Pic-A-State Pa, Inc. v. Reno

Opinions of the United
1996 Decisions States Court of Appeals
for the Third Circuit

2-13-1996

McLean v. Reno
Precedential or Non-Precedential:

Docket 95-7137

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 UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

___________

No. 95-7137
___________

PIC-A-STATE PA, INC.,
SCOTT McLEAN,
Appellants

v.

JANET RENO, in her official capacity as
Attorney General of the United States of America;
THE UNITED STATES DEPARTMENT OF JUSTICE;
THE UNITED STATES OF AMERICA

_______________________________________________

On Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. Civil Action No. 94-cv-01490)
___________________

Argued November 13, 1995

Before: BECKER and SCIRICA, Circuit Judges
and COHILL, District Judge*

(Filed February 13, l996)

MICHAEL A. FINIO, ESQUIRE (ARGUED)
Saul, Ewing, Remick & Saul
240 North Third Street, Suite 700
P.O. Box 1291
Harrisburg, Pennsylvania 17101

WILLIAM M. JANSSEN, ESQUIRE
Saul, Ewing, Remick & Saul
3800 Centre Square West
Philadelphia, Pennsylvania 19102

Attorneys for Appellants

1
*The Honorable Maurice B. Cohill, Jr., United States District
Judge for the Western District of Pennsylvania, sitting by
designation.

2
 MATTHEW M. COLLETTE, ESQUIRE (ARGUED)
MARK B. STERN, ESQUIRE
United States Department of Justice
Civil Division, Appellate Staff
10th & Pennsylvania Avenue, N.W.
Washington, D.C. 20530-0001

Attorneys for Appellees

__________________

OPINION OF THE COURT
__________________

SCIRICA, Circuit Judge.

Pic-A-State Pa., Inc. brings a Commerce Clause

challenge to the Interstate Wagering Amendment, which amended 18

U.S.C. § 1301 (1994) by prohibiting the transmission in

interstate commerce of information to be used for the purpose of

procuring a lottery ticket. Because the Amendment regulates an

activity affecting interstate commerce and rationally relates to

the goals articulated by Congress, we hold the Amendment was a

constitutional exercise of Congress' power to legislate under the

Commerce Clause.

I. FACTS AND PROCEDURAL HISTORY

Congress has restricted interstate traffic in lottery

tickets for over a century. See generally United States v. Edge

Broadcasting Co., 113 S. Ct. 2696 (1993); see also Act of July

12, 1876, ch. 186, § 2, 19 Stat. 90; Anti-Lottery Act of 1890,

ch. 908, § 1, 26 Stat. 465. Title 18 U.S.C. § 1301, the current

prohibition on interstate traffic in lottery tickets, was enacted

3
by Congress in 1895. Before amendment by the Interstate Wagering

Amendment, § 1301 provided:
Whoever brings into the United States for the
purpose of disposing of the same, or
knowingly deposits with any express company
or any common carrier for carriage, or
carries in interstate or foreign commerce any
paper, certificate, or instrument purporting
to be or to represent a ticket, chance,
share, or interest in or dependent upon the
event of a lottery, gift enterprise, or
similar scheme, offering prizes dependent in
whole or part upon lot or chance, or any
advertisement of, or list of prizes drawn or
awarded by means of, any such lottery, gift
enterprise, or similar scheme; or knowingly
takes or receives any such paper,
certificate, instrument, advertisement, or
list so brought, deposited or transported,
shall be fined not more than $1,000 or
imprisoned not more than two years, or both.

Act of March 2, 1895, 28 Stat. 963; 18 U.S.C. § 1301 (1988).

Pic-A-State Pa., Inc. is a Pennsylvania corporation

that was engaged in the business of taking orders for, and

purchasing, out-of-state lottery tickets on behalf of customers.

Pic-A-State's operations were designed to avoid the longstanding

prohibition on the interstate traffic in lottery tickets by

keeping the tickets themselves in the state of origin and

transferring only a computer-generated "receipt" to the customer.

The Commonwealth of Pennsylvania tried repeatedly to

put a stop to Pic-A-State's operations. In 1993, the

Pennsylvania legislature passed Act 8 of 1993, which prohibited

the sale of any interest in another state's lottery. 72 Pa.

