RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206 2 Raceway Park, Inc., et al. v. Nos. 02-3466/3487
ELECTRONIC CITATION: 2004 FED App. 0021P (6th Cir.) State of Ohio, et al.
File Name: 04a0021p.06
Before: SUHRHEINRICH, COLE, and ROGERS, Circuit
Judges.
UNITED STATES COURT OF APPEALS
_________________
FOR THE SIXTH CIRCUIT
_________________ COUNSEL
RACEWAY PARK , INC.; X ARGUED: William T. Maloney, MALONEY, McHUGH &
TOLEDO MAUMEE RACEWAY, - KOLODGY, Toledo, Ohio, John D. Smith, JOHN D. SMITH
- CO., L.P.A., Springboro, Ohio, for Appellants. Shawn J.
INC.; CEDAR DOWNS OTB, Organ, JONES DAY, Columbus, Ohio, for Appellees.
- Nos. 02-3466/3487
LTD .; RIVER DOWNS JOCKEY - ON BRIEF: William T. Maloney, MALONEY, McHUGH
CLUB, INC.; RIVER DOWNS > & KOLODGY, Toledo, Ohio, John D. Smith, JOHN D.
,
TURF CLUB, INC. (02-3466); SMITH CO., L.P.A., Springboro, Ohio, Jack M. Lenavitt,
-
MIAMI VALLEY TROTTING, LENAVITT LAW OFFICES, Toledo, Ohio, for Appellants.
- Shawn J. Organ, Ronald E. Laymon, JONES DAY,
INC.; LEBANON TROTTING - Columbus, Ohio, Thomas J. Rocco, OFFICE OF THE
CLUB, INC. (02-3466/3487), - ATTORNEY GENERAL OF OHIO, Columbus, Ohio, Orla
Plaintiffs-Appellants, - E. Collier III, N. Victor Goodman, BENESCH,
- FRIEDLANDER, COPLAN & ARONOFF, Columbus, Ohio,
-
v. John J. Chester, Karen S. Hockstad, CHESTER, WILLCOX
- & SAXBE, Columbus, Ohio, for Appellees.
-
STATE OF OHIO ; OHIO STATE - _________________
RACING COMMISSION ; -
NORTHFIELD PARK - OPINION
- _________________
ASSOCIATES ; THISTLEDOWN , -
INC.; SCIOTO DOWNS, - ROGERS, Circuit Judge. The instant action arises from the
Defendants-Appellees. - passage of Substitute House Bill 561 (“HB 561”) by the Ohio
N General Assembly. 1996 Ohio Laws H 561. HB 561
Appeal from the United States District Court concerned, in relevant part, the terms under which horse
for the Northern District of Ohio at Toledo. racing tracks and satellite facilities could receive simulcast
No. 00-07720—David A. Katz, District Judge. races conducted at other facilities. The plaintiffs — certain
owners of licensed race track facilities located in Cincinnati,
Argued: September 17, 2003 Toledo, and Lebanon, Ohio, and the satellite facility
associated with the Toledo track — sued the Ohio State
Decided and Filed: January 15, 2004 Racing Commission, among others, challenging the
1
Nos. 02-3466/3487 Raceway Park, Inc., et al. v. 3 4 Raceway Park, Inc., et al. v. Nos. 02-3466/3487
State of Ohio, et al. State of Ohio, et al.
constitutionality of certain aspects of HB 561 under the they offered no live racing program, and provided a separate
Takings Clause of the Fifth Amendment and the Equal scheme for allocating wagering revenues from such days. See
Protection and Due Process Clauses of the Fourteenth generally OHIO REV . CODE ANN . § 3769.089 (Anderson
Amendment. The district court granted the defendants’ 2002). The scheme was essentially the same, except that the
motion for summary judgment, and dismissed the case. portion of the commission which had been allocated to the
Because the statutory scheme does not effectuate a taking for purse fund at the track was diverted instead into a newly
Fifth Amendment purposes, and does not otherwise run afoul created Combined Simulcast Purse Fund (“CSPF”). OHIO
of the Fourtheenth Amendment, we affirm the judgment of REV . CODE ANN . § 3769.089(E) (Anderson 2002). Funds
the district court. from the CSPF are distributed periodically to the purse funds
at Ohio race tracks in accordance with a formula based on
I. Background each track’s historical share of the total amount wagered on
live racing days during the five calendar years immediately
The statutory provisions at issue in this case govern the preceding the distribution. OHIO REV . CODE ANN .
