Justia Government & Administrative Law Opinion Summaries

KalshiEX LLC operates a federally licensed designated contract market (DCM) that allows users to trade event contracts, including those based on sports outcomes. In late 2024, after Kalshi began offering sports-related event contracts similar to those offered by a competitor, New Jersey issued a cease-and-desist letter. The state asserted that Kalshi’s activities violated the New Jersey Constitution and state gambling laws, particularly regarding betting on collegiate sports, and threatened legal action with significant penalties if Kalshi continued its operations within New Jersey.In response, Kalshi initiated proceedings in the United States District Court for the District of New Jersey, seeking a preliminary injunction to prevent enforcement of New Jersey’s gambling laws against its federally regulated contracts. The District Court granted the injunction, finding that Kalshi had a reasonable likelihood of success on the merits, would suffer irreparable harm without relief, and that the public interest favored enjoining enforcement of potentially preempted state law. New Jersey appealed this decision.The United States Court of Appeals for the Third Circuit reviewed the District Court’s factual findings for clear error, legal conclusions de novo, and the decision to grant the preliminary injunction for abuse of discretion. The Third Circuit affirmed the District Court’s order. The appellate court held that the Commodity Exchange Act (CEA) grants the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over swaps, including sports-related event contracts traded on CFTC-licensed DCMs. Both field and conflict preemption principles bar New Jersey from enforcing its gambling laws against these contracts. The court concluded that Kalshi demonstrated a likelihood of success on the preemption claim, irreparable harm in the absence of an injunction, and that the equities and public interest favored injunctive relief. Accordingly, the court affirmed the preliminary injunction. View "Kalshiex LLC v. Flaherty" on Justia Law

A federally recognized tribe, which operates casinos under a tribal-state compact allowing video games of chance, objected when the Minnesota Racing Commission approved a 2023 amendment to a racetrack’s card club plan. This amendment allowed Running Aces Casino, Hotel & Racetrack to add an additional dealer table and 11 player stations featuring electronic table games. These electronic games use a live dealer and transmit images of physical cards to player stations, where patrons interact via video screens. Minnesota law limits commercial operation of such gambling devices and video games of chance to tribes and restricts the number of card tables at racetrack card clubs. The tribe argued that the Commission’s approval constituted an unlawful expansion of gambling, infringing upon its statutorily protected competitive environment.After the Racing Commission approved Running Aces’s request, the tribe petitioned the Minnesota Court of Appeals for review. The tribe contended that the Commission erred by permitting racetracks to operate devices reserved for tribes, by exceeding the statutory table limit, and by applying an unpromulgated rule. The Racing Commission and Running Aces challenged the tribe’s standing. The Minnesota Court of Appeals concluded that the tribe had standing due to its legally protected market-restricted interest, but rejected its arguments on the merits, affirming the Commission’s decision.On further appeal, the Minnesota Supreme Court reviewed the issue of standing de novo and held that the tribe does have standing to challenge the Commission’s decision, as the statutory scheme creates a competition-restricted environment protecting the tribe’s interest in operating video games of chance. However, because the Supreme Court was evenly divided on the merits of the tribe’s challenge to the Commission’s decision, it affirmed the Court of Appeals’ decision without expressing an opinion on those merits. View "In the Matter of the Minnesota Racing Commission's Approval of Running Aces Casino, Hotel & Racetrack's Request to Amend its Plan of Operation" on Justia Law

TwinSpires, an Oregon-based electronic wagering platform, facilitates interstate betting on horseraces. Under the federal Interstate Horseracing Act (IHA), such betting is lawful if the operator obtains consent from both the state where the bet is accepted and the state where the race occurs, as well as the relevant racetrack. Michigan, however, enacted a law requiring additional state-specific licensing for platforms like TwinSpires to accept bets from Michigan residents. After TwinSpires partnered with Michigan’s only racetrack and obtained the requisite license, its license was suspended when the racetrack temporarily lost its own license. Even after the racetrack’s license was restored, Michigan maintained the suspension of TwinSpires’ license, prompting the company to sue, arguing that Michigan’s requirements conflicted with the IHA.The United States District Court for the Western District of Michigan granted a preliminary injunction, preventing Michigan from enforcing its licensing requirements against TwinSpires. The district court found that the IHA preempted Michigan’s additional licensing regime, concluding that TwinSpires was likely to succeed on the merits of its preemption claim and that other injunction factors favored TwinSpires.The United States Court of Appeals for the Sixth Circuit reviewed the preliminary injunction for abuse of discretion, applying de novo review to legal conclusions and clear error review to factual findings. The Sixth Circuit affirmed the district court’s order, holding that the IHA conflict-preempts Michigan’s licensing requirement for interstate wagering platforms. The court concluded that Michigan’s law imposed an additional regulatory hurdle beyond what the IHA requires, interfering with the federal scheme and frustrating Congress’s intended objectives. The court also found that the remaining factors for a preliminary injunction—irreparable harm, balance of equities, and public interest—favored TwinSpires. View "Churchill Downs Tech. Initiatives Co. v. Mich. Gaming Control Bd." on Justia Law