Stat. Ann. § 3761-9(c) (1995). Pic-A-State challenged this

legislation in federal court on dormant Commerce Clause grounds,

4
and the statute was struck down by the district court. Pic-A-

State Pa. v. Pennsylvania, No. 93-0814 (M.D. Pa. July 23, 1993).

On appeal, we reversed citing an intervening change in federal

law, the Interstate Wagering Amendment, which made the

Pennsylvania statute fully consistent with federal law and not

unduly burdensome on interstate commerce. Pic-A-State Pa. v.

Pennsylvania, 42 F.3d 175, 178-80 (3d Cir. 1994) ("Pic-A-State

I").

The Interstate Wagering Amendment amended 18 U.S.C.

§1301 by providing that, in addition to § 1301's extant

prohibition on the transfer in interstate commerce of any lottery

ticket, any person who:
being engaged in the business of procuring
for a person in 1 State such a ticket,
chance, share, or interest in a lottery,
gift, enterprise or similar scheme conducted
by another State (unless that business is
permitted under an agreement between the
States in question or appropriate authorities
of those States), knowingly transmits in
interstate or foreign commerce information to
be used for the purpose of procuring such a
chance, share or interest; . . . shall be
fined not more than $1,000 or imprisoned not
more than two years, or both.

Violent Crime Control and Law Enforcement Act of 1994, Pub. L.

No. 103-322, § 320905, 108 Stat. 2126, 2147 (emphasis added).

This Amendment was explicitly intended to prohibit Pic-A-State's

line of business.

Senator Arlen Specter of Pennsylvania was the primary

sponsor of the Interstate Wagering Amendment. He explained that

"current law prohibit[s] interstate transfer of lottery

tickets . . . . However, due to advances in communication

5
technologies, current law does not accomplish its intended

goals." 139 Cong. Rec. S15247. He also noted the district

court's decision in Pic-A-State Pa. v. Pennsylvania, No. 93-0814

(M.D. Pa. July 23, 1993), allowed "the sale of interests in out-

of-state lottery tickets via computer transaction with no paper

crossing state lines." Id. The Amendment was designed to close

this "loophole." Id.

Senator Specter identified two other purposes for the

Interstate Wagering Amendment. First, that the Amendment was

necessary to preserve "the right of a State to regulate lottery

[sic] and gambling within its borders." Id. He stated, "Federal

laws should continue to limit the proliferation of interstate

gambling to preserve the sovereignty of States that do not permit

certain forms of gambling." Id. Second, that businesses such as

Pic-A-State's would "undermine [the states'] ability to realize

projected revenues." Id. Senator Joseph Biden echoed Senator

Specter's concerns, noting the interstate sale of interests in

lottery tickets "hurts the operation of lotteries in smaller

States." Id.

Three days after the Interstate Wagering Amendment was

signed into law, Pic-A-State filed this suit seeking injunctive

relief and a declaratory judgment that the Amendment was

unconstitutional. The district court dismissed Pic-A-State's

complaint, finding no merit in any of its arguments. Pic-A-State

Pa. v. Reno, No. 94-1490 (M.D. Pa. Feb. 23, 1995). Since passage

of the Amendment, Pic-A-State has terminated its business.

6
 We have jurisdiction to review the district court's

final judgment dismissing the action under 28 U.S.C. § 1291

(1988). "Our standard of review is plenary." Juzwin v. Asbestos

Corp., 900 F.2d 686, 689 (3d Cir.), cert. denied, 498 U.S. 896

(1990).

II. RIPENESS, STANDING AND EQUITABLE RELIEF

As an initial matter, the Government disputes whether

the district court had jurisdiction to hear this case under 28

U.S.C. § 1331 (1988). Article III, section 2 of the United

States Constitution requires an actual "controversy" for a

federal court to have jurisdiction. U.S. Const. art. III, § 2.

The Government argues no justiciable controversy exists because

Pic-A-State has never been threatened with prosecution under

amended § 1301. It asserts the controversy is not ripe, Pic-A-

State lacks standing, and Pic-A-State is not entitled to

equitable relief.0 We will examine each of these contentions in

turn.