allocation of proceeds from simulcast horse racing in Ohio. § 3769.089(F) (Anderson 2002). The plaintiffs have each
Prior to the enactment of HB 561, wagering at Ohio tracks on paid more money into the CSPF than they have received in
televised, simulcast horse races was significantly restricted.1 distributions, while the racetrack defendants have each
Tracks could offer simulcast racing only on days that they received more money in distributions from the CSPF than
also offered a live racing program. Ohio law also prescribed they have paid into it.
how wagering revenues were allocated. Money wagered at
tracks was divided, with a percentage going to the track This case involves the constitutionality not only of the
operator as a “commission” and the balance distributed as CSPF, but also the so-called “50% Rule” that applies to
payoffs on winning wagers. After taxes and administrative wagers made at satellite facilities. OHIO REV . CODE ANN .
fees were subtracted from the commission, 50% of the § 3769.26(F) (Anderson 2002). Satellites must be affiliated
balance was allocated to the operator’s purse account (which with a particular race track but conduct no live racing
must be used to fund purses at the track) and 50% of the activities themselves. Consequently, a satellite depends
balance was retained by the operator as income. See OHIO entirely on simulcasts of races conducted at other locations.
REV . CODE ANN . § 3769.08 (West 1995). Satellites receive simulcasts from “simulcast hosts,” Ohio
race tracks that transmit live racing conducted at Ohio tracks
This scheme for allocating wagering revenues on days on or that act as hosts for races taking place in other states.2
which a track offered both live and simulcast racing was not
changed by the passage of HB 561. See OHIO REV . CODE All money wagered at the simulcast host and all money
ANN . § 3769.08 (Anderson 2002). HB 561, however, wagered at satellites is included in a common pari-mutual
authorized tracks to offer simulcast racing on days on which pool at the simulcast host and, with limited exceptions not
1 2
W agering on horse racing is comprehensively and strictly regulated Mo re than one Ohio track can operate as a simulcast host for the
by the state of Ohio, and such wagering is prohibited unless authorized by same out-of-state race . In such cases, the allocation of money wagered,
a permit issued by the Ohio State Racing Comm ission. as described below , is divided equally among the ho sting tracks.
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State of Ohio, et al. State of Ohio, et al.
relevant here, the payment on winning tickets is the same and well-considered statutory scheme” established to protect
whether the wager was placed at the simulcast host or at a and promote live horse racing in Ohio.3 The plaintiffs filed
satellite. OHIO REV . CODE ANN . § 3769.26(E) (Anderson the instant appeal.
2002). Under the 50% Rule, 50% of the money wagered at a
satellite location is “allocated” to the simulcast host, OHIO II. Analysis
REV . CODE ANN . § 3769.26(F) (Anderson 2002), which
effectively means that that portion is treated as if it were Summary judgment is appropriate when the moving party
wagered at the simulcast host for the purposes of determining demonstrates that there are no genuine issues of material fact
taxes to be paid and commissions to be retained by the host. and that the moving party is entitled to judgment as a matter
The remaining 50% is allocated to the satellite for the purpose of law. See Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby,
of determining taxes to be paid and the commission to be Inc., 477 U.S. 242, 256 (1986). In considering a motion for
retained by the satellite. The 50-50 allocation is the same summary judgment, the district court views the evidence in
whether the simulcast host is transmitting live racing the light most favorable to the non-moving party. Adickes v.
conducted at its track or hosting racing conducted at out-of- S.H. Kress & Co., 398 U.S. 144, 158-59 (1970) (citation
state tracks. omitted). We review a district court’s grant of summary
judgment de novo. Pinney Dock & Transp. Co. v. Penn Cent.