Several applicants sought licenses to operate video gaming terminals under Pennsylvania's Video Gaming Act, which requires applicants to demonstrate "good character, honesty, and integrity." The Pennsylvania Gaming Control Board denied the applications of Todd Teitelbaum, Michael Brozzetti, and Frank Brozzetti, citing their involvement in the skill games industry, which the Board viewed as unregulated and problematic. The Board's decision was based on general criticisms of the skill games industry, including the lack of regulatory safeguards and the economic impact on casinos and the lottery.The Commonwealth Court reviewed the Board's decision and reversed it, finding that the Board's rationale was insufficient. The court noted that the Board's decision relied solely on generalizations about the skill games industry and did not provide specific evidence regarding the applicants' personal character, honesty, or integrity. The court highlighted the absence of any criminal convictions, tax evasion, connections to organized crime, or other nefarious conduct by the applicants. The Commonwealth Court concluded that the Board's decision was arbitrary and an abuse of discretion.The Supreme Court of Pennsylvania reviewed the case and agreed with the Commonwealth Court that the Board's decision was arbitrary and capricious. The Supreme Court noted that the Board failed to provide specific evidence regarding the applicants' personal qualities and relied solely on general criticisms of the skill games industry. However, the Supreme Court vacated the Commonwealth Court's order to issue the licenses, remanding the case to the Board for further consideration of the applications without directing any particular outcome. The Supreme Court emphasized that the Board's discretion is not absolute and must be based on reason and specific evidence related to the applicants. View "Brozzetti v. PGCB" on Justia Law

Four Native American tribes operating casinos in Oklahoma filed a federal lawsuit in August 2020 to invalidate certain tribal-gaming compacts entered into by the Governor of Oklahoma and other tribes. These compacts were approved by the U.S. Secretary of the Department of the Interior by operation of law. The tribes argued that the Governor lacked the authority to enter into these compacts, violating Oklahoma law and their rights under the Indian Gaming Regulatory Act (IGRA).The Governor, represented by private counsel, defended the compacts' validity under federal law, arguing that any provisions violating state law could be severed. In July 2023, the Oklahoma Attorney General filed a notice to assume control of the state's defense, asserting that the compacts were invalid under state law. The Governor moved to strike the Attorney General's appearance, arguing that he had the authority to retain counsel and that the Attorney General could not override this.The United States District Court for the District of Columbia certified a question to the Supreme Court of Oklahoma regarding whether the Attorney General could assume control of the defense over the Governor's objection. The Supreme Court of Oklahoma held that the Attorney General could not take control of the defense in this case. The court emphasized the Governor's constitutional role as the "Supreme Executive" with the authority to select and direct counsel for the state's interests. The court also noted that the Attorney General could appear in the case but could not override the Governor's choice of counsel. View "CHEROKEE NATION v. UNITED STATES DEPARTMENT OF THE INTERIOR" on Justia Law

Lucky Chances, Inc. and its owners, Rommel and Ruell Medina, had their gambling licenses renewed by the California Gambling Control Commission with additional conditions. The Commission also imposed a 14-day suspension, stayed it, and ordered a monetary penalty based on findings that Rene Medina, a disqualified person, was materially involved in the gambling operation. The trial court issued a writ of administrative mandamus, ordering the Commission to reconsider the penalty, limiting it to $20,000 per violation.The Superior Court of Sacramento County found substantial evidence supporting the Commission's finding of Rene's material involvement but ruled that the monetary penalty exceeded statutory limits. The court ordered the Commission to set aside the penalty and reconsider it in light of the court's decision.The California Court of Appeal, Third Appellate District, reviewed the case. The court concluded that the Commission was authorized to impose additional license conditions based on its findings. However, it determined that the Commission could not use California Code of Regulations, title 4, section 12554, subdivision (d) to impose discipline because the Commission did not find that the Licensees violated any relevant law, regulation, or previously imposed license condition.The Court of Appeal modified the judgment to order the Commission to reconsider the discipline imposed under California Code of Regulations, title 4, section 12554, subdivision (d) in a manner consistent with its opinion. The judgment, as modified, was affirmed, and costs on appeal were awarded to Lucky Chances, Inc., Rommel Medina, and Ruell Medina. View "Lucky Chances, Inc. v. Cal. Gambling Control Com." on Justia Law

Lucky Chances, Inc., Rommel Medina, and Ruell Medina (collectively, Licensees) had their gambling licenses renewed by the California Gambling Control Commission (Commission) with additional conditions. The Commission also imposed a 14-day suspension, stayed it, and ordered a monetary penalty based on findings that Rene Medina, a disqualified person, was materially involved in their gambling operation. The trial court issued a writ of administrative mandamus, ordering the Commission to reconsider the penalty, limiting it to $20,000 per violation.The Licensees appealed, arguing that the imposition of any discipline was unauthorized. The Commission cross-appealed, contending the trial court misinterpreted the relevant regulations and statutes. The Court of Appeal of the State of California, Third Appellate District, reviewed the case.The appellate court concluded that the Commission was authorized to impose additional license conditions based on its findings. However, it determined that the Commission could not use California Code of Regulations, title 4, section 12554, subdivision (d) to impose discipline because the Commission did not find that the Licensees violated any relevant law, regulation, or previously imposed license condition. The court modified the judgment to order the Commission to reconsider the discipline imposed in a manner consistent with its opinion and affirmed the judgment as modified. View "Lucky Chances, Inc. v. Cal. Gambling Control Com." on Justia Law