A. Ripeness

In Abbott Lab. v. Gardner, 387 U.S. 136, 149 (1967),

overruled on other grounds, Califano v. Sanders, 430 U.S. 99, 105

(1977), and Pacific Gas & Elec. Co. v. State Energy Resources

Conservation & Dev. Comm'n, 461 U.S. 190, 201 (1983), the Supreme

0
The concepts of standing and ripeness require related but
distinct inquiries. "The ripeness doctrine is often confused
with the standing doctrine. Whereas ripeness is concerned with
when an action may be brought, standing focuses on who may bring
a ripe action. Although these doctrines are analytically
distinct, both have evolved from Article III's case or
controversy requirement." Armstrong World Indus. v. Adams, 961
F.2d 405, 411 n.13 (3d Cir. 1992) (citations omitted).

7
Court held that ripeness turns on "the fitness of the issue for

judicial decision" and "the hardship to the parties of

withholding court consideration." For declaratory judgments, we

have refined this test because declaratory judgments are

typically sought before a completed injury has occurred. In

determining whether to engage in pre-enforcement review of a

statute in a declaratory judgment action, we look, among other

factors, to (1) the adversity of the parties' interests, (2) the

conclusiveness of the judgment, and (3) the utility of the

judgment. Freehold Cogeneration Assocs. v. Bd. Reg. Comm'rs, 44

F.3d 1178, 1188 (3d Cir.), cert. denied, 116 S. Ct. 68 (1995);

Step-Saver Data Systems, Inc. v. Wyse Technology, 912 F.2d 643,

647 (3d Cir. 1990). After considering these factors, we believe

this case presents a controversy ripe for resolution.

1. Adversity of Interest

"For there to be an actual controversy the defendant

must be so situated that the parties have adverse legal

interests." Step-Saver, 912 F.2d at 648 (quoting 10A Charles

Wright, Arthur Miller & Mary Kane, Federal Practice and Procedure

§ 2757, at 582-83 (2d ed. 1983)). Although Pic-A-State has not

been prosecuted under the Interstate Wagering Amendment, the

impact of the Amendment is sufficiently direct and immediate to

create an adversity of interest between Pic-A-State and the

Government. Not only has Pic-A-State terminated its business and

suffered economic loss in response to the passage of the

Amendment, but any further attempt to pursue its line of business

8
would risk serious criminal penalties.0 "Where the legal issue

presented is fit for judicial resolution, and where a regulation

requires immediate and significant change in the plaintiffs'

conduct of their affairs with serious penalties attached to

noncompliance, access to the courts . . . under the Declaratory

Judgment Act must be permitted, absent a statutory bar or some

other unusual circumstances." Abbott Lab. v. Gardner, 387 U.S.

at 153.0
0
At oral argument, the Government suggested that review of the
Interstate Wagering Amendment was inappropriate because the
federal government was unlikely to prosecute Pic-A-State. Even
if Pic-A-State were to resume its business, the Government
asserted, any prosecution would be brought by the Commonwealth of
Pennsylvania under Act 8 of 1993. Although a prosecution by
state authorities would raise serious prudential concerns that
might call for our abstention, see Younger v. Harris, 401 U.S. 37
(1971), we need not address this eventuality now. Furthermore,
whether Pennsylvania has threatened to prosecute Pic-A-State is
irrelevant to a possible federal prosecution under the amended 18
U.S.C. § 1301.

The Government's argument would also place Pic-A-State
in an untenable position. The district court found Act 8 to be
unconstitutional under the dormant Commerce Clause in Pic-A-State
Pa. v. Commonwealth of Pennsylvania, No. 93-0814 (M.D. Pa. July
23, 1993). We reversed because the intervening passage of the
Interstate Wagering Amendment made Act 8 consistent with federal
law. Pic-A-State I, 42 F.3d 175, 178-80 (3d Cir. 1994). If the
Interstate Wagering Amendment is unconstitutional, our decision
in Pic-A-State I is of doubtful vitality and prosecution of Pic-
A-State by Pennsylvania under Act 8 of 1993 would be suspect on
dormant Commerce Clause grounds. Thus, regardless of whether
Pic-A-State is prosecuted by state or federal authorities, the
central issue in this case is the constitutionality of the
Interstate Wagering Amendment. Yet the Government seeks to bar
adjudication of this issue at this time.
0
Pic-A-State argues that under Babbitt v. United Farm Workers
Nat'l Union, 442 U.S. 289 (1979), and Steffel v. Thompson, 415
U.S. 452 (1974), "it is not necessary that petitioner first
expose himself to actual arrest or prosecution to be entitled to
challenge a statute that he claims deters the exercise of his
constitutional rights." Steffel, 415 U.S. at 459. While this
statement is undoubtedly true, we note both Babbitt and Steffel