The plaintiffs filed a complaint in the district court, alleging Corp., 838 F.2d 1445, 1472 (6th Cir. 1988).
that the CSPF and the 50% Rule constituted unconstitutional
takings of their property under the Takings Clause of the Fifth A. The challenged provisions do not constitute
Amendment to the United States Constitution, and violated unconstitutional takings of the Plaintiffs’ property under the
their rights under the Equal Protection Clause and the Due Takings Clause of the Fifth Amendment to the United States
Process Clause of the Fourteenth Amendment. Faced with Constitution.
cross-motions for summary judgment, the district court
granted the defendants’ motion for summary judgment, The Takings Clause of the Fifth Amendment, made
denied the plaintiffs’ motion for summary judgment, and applicable to the states through the Fourteenth Amendment,
dismissed the plaintiffs’ complaint. The court concluded that, Dolan v. City of Tigard, 512 U.S. 374, 383-84 (1994) (citing
because the CSPF was created by the same legislation that Chicago, Burlington & Quincy R.R. Co. v. Chicago, 166 U.S.
authorized simulcast-only racing, the plaintiffs had no 226, 239 (1897)), provides that private property shall not be
reasonable expectation to receive the revenues diverted to taken for public use without just compensation. Even
CSPF and, thus, had no property interest in those funds that assuming that the plaintiffs have a property interest in the
could be taken in violation of the Takings Clause. The funds diverted under the CSPF or the 50% Rule, however, the
district court further found that the plaintiffs’ failure to operation of those provisions does not constitute an unlawful
demonstrate a protectable property interest in the revenues taking under the Fifth Amendment.
diverted to the CSPF doomed their claims that the creation of
the CSPF arbitrarily deprived them of property in violation of
the Due Process Clause of the Fourteenth Amendment.
Finally, the district court concluded that HB 561 contained no 3
In granting summary judgment, the district court did not discuss the
indiscriminate or arbitrary classification, but was “a studied plaintiffs claims concerning the 50% Rule.
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State of Ohio, et al. State of Ohio, et al.
“Because the Constitution protects rather than creates not identify any specific pre-HB 561 property interest that is
property interests, the existence of a property interest is affected by the 50% Rule.
determined by reference to ‘existing rules or understandings
that stem from an independent source such as state law.’” It follows that funds diverted by HB 561 to the CSPF, and
Phillips v. Wash. Legal Found., 524 U.S. 156, 164 (1998) funds allocated under the 50% Rule, are not the private
(quoting Bd. of Regents v. Roth, 408 U.S. 564, 577 (1972)). property of plaintiffs for Fifth Amendment Takings Clause
Current law does not grant the plaintiffs any property interest purposes. This conclusion is consistent with Phillips and
to wagering revenues diverted under the CSPF (aside from Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155
their rights to distributions under the statutory formula) or the (1980), because the conclusion is not, contrary to plaintiffs’
50% Rule. Accordingly, the inquiry turns to whether the assertions, dependent on any theory of “government-created
plaintiffs had such an interest prior to the passage of HB 561. value.” In Phillips, the Supreme Court concluded that interest
It is apparent that they did not. earned on funds deposited in pooled accounts under an
Interest on Lawyers Trust Accounts (“IOLTA”) program was
It is clear that, prior to the enactment of HB 561, the private property. Phillips, 524 U.S. at 172. Under Texas law,
plaintiff race tracks were statutorily entitled to commissions attorneys were required to pool client deposits in an IOLTA
earned from wagering on simulcast racing at their tracks on account if the funds could not earn net interest if deposited
days when live racing was also conducted at the tracks. The separately. The interest on the pooled account was not
race tracks’ entitlement to those commissions was not apportioned among the clients, but diverted to foundations
affected by the passage of HB 561 and the establishment of that financed legal services for low-income individuals. The
the CSPF. The plaintiffs did not, however, have a statutory Court found that the interest was, in fact, the private property
entitlement to commissions earned on days when they offered of the clients, reasoning that the clients owned the principal
only simulcast racing because, under pre-HB 561 law, no and, under Texas law, interest is presumed to follow the
such racing could be conducted. There could therefore have principal that generates it. Id. at 165-66. The Court found
been no property interest in such commissions. It was the that the fact that net interest could not have been earned had
passage of HB 561 that created the right to conduct simulcast- the clients’ funds been deposited separately rather than in an
only racing in Ohio, and, therefore, any property rights to IOLTA account, was irrelevant to the question of whether the
commissions on such racing could not pre-date the passage of interest, once earned, was private property. Id. at 169-70.
