A CONSTITUTIONAL "INQUIRY" INTO THE TEXAS RACING ACT: THE PHYSICAL PRESENCE REQUIREMENT FOR WAGERING & THE DORMANT COMMERCE CLAUSE

Note Written By: Amanda Stubblefield

With the advent of the commercial Internet, there came a fundamental transformation in the United States' economy. In 2010, "ecommerce grew faster on a year-to-year percentage change basis than total economic activity." This growth in e-commerce also holds true in the horseracing industry. With advance-deposit wagering (ADW) comprising a larger portion of the betting industry, companies are more aware of the importance of offering their ADW systems to as many potential customers as possible. Companies operating ADW systems must navigate inconsistent state regulations. Challenges to a state law that regulates gambling on the Internet can culminate in a multitude of potential legal quandaries, including: constitutional issues; the perplexity of applying legal doctrines to the Internet; and federalism concerns. Legal scholars have often said that the Dormant Commerce Clause, when combined with state laws that regulate the Internet, is "a nuclear bomb of legal theory." This statement is particularly true when the Dormant Commerce Clause, the Internet, and the traditional state police power to regulate gambling converge.

Part I of this note discusses the various federal laws which relate to online pari-mutuel wagering. Part II outlines the Commerce Clause and its dormant application. Parts III and IV provide an in-depth examination of the dormant Commerce Clause doctrine and its application in cases involving the Internet and gambling. Part V demonstrates the convergence of these complex legal analyses in Churchill Downs Inc. v. Trout. Finally, Part VI recommends a proper resolution to the Churchill Downs case and proposes a course for future regulation of the horseracing industry and parimutuel wagering.

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