law.
Specifically, TwinSpires claimed that the Interstate Horseracing Act preempts the state law’s requirement to partner with in-state institutions, and that this requirement conflicts with the exclusive powers of the U.S. Congress over interstate commerce.
The Court ruled in favor of the Twin Spires motion, granting the company a preliminary injunction to prevent the MGCB from enforcing the state’s licensing requirement.
MGCB APPEALED RULING
The MGCB filed an appeal against the ruling, and that appeal was heard last month. Lawyers representing the MGCB argued that, as the state regulator, it has the right to regulate any wagers made in Michigan through the Twin Spires app.
Representatives for Twin Spires countered that the MGCB was in violation of federal law when it banned ADW wagering.
“What Michigan has done here runs afoul of the IHA,” read the argument they submitted to the Court. “In other words, no matter how one labels what Michigan has done, we know that it can’t do it because it conflicts with the IHA.”
Chief District Judge Hala Y. Jarbou sided with Twin Spires in her ruling, which made the temporary injunction permanent.
“TwinSpires has met its burden,” Jarbou wrote in the ruling. “Unlike lost profits, which can be ‘fairly easily… remedied through damages,’ courts can’t easily compensate a movant for loss of competitive position and goodwill.
“TwinSpires’ irreparable injury reflects the latter two considerations. It warned that it might ‘lose access to its 18,000 Michigan users’ if forced to shut down, and that Michigan’s ‘accusations of illegal gambling activity have hurt its reputation and caused a loss of customer goodwill.’
“The ‘merged’ other harm and public interest factors favor TwinSpires because enjoining the enforcement of a law that violates constitutional rights ‘is always in the public interest.’”
Jarbou also shot down the arguments put forth by the MGCB.
“Its arguments aren’t persuasive,” Jarbou wrote. “Michigan points to its interest in regulating gambling and its residents’ interest in the protections of Michigan law. But Michigan didn’t lose its ability to regulate gambling other than wagering on interstate horse racing. The IHA is clear on that. ‘In the limited area of interstate off-track wagering on horse races, there is a need for Federal action.’
“Nor does the IHA necessarily prohibit Michigan from promulgating gambling regulations that incidentally bear on interstate horse race wagering (such as limiting wager types). And, of course, the state retains authority to regulate horse races run in Michigan and horse race wagers accepted in Michigan because it wields IHA consent rights in those situations.”
RULING COULD OPEN UP ADW OPTIONS IN OTHER STATES
The argument put forth by Judge Jarbou in ruling in favor of Twin Spires is that with ADW wagers, the hub that is the site at which the online wagers are placed is considered to be the state in which the wagering is regulated. In this instance, those states are North Dakota and Oregon.
The court ruled that Michigan has no right to regulate interstate wagering because federal law always overrides state law.
“If a state decides to allow pari-mutuel wagering, it cannot invade the Interstate Horseracing Act’s exclusive regulatory scheme for accepting interstate off-track wagers,” reads Jarbou’s ruling. “Once a state decides that pari-mutuel wagering is permissible within its borders, the federal field covers interstate off-track pari-mutuel wagers in that state.”
Currently, four states prohibit ADW – Georgia, Hawaii, Texas, and Utah. Of those four states, only Texas offers wagering on live horse racing.
Texas is a massive state. Its 31.7 million people make it the second-most populous state in the union. It’s a potential gold mine for ADW.
And suddenly, with a legal precedent in hand for ADW operators, the door to that opportunity looks to be wide open.