9
 Moreover, courts have found sufficient adversity

between parties to create a justiciable controversy when suit is

brought by the only plaintiff subject to regulation by an

enactment. See, e.g., Illinois v. General Elec. Co., 683 F.2d

206, 210 (7th Cir. 1982) ("as the Act has only one conceivable

target . . . it is extremely unlikely that the state would

overlook the violation," and the controversy is therefore ripe),

cert. denied, 461 U.S. 913 (1983); Entertainment Concepts, III v.

Maciejewski, 631 F.2d 497, 500 (7th Cir. 1980) (same), cert.

denied, 450 U.S. 919 (1981). In introducing the Interstate

Wagering Amendment, its sponsors were motivated by the desire to

halt the operations of Pic-A-State specifically. See 139 Cong.

Rec. S15247. Its chief sponsor mentioned the district court's

decision in Pic-A-State Pa. v. Pennsylvania, No. 93-0814 (M.D.

Pa. July 23, 1993), and explained the Amendment would close the

"loophole" in the statute that allowed Pic-A-State to run its

business. Id.

Under these circumstances, we believe the likelihood of

prosecution under the Interstate Wagering Amendment is so strong

that a justiciable issue is presented.0 We also note that the

involved challenges to statutes that criminalized the exercise of
First Amendment rights. Pic-A-State's claim does not involve
these rights, and so we do not rely on Babbitt or Steffel in
finding adversity between the parties.
0
Moreover, as a policy matter, strong reasons counsel against
requiring Pic-A-State to engage in illegal conduct before its
challenge can be heard.

Fear that courts may find the statute valid
will deter many from risking violation;
defense of criminal proceedings on
constitutional grounds simply is not an

10
Government, although it has stated that a federal prosecution is

unlikely, has not expressly disavowed an intent to prosecute. See

Presbytery of the Orthodox Presbyterian Church v. Florio, 40 F.3d

1454, 1463-68 (3d Cir. 1994) (failure of state to disavow intent

to prosecute sufficient to create adversity between the parties);

Salvation Army v. Department of Community Affairs, 919 F.2d 183,

192 (3d Cir. 1990) (no adversity where state gives "express

assurance that there will be no enforcement").

2. Conclusiveness

We next examine whether the issue raised here is "based

on a `real and substantial controversy admitting of specific

relief through a decree of conclusive character, as distinguished

from an opinion advising what the law would be on a hypothetical

state of facts.'" Step-Saver, 912 F.2d at 649 (quoting Aetna

Life Ins. Co. v. Haworth, 300 U.S. 227, 241 (1937)) (emphasis

added).

Where the question presented is "predominantly legal,"

a factual record is not as important as in fact-sensitive

inquiries. Compare Pacific Gas & Elec. Co. v. State Energy

Resources Conservation & Dev. Comm'n, 461 U.S. at 201 (question

adequate remedy. In addition to this
practical fact, more abstract principles
suggest that a citizen should not be required
to sacrifice his wish to conform to valid
social prescriptions in order to test his
belief of invalidity; citizens should be
allowed to prefer official adjudication to
private disobedience.

13A Charles Wright, Arthur Miller & Mary Kane, Federal Practice
and Procedure § 3532.5, at 183-84 (2d Ed. 1984).

11
of federal preemption is "predominantly legal" and need not await

development of factual record); Abbott Lab. v. Gardner, 387 U.S.

at 149 (declaratory judgment challenge to regulations presented

purely legal issues fit for resolution even before prosecution

instituted); with Hodel v. Virginia Surface Mining & Reclamation

Ass'n, 452 U.S. 264, 294-95 (1981) ("actual factual setting" is

"particularly important in cases raising allegations of an

unconstitutional taking of private property."). Because Pic-A-

State brings a facial challenge to the constitutionality of the

Interstate Wagering Amendment, further development of the factual

record by the prosecution of Pic-A-State would not inform our

legal analysis. Both parties have approached this case as one

presenting the purely legal question of the scope of Congress'

power to legislate under the Commerce Clause. The Government has

made no attempt to justify the Interstate Wagering Amendment in

factual terms. Accordingly, we believe the legal issues

presented may be conclusively resolved even before the

prosecution of Pic-A-State.