HB 561. The Court had reached a similar result in Webb’s, concluding
that interest accruing on an interpleader fund was the private
Nor did the plaintiffs have a property interest in the property of the fund’ s beneficiaries. Webb’s, 449 U.S. at 164-
revenues diverted under the 50% Rule prior to the passage of 65. Florida law required that interpleader funds be deposited
HB 561. While the plaintiffs generally assert that “the mere in the registry of the county clerk, and the interest earned on
fact that an activity is pursued under an authorization or such funds was retained by the county as income. The Court
license obtained by the government does not mean that found that the county’s retention of the interest, under the
licensees have no property interest in the fruits of their specific statutory scheme in place, was a taking in violation
labors,” and that they have a property interest “in funds of the Fifth and Fourteenth Amendments. In doing so, the
generated though the conduct of a licensed business Court relied heavily on a “long established general rule” that
activity—the simulcasting of horse racing events,” they do interest on interpleaded and deposited funds follows the
Nos. 02-3466/3487 Raceway Park, Inc., et al. v. 9 10 Raceway Park, Inc., et al. v. Nos. 02-3466/3487
State of Ohio, et al. State of Ohio, et al.
principal and should be allocated to the owners of the inquiry into the circumstances of each particular case. See,
principal. Id. at 162-63. In the instant case, as in Webb and e.g., Connolly v. Pension Benefit Gty. Corp., 475 U.S. 211,
Phillips, the relevant inquiry is whether state law recognizes 224 (1986). In conducting such an inquiry, three factors have
the asserted property right. The conclusion we reach here particular significance: the economic impact of the regulation
results from the fact that there is no long-standing right to the on the claimant, the extent to which the regulation interfered
revenues earned from gambling on horse racing. with reasonable investment-backed expectations, and the
character of the governmental action. Id. In the instant case,
We could appropriately end our Takings Clause analysis each of these factors weighs against finding a taking
here, as there is no taking if there is no private property in the prohibited by the Fifth Amendment.
first place. We are reluctant to do so, however, because our
conclusion is potentially subject to counterarguments 1. The nature of the action.
(outlined in the margin4) that have some force, though not
enough to persuade us. We therefore assume for the sake of First, the challenged provisions are not by nature takings.
argument that revenues diverted to the CSPF and revenues Under HB 561, the government does not physically invade or
diverted under the 50% Rule were—sufficiently for Takings permanently appropriate any of the plaintiffs assets for its
Clause purposes—the private property of plaintiffs. Even if own use. Instead, HB 561 represents an attempt by Ohio’s
so, HB 561 clearly does not effectuate an unconstitutional General Assembly to protect and preserve Ohio’s horse racing
taking. industry. It is true that the statutory scheme created by HB
561 includes provisions that allocate revenues from wagering
The Supreme Court has consistently declined to create a set on horse racing according to prescribed formulas, and that
formula for identifying a “taking” forbidden by the Fifth those formulas burden some race track operators and benefit
Amendment and has instead prescribed an ad hoc, factual others. It is well settled, however, that legislation that
“adjusts the benefits and burdens of economic life to promote
the common good . . . does not constitute a taking requiring
4 Government compensation.” Connolly, 475 U.S. at 225
It might be argued that if the earnings (interest) on principal are the (citations omitted).5
property of the owner of the principal under Phillips and Webb’s
Fabulous Pharmacies, then by parity of reasoning the earnings (profits)
of an enterprise are the property of the owner of the enterprise. The fact
that a controversial way of making money may over the years be 5
alternately banned, heavily licensed, or permitted by the state, does not At oral argument, counsel for the plaintiffs suggested for the first
mean that the profits of such private enterprises, when legal, can be taken time that the diversion of revenues effected by the challenged provisions
by the state without being subject to Takings Clause protection. And it is should be analyzed as per se takings, as the plaintiffs were comp letely
at least questiona ble whether this conclusion should be any different just deprived of such revenues. The m erits of counsel’s sugge stion is
because the alleged taking is effectuated by the same statute that legalizes questionable, see Conn olly, 475 U.S. at 222-23 (recognizing that
the activity. Thus if peddling in a particular city, previously forbidden, employer was permanently deprived of assets necessary to satisfy
were allowed by an ordinance, we might be reluctant to say that the city statutory liability to private party, but rejecting argument that said liab ility
could— pursuant to the same ordinance — confiscate the peddler’s profits. always constituted uncomp ensated taking prohibited by Fifth
In our view, the fixed allocation of a new gambling pool is much farther Amendm ent), and we d ecline to consider it absent briefing, pa rticularly
removed in nature from the interest earnings on principa l involved in considering its potentially far-reaching implications for other areas of
Phillips than the hypothetical pe ddler’s earnings from his efforts. government regulation, and indeed upon the government’s power to tax.
