The legal dispute involving Kentucky Derby-owner Churchill Downs Inc. and Michigan gaming regulators is scheduled to drag on well after the 151st Run for the Roses has ended.
Key Insights
- A legal fight over TwinSpires taking online bets on horse racing in Michigan is poised to continue for the foreseeable future.
- TwinSpires, a subsidiary of Kentucky Derby-owner Churchill Downs, has so far prevailed in court, allowing it to keep taking bets from Michigan residents.
- That means wagering on this Saturday's Kentucky Derby will be available in Michigan via TwinSpires.
In February, a federal judge in Michigan sided with Churchill Downs' TwinSpires subsidiary, granting the online racebook operator a preliminary injunction against Michigan authorities seeking to enforce local law and licensing requirements.
The Michigan Gaming Control Board (MGCB) and others were also blocked from hitting TwinSpires with sanctions over what the state alleges is the ongoing offering of unauthorized horse race betting by the online gambling operator.
Earlier this month, the same judge for the U.S. District Court for the Western District of Michigan denied the state's motion to stay the preliminary injunction, which means TwinSpires can still take bets in Michigan on this Saturday's Kentucky Derby.
“The [federal Interstate Horseracing Act] requires certain entities to consent to interstate wagers, and no other regulation should interfere with the system that the IHA establishes,” Chief U.S. District Judge Hala Jarbou wrote on April 18. “That prohibition on ‘other’ supervision or regulation over interstate off-track wagers applies to the [Michigan Horse Racing Law]; the IHA establishes the exclusive regulatory framework for the limited area of interstate off-track wagers on horse races, and the MHRL cannot supplement or supplant it.”
The case is still ongoing, even if Michigan has been thwarted from shutting TwinSpires down in the state thus far. The company is seeking a permanent injunction from the court and declarations that Michigan’s licensing requirements are unconstitutional.
Michigan is also appealing the preliminary injunction to the U.S. Court of Appeals for the Sixth Circuit in Cincinnati. According to the appeals court docket, the first brief in the matter must be filed by May 12.
Open for Derby business
All of the above means it’s unlikely that the contentious legal battle between the two sides will be settled before this year's Kentucky Derby. It also means TwinSpires users in Michigan can wager on Kentucky Derby odds using the platform.
The dispute broke into public view in January, when the MGCB announced it was summarily suspending TwinSpires' license to operate advance deposit wagering (ADW) on horse racing.
According to the MGCB, the state’s horse racing law requires ADW wagering to be tied to a live race meet and a licensed track, and there were none at the time. Three other ADW operators hit the pause button on their Michigan business at the MGCB's urging, including FanDuel Racing, but TwinSpires did not.
TwinSpires then turned to the courts and sued. The company alleged Michigan’s efforts violated the U.S. Constitution because the federal Interstate Horseracing Act (IHA) preempts the local legal requirement to partner with a track for a so-called “third-party facilitator” license.
We got all the permission we need, thanks
In February, Chief Judge Jarbou sided with TwinSpires and granted a preliminary injunction. In doing so, though, the judge shed further light on why the ongoing battle is being watched beyond Michigan’s borders.
In short, TwinSpires believes it has all the necessary permissions under federal law to take bets in Michigan on races run outside of the state, such as the Kentucky Derby. Those permissions include one from Oregon, where TwinSpires’ wagering “hub” is based. If that hub were in Michigan, or if a horse race people want to wager on is in Michigan, TwinSpires would likely have to knock it off.
“When someone in Michigan places a wager on an out-of-state race, and they place this wager through an off-track betting system that accepts the wager out of state, under the IHA, the off-track betting system needs consent from the racetrack, the regulating entity in the racetrack’s state, and the regulating entity in the state where the system accepted the wager, not the MGCB,” Judge Jarbou wrote on Feb. 19.
“By requiring a third-party facilitator license for such transactions, Michigan has acted contrary to the IHA. The Executive Director’s attempt to force TwinSpires to obtain a license before accepting bets of this nature is unconstitutional, akin to adding an additional consent to the IHA’s exclusive process.”
Judge Jarbou provided another succinct explanation in the April 18 decision denying Michigan’s attempt to stay the preliminary injunction: “For races that take place outside of Michigan, TwinSpires does not need MGCB consent.”
The 151st Kentucky Derby was already facing the tough comp of the 150th Kentucky Derby, but this year's Run for the Roses also has some persistent economic dread looming over it:https://t.co/ujCizHhbdY @Covers
— Geoff Zochodne (@GeoffZochodne) April 30, 2025
The constitutional questions and TwinSpires’ ongoing refusal to bow to a regulator mean the case could have consequences in other states. For example, the matter has been publicly noted in Massachusetts by the local sports betting, horse racing, and casino gambling regulator.
"Chief Judge Jarbou’s opinion is a thoughtful and carefully reasoned decision that upholds the framework Congress established for interstate wagering on horse races," said Brad Blackwell, executive vice president and general counsel at Churchill Downs, in a statement to Covers in February. "We are pleased with the court's ruling and the guidance it will provide to courts throughout the country."
Churchill Downs also noted the dispute in its most recent quarterly financial results, which were reported last week.
During the company’s conference call with analysts and investors, CDI chief financial officer Marcia Dall said their TwinSpires horse-racing business saw an increase in revenue and a “modest” decline in adjusted EBITDA in the first quarter.
This was, Dall said, primarily because of “incremental legal expenses related to our legal team's successful outcome regarding TwinSpires’ right to accept horse racing wagers in the state of Michigan.”