3. Utility

Finally, we focus on the utility of the present

resolution of this dispute. We consider "whether the parties'

plans of action are likely to be affected by a declaratory

judgment." Step-Saver, 912 F.2d at 649 n.9. Unlike our cases in

which we have concluded that a judgment would not have a

significant effect, see Armstrong World Indus. v. Adams, 961 F.2d

405, 423-24 (3d Cir. 1992); Step-Saver, 912 F.2d at 649-50, we

believe resolution of this case will materially affect the

12
parties. Pic-A-State has abandoned its line of business because

of the passage of the Interstate Wagering Amendment. Were the

Amendment to be declared unconstitutional, Pic-A-State would

promptly resume its activities. Accordingly, we believe this

case is ripe at this time.

B. Standing

The Government also attacks Pic-A-State's standing to

bring this suit, asserting no harm is imminent because no

prosecution is pending. As the Supreme Court has stated, "there

is no question in the present case that petitioners have

sufficient standing as plaintiffs: the regulation is directed at

them in particular; it requires them to make significant changes

in their everyday business practices; if they fail to observe the

. . . rule they are quite clearly exposed to the imposition of

strong sanctions." Abbott Lab. v. Gardner, 387 U.S. at 154.

Accordingly, we find no merit in the Government's argument.

C. Equitable Relief

Finally the Government asserts equitable injunctive

relief is unavailable because Pic-A-State is threatened with no

immediate harm. The Government relies on Younger v. Harris, 401

U.S. 37 (1971), and the line of cases that holds federal courts

should not enjoin pending state criminal prosecutions. See,

e.g., Douglas v. City of Jeannette, 319 U.S. 157, 163 (1943);

Watson v. Buck, 313 U.S. 387, 400 (1941). Here there is no state

prosecution, a federal statute is at issue, and there are no

grounds for federal courts to abstain from hearing the challenge.

Therefore, we will reach the merits.

13
 III. THE COMMERCE CLAUSE

The Commerce Clause of the United States Constitution

provides that "Congress shall have Power . . . To regulate

commerce with foreign Nations, and among the several States, and

with the Indian Tribes." U.S. Const. art. I, § 8, cl. 3. This

power is "complete in itself, may be exercised to its utmost

extent, and acknowledges no limitations, other than are

prescribed in the constitution." Gibbons v. Ogden, 9 Wheat. 1,

196 (1824). Accordingly, "[t]he task of a court that is asked to

determine whether a particular exercise of congressional power is

valid under the Commerce Clause is relatively narrow." Hodel v.

Virginia Surface Mining & Recl. Assn., 452 U.S. at 276. "The

court must defer to a congressional finding that a regulated

activity affects interstate commerce, if there is any rational

basis for such a finding." Id. This established, the only

remaining question for judicial inquiry is whether the means

chosen by Congress are "reasonably adapted" to the asserted goals

of the legislation. Id.; Heart of Atlanta Motel, Inc. v. United

States, 379 U.S. 241, 258 (1964). "The judicial task is at an

end once the court determines that Congress acted rationally in

adopting a particular regulatory scheme." Hodel, 452 U.S. at

276; see also United States v. Pozsgai, 999 F.2d 719, 733 (3d

Cir. 1993) ("We will uphold application of the law if there is a

`rational basis' for the congressional determination that the

regulated activity `affects interstate commerce,' and if the

means chosen to regulate the activity are reasonable."), cert.

denied, 114 S. Ct. 1052 (1994); United States v. Frame, 885 F.2d

14
1119, 1126 (3d Cir. 1989) ("It is well settled that Congress will

have validly exercised its power to regulate interstate commerce

if the activity being regulated affects commerce, and if there is

a rational connection between the regulatory means selected and

the asserted ends."), cert. denied, 493 U.S. 1094 (1990).