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State of Ohio, et al. State of Ohio, et al.
The plaintiffs contend that the CSPF and the 50% Rule do as to how value generated through economic activity is
not benefit the general public, but instead benefit a select apportioned among those performing the activity, because the
group of race track operators—namely the racetrack distribution of funds from the CSPF is based on historical
defendants. They argue that Ohio’s aims of protecting and shares of racing revenues at Ohio race tracks, and because
preserving its horse racing industry could have been both the CSPF and the 50% Rule create disproportionate
accomplished by liberalizing the restrictions on simulcast benefits and burdens among race track operators. Finally, the
racing, and that therefore the CSPF and the 50% Rule are plaintiffs argue that they had a reasonable investment backed
extras that inure only to the benefit of private parties. Even expectation that the introduction of simulcast-only racing
assuming that Ohio could have achieved its goals of would enhance revenues and enable them to offer larger
providing economic relief to the horse racing industry in purses at their own tracks.6
another fashion, however, it does not follow that the
balancing of interests codified in HB 561 was beyond Ohio’s Even assuming, however, that the plaintiffs have accurately
power to modify the economic benefits and burdens from characterized the provisions of HB 561, these contentions are
wagering on horse races. Accordingly, we conclude that the beside the point. To say that it is not reasonable to expect that
nature of the action weighs against finding a taking. the government enact such regulations, that such regulations
are subject to challenge, or that such regulations conflict with
2. Interference with investment backed expectations. normal business expectations does not change the fact that the
plaintiffs were well aware of the CSPF and the 50% Rule
Second, the challenged provisions of HB 561 do not prior to making any investments related to simulcast-only
interfere with legitimate investment backed expectations. The racing, and could not, therefore have reasonably expected a
district court observed that the same legislation that greater return. Consequently, this factor also weighs against
authorized simulcast-only racing also included the revenue finding a taking.
allocation formulas to which the plaintiffs objected and
concluded that the plaintiffs could have no reasonable 3. Economic Impact.
expectation of a greater return on their investment than that
provided under the CSPF and 50% Rule. Finally, consideration of the economic impact of the
challenged provisions of HB 561 does not support the
The plaintiffs offer several arguments as to why this up- conclusion that there has been a taking. The district court
front disclosure of the terms of participation did not prevent acknowledged that the CSPF and the 50% Rule had an
them from reasonably expecting higher returns. First, they adverse economic impact on the plaintiffs, at least to the
argue that the district court’s conclusion is tantamount to
finding that participants in heavily-regulated industries have
no choice but to accept even the most confiscatory 6
Curio usly, the plaintiffs do not actually allege that revenues have not
regulations. “[I]t is not objectively reasonable,” they contend, increased or that they have been precluded from offering higher purses
“to expect that the state will condition participation in the than before the implementation of HB 561. They simp ly allege that purse
racing industry upon acceptance of a system which transfers money that could have gone into their purse fund was diverted to the
earnings from one set of race track owners to another.” Next, CSPF. At worst, it appears that the plaintiffs’ revenues have increased
after the passage of HB 561, just not as much as the plaintiffs would have
the plaintiffs charge that HB 561 disrupts normal expectations liked.
