On Dec. 16, 2025, the United States Court of Appeals for the 6th Circuit upheld the Western District of Michigan's ruling and injunction in favor of Churchill Downs Inc.'s TwinSpires' advance-deposit wagering platform in a case that could impact wellbeyond the Wolverine State's borders.
As background, in addition to the consent requirements under the Interstate Horse Racing Act that govern simulcasting and wagers across state lines, Michigan requires an out-of-state ADW provider to have an agreement with an in-state racetrack in order to accept wagers from Michigan residents. In late 2024, the state's only remaining racetrack was closed for a period of time, thus rendering such an agreement impossible.
After that closing, at the direction of the Michigan Gaming Control Board, most ADWs stopped taking wagers from Michigan residents. TwinSpires continued to take wagers in Michigan and the state then suspended the ADW's license. TwinSpires sued and sought a temporary injunction to stay the Michigan board's order suspending TwinSpires' pending the resolution of litigation. TwinSpires prevailed at the lower federal district court and Michigan then appealed to the U.S. Court of Appeals for the 6th Circuit.
Wagering across state lines (including betting on simulcasts and account wagering) is governed by the Interstate Horse Racing Act of 1978 (as amended in 2000). The IHA defines "interstate off-track wager" as a "legal wager placed or accepted in one state with respect to the outcome of a horse race taking place in another (state)." The U.S. Court of Appeals for the 6th Circuit determined that a wager must indeed be legal under state law and contemplates a three-state scenario where a bet is I) placed in one state on II) a horse race in a second state and III) accepted in a third state (in this case, Oregon).
The IHA specifically sets forth three parties who must consent for legal interstate wagering: the live (or host) racetrack, the live (or host) racing regulator, and the regulator where the bet is accepted. Focusing on the third prong of consent—where a wager is accepted—the court determined that Michigan could not add an additional Michigan-specific consent that effectively interferes with out-of-state activity. And in doing so, Michigan "intruded into the federal scheme" and "stands as an obstacle to the accomplishment" of Congress' objectives.
There has long been an unsettled question of where exactly a bet is accepted. This court made it clear that an ADW wager is accepted where the ADW hub is located (in this case, Oregon), and not where the bettor is located (in this case, Michigan).
Relying on the federal concept of conflict preemption rather than field preemption (which the lower court used), the appeals court ruled that Michigan could not effectively add a fourth consent requirement to the three consents specifically set forth under the federal IHA. The court held that the IHA preempted additional state consent requirements even though the regulation of gambling is generally reserved to the states under state police power. In this instance, where the federal act clearly sets forth a process for accepting interstate wagers, the supremacy clause dictates that the states follow the federal act and not add more onerous state requirements.
The court clarified that the state police power applies to matters within a state's border. The court said that state police power gives the states responsibility for what forms of gambling take place within their borders, but cannot interfere with interstate wagering.
While numerous horse racing states require out-of-state ADWs to obtain licenses to operate in their states and accept wagers from their residents, a handful of states, in addition to Michigan, have an additional requirement that "poses an obstacle" to the IHA. Michigan requires that the ADW enter into an agreement with a Michigan in-state racetrack licensee in order to take wagers from Michigan state residents on out-of-state races. California and Arizona have similar requirements. The court described Michigan's efforts as "tailor-made additions to the IHA" and held that these additional requirements are not permitted.
Of note, similar preemption arguments are also at the heart of the series of prediction market cases proceeding now in multiple jurisdictions (Kalshi Acts Swiftly Across Pending Litigation After Adverse Maryland Ruling and Inside the Kalshi Legal Drama with IMGL's Marc Dunbar). Kalshi is a prediction market platform currently fighting multiple lawsuits across the United States.
The main issue in these prediction market cases is whether "event contracts," which often involve sports outcomes, are federally regulated financial instruments or unlicensed, illegal sports betting subject to state regulation. Kalshi is licensed federally by the Commodity Futures Trading Commission and therefore argues it is exclusively under federal jurisdiction and therefore argues it is not required to obtain state-by-state sports betting licenses. To date, Kalshi has been successful in obtaining injunctions in several jurisdictions, with a loss in Maryland.
ADW providers hold "multi-state jurisdictional hub licenses" in either Oregon or North Dakota and are taxed and regulated in these states. However, many states have moved to require ADWs to also become licensed in their individual states in order to take wagers from residents of those states. These state-specific licenses are burdensome in time and paperwork and add to the cost of operating an ADW by requiring that the ADW pay not only annual licensing and investigative fees but a percentage of revenue and/or taxes to these individual states.
In the 6th Circuit decision, the court stated that TwinSpires is "likely to show that the IHA preempts Michigan's licensing requirement." It is unclear if the court was referring to the requirement of ADWs to obtain additional individual state licenses in order to operate there or if the reference was to the additional in-state racetrack agreement. If the court holds that requiring state-by-state licenses violates the IHA, in the context of preemption, the impact on regulators would be significant in that the states would lose substantial revenue in the form of licensing fees and taxes. Beyond that, each state varies in how it allocates the money it receives from ADW operators, but in most states, this would translate to reduced purses and breeders' awards.
Churchill's counsel raised the argument that under the IHA, the state where the bet is placed (where the bettor is physically located) is irrelevant and went so far as to take the position in Oct. 23, 2025, oral arguments that ADWs should be able to take wagers from all states, even in states such as Utah that ban pari-mutuel wagering. The court did not appear to agree, responding that individual states are still able to ban in-state wagering or set limits that apply only to their residents, such as age of participation.
The injunction remains in place in Michigan, and TwinSpires may continue to accept wagers from Michigan residents as the case proceeds. The outcome of this case stands to have a significant impact on state regulators, racetracks, horsemen, and purses beyond Michigan.
The case will now be remanded to the trial court for case management and scheduling, with a trial likely to occur in the third quarter of this year. Cases such as these typically require years to be resolved in the applicable circuit court of appeals, but a case with this national significance may wind up before the Supreme Court of the United States for ultimate resolution.
An expert in equine, racing, and gaming law, Laura D'Angelo is a partner in the corporate practice group and member of the gaming industry team for Jones Walker.