A. Affects Commerce

It is beyond dispute that state lotteries affect

interstate commerce. In the Lottery Case, 188 U.S. 321, 354

(1903), the Supreme Court held that "lottery tickets are subjects

of traffic and therefore are subjects of commerce, and the

regulation of the carriage of such tickets from State to

State . . . is a regulation of commerce among the several

states." Although Pic-A-State does not transport actual lottery

tickets across state lines, but only sells interests in lottery

tickets via computer, its activities may still be regulated by

Congress. The power of Congress to regulate interstate commerce

extends not only to "the exchange and transportation of

commodities, or visible, tangible things, but the carriage of

persons and the transmission by telegraph of ideas, wishes,

orders, and intelligence." Id. at 351-52. Congress' power to

regulate interstate commerce also reaches the transmission of

information by computer for the purpose of purchasing lottery

tickets. Moreover, Pic-A-State itself notes that national

lottery sales exceeded $30 billion in 1993. Brief of the

Appellants at 20 n.5. A business of such enormous economic

impact is a proper subject for congressional regulation under the

Commerce Clause.

15
 B. Rational Basis

1.

Accordingly, the task before us is to determine whether

Congress acted rationally in adopting the regulatory scheme of

which the Interstate Wagering Amendment is a part. Hodel, 452

U.S. at 276. Pic-A-State asserts the Interstate Wagering

Amendment cannot survive scrutiny under a "rational basis" review

because it is not "reasonably adapted" to a legitimate end. It

makes three arguments.

First, Pic-A-State argues the historical rationale for

federal regulation of lotteries was Congress' perception that

lotteries were "evils" to be strictly contained, if not

absolutely prohibited. In the wake of the legalization of

lotteries by over thirty states, Pic-A-State contends that

regulation of lotteries as "evils" is no longer rational. Second,

Pic-A-State asserts the protection of the states' ability to

regulate gambling within their own borders is an impermissible

purpose for federal lawmaking. Third, it contends the Interstate

Wagering Amendment will insulate state lotteries from

competition, and this restraint on trade is irrational.

Pic-A-State misapprehends the nature of a "rational

basis" review of legislation under the Commerce Clause. We do

not substitute our judgment for that of Congress. "Where the

legislative judgment is drawn in question," our inquiry "must be

restricted to the issue of whether any state of facts either

known or which could reasonably be assumed affords support for

it." United States v. Carolene Prod. Co., 304 U.S. 144, 154

16
(1938). The Supreme Court's recent decision in United States v.

Lopez, 115 S. Ct. 1624 (1995), does not change the nature of this

inquiry. Lopez asks whether the activity at issue could

rationally be understood to affect commerce. The Court did not

reach the question of whether the legislation itself was

rationally related to its announced goal.0

In introducing the Interstate Wagering Amendment on the

Senate floor, its proponents advanced several justifications,

including the prevention of reductions in state lottery revenues,

the preservation of "the sovereignty of State lottery programs,"

and the enforcement of the federal laws prohibiting interstate

gambling. See 139 Cong. Rec. S15247. The Interstate Wagering

Amendment is rationally related to achieving these goals.

First, Congress could rationally determine that the

sale of interests in lottery tickets across state lines might

cause revenue shortfalls in some lottery states, particularly

smaller states. The Chair of the Pennsylvania Council on Aging

stated in a letter to Senator Specter that the sale of out-of-

state lottery tickets would "have a direct and negative impact on

Pennsylvania lottery sales.0 The final result will be revenue
0
The impetus behind striking down the Gun-Free School Zones Act
under the Commerce Clause in Lopez was a concern for federalism.
See United States v. Lopez, 115 S. Ct. 1624, 1629 (1995). The
Interstate Wagering Amendment supplements and guarantees, not
usurps, the states' power to regulate their own lotteries.
Despite Pic-A-State's arguments, it therefore seems an unsuitable
object for a Commerce Clause challenge under Lopez.
0
The Director of Public Relations and Special Events for the
Pennsylvania Lottery testified that "800,000 to a million
dollars" is an "extremely conservative" estimate of the losses
suffered by the Pennsylvania lottery in 1991-92 due to the
interstate sale of lottery tickets. App. at 213a-215a.