KalshiEx LLC, a regulated commodities exchange, sought to offer "Congressional Control Contracts" allowing individuals to bet on the outcome of the November 2024 congressional elections. The Commodity Futures Trading Commission (CFTC) prohibited these contracts, arguing they constituted gaming or election gambling, which is illegal in many states. Kalshi challenged this decision under the Administrative Procedure Act, claiming the CFTC's determination was arbitrary and capricious.The U.S. District Court for the District of Columbia ruled in favor of Kalshi, finding that the CFTC erred in categorizing the contracts as gaming or gambling. The court vacated the CFTC's decision, reasoning that the term "gaming" did not apply to election contracts and that the contracts did not involve illegal activity under state law. The CFTC then sought a stay of the district court's judgment while it pursued an appeal.The United States Court of Appeals for the District of Columbia Circuit reviewed the CFTC's emergency motion for a stay pending appeal. The court denied the motion, concluding that the CFTC failed to demonstrate that it or the public would suffer irreparable harm without a stay. The court noted that the CFTC's concerns about potential harms, such as market manipulation and threats to election integrity, were speculative and not substantiated by concrete evidence. The court left open the possibility for the CFTC to renew its stay request if more concrete evidence of irreparable harm emerged during the appeal. The administrative stay was dissolved. View "KalshiEX LLC v. CFTC" on Justia Law

In 2020, a federal grand jury indicted David DeQuattro, an architect, and Cedric Cromwell, Chairman of the Mashpee Wampanoag Tribal Council and President of the Mashpee Wampanoag Gaming Authority. They were charged with various federal offenses, including bribery and extortion, related to Cromwell allegedly soliciting and DeQuattro allegedly providing checks and other items of value to protect a contract between DeQuattro's firm and the Gaming Authority for building a casino on tribal land.The United States District Court for the District of Massachusetts held a jury trial where DeQuattro was convicted of one count of federal-program bribery, and Cromwell was convicted of two counts of federal-program bribery and multiple counts of Hobbs Act extortion. However, the District Court later entered a judgment of acquittal on the Hobbs Act-related counts, determining that the Hobbs Act did not clearly abrogate tribal immunity. Both defendants appealed their § 666 convictions, and the government cross-appealed the judgment of acquittal on the Hobbs Act counts.The United States Court of Appeals for the First Circuit reviewed the case. The court reversed both the § 666 convictions and the judgment of acquittal. The court found that the evidence did not suffice to show that the RGB contract was "business" of the Tribe, as required under § 666, because the Gaming Authority, which entered the contract, was a separate legal entity from the Tribe and received almost all its funding from a third party. The court also reversed the District Court's judgment of acquittal on the Hobbs Act convictions, holding that tribal officials do not enjoy immunity from federal criminal prosecution and that the evidence was sufficient to show Cromwell's intent to engage in a quid pro quo arrangement. The case was remanded for further proceedings consistent with this opinion. View "United States v. Dequattro" on Justia Law

A patron at Encore Boston Harbor Casino challenged the casino's practice of redeeming slot-machine tickets. When patrons finish using a slot machine, they receive a TITO ticket, which can be redeemed for cash. The casino offers two redemption options: cashier cages, which provide full cash value, and self-serve kiosks (TRUs), which dispense only bills and issue a TRU ticket for any remaining cents. The TRU ticket can be redeemed at the cashier cage or used in another slot machine. The plaintiff argued that this practice was unfair and deceptive, violating Massachusetts regulations and consumer protection laws.The case was initially filed in Massachusetts state court and then removed to federal court. The district court dismissed the plaintiff's unjust enrichment claim, ruling that an adequate legal remedy was available under Chapter 93A. The court later granted summary judgment in favor of the defendants on the remaining claims, including breach of contract, promissory estoppel, conversion, and unfair and deceptive business practices. The court found that the casino's practice did not violate its internal controls or Massachusetts regulations and that the plaintiff failed to show the practice was unfair or deceptive.The United States Court of Appeals for the First Circuit reviewed the case. The court affirmed the district court's dismissal of the unjust enrichment claim, agreeing that Chapter 93A provided an adequate legal remedy. The court also upheld the summary judgment on the remaining claims, concluding that the casino's practice of issuing TRU tickets for cents did not violate regulations or constitute unfair or deceptive practices. The court found no evidence that the practice was immoral, unethical, oppressive, or unscrupulous, and ruled that the plaintiff's common law claims also failed. View "Schuster v. Wynn Resorts Holdings, LLC" on Justia Law