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State of Ohio, et al. State of Ohio, et al.
extent that they were deprived of a portion of simulcast will always be out of proportion to its experience with
wagering proceeds.7 The plaintiffs emphasize that, under the the plan, and the mere fact that the employer must pay
challenged provisions, significant portions of the revenue money to comply with the Act is but a necessary
from wagering on simulcast-only racing at their facilities is consequence of the [amendment]'s regulatory scheme.
diverted to others. The plaintiffs allege that, under the CSPF
regulations, they have paid millions more into the CSPF than Id. at 225-26 (footnote omitted). Similarly in this case, the
they have received in disbursements, and they note that, under allocations are not made “in a vacuum,” but depend upon
the 50% Rule, one-half of the money wagered at the plaintiff factors that the legislature found reasonably related to the
satellite facility is allocated to other tracks. encouragement of live horse racing. As in Connolly, the
payment of the revenues at issue is “a necessary consequence
In applying the economic impact factor, the Supreme Court of the . . . regulatory scheme.”
has made clear that a complete deprivation of money that an
enterprise is obligated to pay does not necessarily require the The plaintiffs argue that the economic impact of the CSPF
finding of a taking. In Connolly, the Court found that the is particularly onerous, because the formula for determining
retroactive application of the withdrawal liability provisions distributions creates a cycle in which they will always pay
of the Multiemployer Pension Plan Amendments Act of 1980 more into the fund than they receive out of it. Under the
did not effect an unconstitutional taking under the Fifth CSPF distribution formula, the plaintiffs contend, tracks with
Amendment. Connolly, 475 U.S. at 221-28. In considering higher historical wagering are rewarded by higher
the economic impact of the provisions, the Court reasoned: distributions, which are dedicated to the tracks purse funds.
More money available in a track’s purse fund means that the
as to the severity of the economic impact of the track can attract better horses, which increases wagering,
[amendment], there is no doubt that the Act completely which in turn increases the track’s share of the CSPF
deprives an employer of whatever amount of money it is distributions. Indeed, the plaintiffs project that they will
obligated to pay to fulfill its statutory liability. The always pay more into the fund than they receive in
assessment of withdrawal liability is not made in a distributions.
vacuum, however, but directly depends on the
relationship between the employer and the plan to which It appears, however, that the cycle complained is not a
it had made contributions. Moreover, there are a necessary consequence of the CSPF formula, but is instead
significant number of provisions in the Act that moderate rooted in the plaintiffs’ business decisions. Tracks contribute
and mitigate the economic impact of an individual to the CSPF only on days that they offer simulcast racing
employer's liability. There is nothing to show that the without also offering live racing. Plaintiff Raceway Park and
withdrawal liability actually imposed on an employer Defendant Scioto Downs conducted live racing on roughly
the same number of days, but Raceway Park conducted
simulcast-only racing on 237 days, while Scioto Downs
7
conducted such racing on only 9 days. Consequently,
As noted above, the p laintiffs do not actually claim that their Raceway Park contributed significantly more to the CSPF.
revenues decreased after the passage of HB 561, but instead claim that Raceway Park could have chosen to minimize its
their revenues would have increased more absent the challenged
provisions.
contributions to the fund by limiting the number of simulcast-
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State of Ohio, et al. State of Ohio, et al.