17
losses for programs that assist very vulnerable older citizens of

Pennsylvania."0 139 Cong. Rec. S15247. The Governor of Delaware

also submitted a letter complaining that such sales "have the

potential to negatively affect state revenues from lottery ticket

sales, especially for smaller states." Id. at S15248. As

Senator Specter noted, "[a]ny erosion of revenues due to the sale

of out-of-State lottery tickets is contrary to the purpose of

State lottery programs." Id. at S15247. "State lottery programs

are based on the premise that the revenues derived from the

lottery go toward State programs for the betterment of that

particular State." Id. Congress made a reasonable determination

that the prohibition of interstate sales of lottery tickets would

promote the purposes for which the various states have instituted

lotteries. We will not second-guess this judgment.

Moreover, Congress rationally believed that the

Interstate Wagering Amendment served the purpose of preserving

state sovereignty in the regulation of lotteries. Senator

Specter explained:

the right of a State to regulate lottery
[sic] and gambling within its borders must be
preserved. Federal gambling laws have
traditionally enabled the States to regulate
in-State gambling. Federal laws should
continue to limit the proliferation of
interstate gambling to preserve the
sovereignty of States that do not permit
certain forms of gambling.

0
Proceeds from the Pennsylvania lottery are earmarked for
programs that benefit senior citizens. See 72 Pa. Stat. Ann.
§3761-2 (1995).

18
Id. The Interstate Wagering Amendment furthered these goals by

giving the states the sole right to regulate lottery sales within

their borders. The states need not permit the sale of interests

in out-of-state lottery tickets, but may do so by concluding an

agreement for that purpose with other states. 18 U.S.C. § 1301.

The Interstate Wagering Amendment thus allows the various states

to gauge the economic effects of their own lotteries without out-

of-state interference, to form their own judgments about the

propriety of lotteries, and to regulate the types of state-

sponsored gambling they wish to allow within their borders.

Finally, Congress could rationally conclude that the

Interstate Wagering Amendment was necessary to effectuate the

purposes for which 18 U.S.C. § 1301 was originally enacted. As

Senator Specter stated, the federal gambling laws were clearly

intended to prohibit the interstate transportation and sale of

lottery tickets, but "the development of communications

technology resulted in [a] loophole in the Federal lottery law"

that allowed such transactions to be consummated by computer with

no papers crossing state lines. 139 Cong. Rec. S15247. Both

Pennsylvania Senators believed this loophole "plainly violat[ed]

the spirit and intent of the Federal law" and introduced the

Interstate Wagering Amendment in order to close it. Id. at

S15247-48.

In the context of the one-hundred year history of §1301

and the federal regulation of lotteries, Congress could

rationally conclude the need for an amendment to close a loophole

created by advances in technology unforeseeable at the time the

19
statute was originally drafted. Congress believed that since the

sale of lottery tickets across state lines was illegal, the sale

of interests in tickets across state lines by computer should be

illegal as well. We believe the Commerce Clause requires no more

indication of rationality for us to uphold the statutory scheme

adopted by Congress.0

2.

Even evaluating the rationality of the Interstate

Wagering Amendment on the terms suggested by Pic-A-State, we hold

it was a constitutional exercise of Congress' power to legislate

under the Commerce Clause. Pic-A-State argues that because

lotteries have been legalized by the majority of states, the

interstate sale of lottery tickets may no longer rationally be

prohibited on moral grounds. We disagree. Although many states

have legalized lotteries, some have not. Congress could

rationally decide to legislate in support of the policies of

nonlottery states by placing the regulation of lotteries within

the discretion of each state and prohibiting out-of-state

interference. See United States v. Edge Broadcasting Co., 113 S.
0
Pic-A-State notes Congress did not conduct factfinding or rely
on empirical research in drafting the Interstate Wagering
Amendment and argues that this undermines the Amendment's
rationality. We are unpersuaded, as several of the
justifications advanced by Congress are rational on their face.
Pic-A-State further argues Congress' conclusion that the
Amendment would prevent revenue shortfalls in smaller states is
mistaken as a factual matter. Even were this so, we would uphold
the Interstate Wagering Amendment under rational basis review.
Rational basis review "is not a license for courts to judge the
wisdom, fairness, or logic of legislative choices." FCC v. Beach
Communications, 113 S. Ct. 2096, 2101 (1993)). "Congress need
not make particularized findings in order to legislate." Perez
v. United States, 402 U.S. 146, 156 (1971).

