Monarch Content Management LLC v. Arizona Department of Gaming, No. 20-15047 (9th Cir. 2020)
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The Ninth Circuit affirmed the district court's denial of a preliminary injunction in an action challenging Arizona Revised Statute 5-112(U). Section 5-112(U) requires, among other things, that any simulcast of live horseracing into Arizona that originates outside the state "must be offered to each commercial live-racing permittee … and additional wagering facility" in the state.
The panel held that the Interstate Horse Racing Act of 1978 (IHA) does not preempt section 5-112(U). The panel also held that Monarch, a simulcast purchaser and sales agent for racetracks, and Laurel Park, a Maryland racetrack whose races Monarch simulcasts, had not shown a likelihood of success on the merits of their claims. The panel explained that the IHA does not address how the states can regulate simulcasts, and the Arizona statute does not address Laurel Park's statutory right to consent before interstate wagering on its races can be conducted. Therefore, it is not facially impossible to comply with both laws. Furthermore, the Arizona statute does not frustrate the intent of the IHA.
The panel rejected plaintiffs' contention that section 5-112(U) is an unconstitutional regulation on commercial speech and a forbidden content-based restriction; rejected plaintiffs' Fourth Amendment and Due Process challenges; held that the Arizona statute does not violate the Dormant Commerce Clause; and held that the statute did not give rise to a Contract Clause claim.
Court Description: Civil Rights. The panel affirmed the district court’s denial of a preliminary injunction in an action challenging Arizona Revised Statute § 5-112(U), which requires, among other things, that any simulcast of live horseracing into Arizona that originates outside the state “must be offered to each commercial live-racing permittee … and additional wagering facility” in the state. The panel held that plaintiffs, Monarch Content Management, a simulcast purchaser and sales agent for racetracks, and Laurel Park Racing Association, a Maryland racetrack whose races Monarch simulcasts, had not shown a likelihood of success on the merits of their claims. * The Honorable Consuelo B. Marshall, United States District Judge for the Central District of California, sitting by designation. MONARCH CONTENT MGMT. V. ARIZ. DEP’T OF GAMING 3 The panel first held that that the Interstate Horse Racing Act of 1978, 15 U.S.C. §§ 3001-3007 (“IHA”), pertaining to interstate horserace wagering at off-track sites, did not preempt § 5-112(U). The panel determined that on their faces, the IHA and the Arizona statute regulated different actors and activities. The IHA did not address how the states can regulate simulcasts, and the Arizona statute did not address Laurel Park’s statutory right to consent before interstate wagering on its races could be conducted. Thus, it was not facially impossible to comply with both laws. The panel further rejected plaintiffs’ argument that A.R.S. § 5- 112(U), frustrates the intent of the IHA. The panel rejected plaintiffs’ argument that A.R.S. § 5- 112(U) is an unconstitutional regulation on commercial speech and a forbidden content-based restriction. The panel assumed arguendo that Monarch’s simulcasts were expressive in certain respects. The panel held, however, that the Arizona statute did not regulate that expressive content, but rather only Monarch’s conduct—the “offer” to sell simulcasts to live-racing permittees and off-track betting sites. The statute’s requirement that Monarch must make simulcasts available on equal terms was plainly incidental to the statute’s focus on Monarch’s non-First Amendment business practices. The panel rejected plaintiffs’ Fourteenth Amendment Due Process challenge. The panel held that because A.R.S. § 5-112(U) did not regulate speech, a less strict vagueness test applied. The panel noted that under the statute, Monarch’s wish to offer its simulcasts to some live-racing permittees and off-track betting sites in Arizona, but not to others was plainly proscribed. The panel further found A.R.S. § 5-112(U)’s language prohibiting “any 4 MONARCH CONTENT MGMT. V. ARIZ. DEP’T OF GAMING anticompetitive or deceptive practice” to be constitutionally sufficient. The panel held that the statute did not violate the Dormant Commerce Clause. The panel stated that Arizona treats out-of-state simulcast providers exactly the same as in- state providers. The statute does not regulate extraterritorially; it merely sets the terms of doing business if Monarch chooses to provide simulcasts in the state. Finally, the panel held that the statute did not give rise to a Contract Clause claim. The panel concluded that nothing on the face of the Arizona statute affects whatever rights Monarch may have to terminate its contract with Turf Paradise, a live-racing permittee in Arizona; the statute regulates only the offering of simulcasts, not termination of contracts.
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