only race days it conducted. It made a business decision not In rejecting the plaintiffs’ equal protection claim, the
to do so. Accordingly, we conclude that the economic burden district court concluded that HB 561 made no indiscriminate
factor weighs against finding a taking in this case.8 classifications, but instead represented a “studied and well-
considered statutory scheme established to address legitimate
B. The challenged provisions do not violate the Equal government objectives.” The plaintiffs argue that the CSPF
Protection Clause or the Due Process Clause of the regulations are arbitrary and irrational because the provisions
Fourteenth Amendment. bear no rational relationship to Ohio’s asserted purpose and
that they arbitrarily shift business revenues from one private
The challenged provisions also do not violate the Equal business to another. The plaintiffs’ argument boils down to
Protection Clause. Social and economic legislation, such as a disagreement with Ohio’s determination on how best to
HB 561, that does not employ suspect classifications or protect and preserve horse racing in Ohio. They claim that
intrude on fundamental rights must be upheld against equal Ohio’s goal could have been satisfied by liberalizing
protection attacks so long as the legislative means are restrictions on simulcast racing and, therefore, that both the
rationally related to a legitimate government purpose. Hodel CSPF and the 50% Rule are unnecessary extras that confer
v. Indiana, 452 U.S. 314, 331 (1981). Such legislation carries benefits on the defendants at their expense. Even assuming
a presumption of rationality that can only be overcome by a that Ohio’s goals could have been achieved without the
clear showing of arbitrariness and irrationality. Id. at 331-32. challenged provisions, they are not so unrelated to Ohio’s
Indeed, “social and economic legislation is valid unless ‘the purpose as to be irrational. Ohio could reasonably determine
varying treatment of different groups or persons is so that the benefits and burdens accompanying simulcast-only
unrelated to the achievement of any combination of legitimate racing are different from those created by live horse racing,
purposes that [a court] can only conclude that the legislature’s and determine that revenues for the two should be allocated
actions were irrational.’” Id. at 332 (alteration in original) differently.9
(quoting Vance v. Bradley, 440 U.S. 93, 97 (1979)). In this
case the plaintiffs have not met the heavy burden of showing Similarly, the challenged provisions do not violate the Due
that the classifications employed by the Ohio General Process Clause of the Fourteenth Amendment. “It is by now
Assembly were irrational. well established that legislative Acts adjusting the burdens
and benefits of economic life come to the Court with a
presumption of constitutionality, and that the burden is on one
8 complaining of a due process violation to establish that the
The Supreme Court followed its Conno lly econ omic burd en ana lysis legislature has acted in an arbitrary and irrational way.”
in a later case, also upholding the withdrawal liability provisions of the Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15 (1976).
same amendments to ERIS A against a Takings Clause challenge, where
application of the statute resulted in loss of 46% of the affec ted party’s net The plaintiffs argue that the challenged provisions are
worth. Con crete Pipe and Prod s. of Cal., Inc. v. Constr. Labo rers
Pension Trust for S. C al, 508 U.S. 602, 645 (1993). The Court relied
upon earlier cases holding squarely that diminution in the value of 9
property is insufficient to demon strate a tak ing. Id., citing Village of For example, live horse races in Ohio supp ort related ind ustries in
Euclid v. Am bler R ealty C o., 272 U.S. 365 , 384 (1926) (app roxim ately ways that simulcasts do not. Ohio could reasonably conclude that
75% diminution in value), and Hadacheck v. Sebastian, 239 U.S. 394, simulca st-only racing produced few er benefits than live racin g, and
405 (19 15) (92.5% diminution). regulate to make such racing less profitable than live racing.
Nos. 02-3466/3487 Raceway Park, Inc., et al. v. 17
State of Ohio, et al.
irrational and arbitrary because they are unrelated to Ohio’s
goal, that the CSPF is impermissibly retroactive, and that the
regulations impermissibly seize private property for private
use.
Although the plaintiffs would have preferred a different
scheme than that embodied by HB 561, the measures enacted
by the Ohio Assembly, as noted above, are related to Ohio’s
goal of protecting and promoting live horse racing in Ohio.
The CSPF provisions, moreover, are not retroactive. While
the distribution formula for the CSPF is based on historical
calculations of racing revenue, a statute “is not made
retroactive merely because it draws upon antecedent facts for
its operation.” Landgraf v. USI Film Prods, 511 U.S. 244,
270 n. 24 (1994) (quoting Cox v. Hart, 260 U.S. 427, 435
(1922)). Indeed, the plaintiffs can easily avoid any liability
to the CSPF by refraining from taking advantage of the
provisions permitting them to offer simulcast-only racing.
Finally, the challenged provisions do not take private property
for private use, as the plaintiffs have failed to establish a
“taking” at all. Accordingly, we find that the plaintiffs have
failed to establish that the challenged provisions violate their
right to due process under the Fourteenth Amendment.
III. Conclusion
For the reasons stated herein, the judgment of the district
court is AFFIRMED.