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Ct. 2696, 2703 (1993) ("[T]he Government has a substantial

interest in supporting the policy of nonlottery States, as well

as not interfering with the policy of States that permit

lotteries."); Lottery Case, 188 U.S. at 357 (Congress may

"supplement[ ] the action of those States . . . which, for the

protection of the public morals, prohibit the drawing of

lotteries, as well as the sale or circulation of lottery tickets,

within their respective limits."). Moreover, in arguing that the

Interstate Wagering Amendment is irrational because lotteries are

no longer morally proscribed, Pic-A-State necessarily implies

that all of 18 U.S.C. § 1301, not just the Interstate Wagering

Amendment, is now irrational. As we have noted, § 1301 has been

in the United States Code since 1895 and was upheld by the

Supreme Court against a Commerce Clause challenge. Lottery Case,

188 U.S. 321 (1903). We do not believe that circumstances have

changed so substantially as to render this body of law

unconstitutional.

As for Pic-A-State's argument that the Interstate

Wagering Amendment is contrary to the spirit of the antitrust

laws and therefore irrational, "neither the Sherman Act nor any

other antitrust statute restricts the United States government in

directing action in complete contradiction to antitrust policy."

Hecht v. Pro-Football, Inc., 444 F.2d 931, 935 (D.C. Cir. 1971),

cert. denied, 404 U.S. 1047 (1972) (citations omitted). The

interstate sale of lottery tickets affects commerce and is

contrary to the policy of several states. In these

circumstances, Congress can rationally exercise its enumerated

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powers to prohibit the passage in interstate commerce of lottery

tickets or information relating to them.

IV. DORMANT COMMERCE CLAUSE

Pic-A-State also contends Congress did not have the

power to enact the Interstate Wagering Amendment. Under dormant

Commerce Clause principles, states may not discriminate against

the flow of out-of-state goods in commerce. Pic-A-State asserts

that Congress, in legislating to supplement the states' police

powers, cannot give the states the power to discriminate against

out-of-state goods because such discrimination is forbidden by

the dormant Commerce Clause.

The Supreme Court rejected this argument in Prudential

Ins. Co. v. Benjamin, 328 U.S. 408 (1946). In Benjamin, South

Carolina imposed a three percent tax on foreign insurance

companies as a condition of their doing business in the State. No

similar tax was imposed on South Carolina corporations. By

statute Congress had authorized state regulation and taxation of

the business of insurance. Id. at 412, 429-30. Prudential

challenged the discriminatory tax, contending Congress could not

legislatively override the dormant Commerce Clause's prohibition

on discriminatory state legislation. Rejecting Prudential's

argument, the Supreme Court distinguished between the Commerce

Clause and the dormant Commerce Clause:
The one limitation bounds the power of
Congress. The other confines only the powers
of the states. And the two areas are not
coextensive. The distinction is not always
clearly observed, for both questions may and
indeed at times do arise in the same case and
in close relationship. But to blur them and

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 thereby equate the implied prohibition with
the affirmative endowment is altogether
fallacious. There is no such equivalence.

Benjamin, 328 U.S. at 423. The Supreme Court concluded the

Commerce Clause places no limitations on Congress' affirmative

power to legislate, other than that the regulated activity must

affect commerce. Id. It is now clear that Congress may consent

to state regulation that discriminates against interstate

commerce. Northeast Bancorp, Inc. v. Board of Governors, 472

U.S. 159, 174 (1985) ("When Congress so chooses, state actions

which it plainly authorizes are invulnerable to constitutional

attack under the Commerce Clause."); Pic-A-State I, 42 F.3d 175,

179 (3d Cir. 1994). Congress had the authority to enact the

Interstate Wagering Amendment in order to supplement state

legislation, even though the Amendment enables states to

discriminate against out-of-state lottery tickets.

V. CONCLUSION

The Interstate Wagering Amendment regulates lotteries--

an activity affecting interstate commerce. It rationally relates
to Congress' goals of protecting state lottery revenues,

preserving state sovereignty in the regulation of lotteries, and

controlling interstate gambling. The Amendment was a

constitutional exercise of Congress' power to legislate under the

Commerce Clause. We will affirm.

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