1996 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

2-13-1996

McLean v. Reno

Precedential or Non-Precedential:

Docket 95-7137

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Recommended Citation

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1 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

___________ 

No. 95-7137 

___________ 

PIC-A-STATE PA, INC., 

SCOTT McLEAN, 

 Appellants 

v. 

JANET RENO, in her official capacity as 

Attorney General of the United States of America; 

THE UNITED STATES DEPARTMENT OF JUSTICE; 

THE UNITED STATES OF AMERICA 

_______________________________________________ 

On Appeal from the United States District Court 

for the Middle District of Pennsylvania 

(D.C. Civil Action No. 94-cv-01490) 

___________________ 

Argued November 13, 1995 

Before: BECKER and SCIRICA, Circuit Judges

and COHILL, District Judge* 

(Filed February 13, l996) 

 MICHAEL A. FINIO, ESQUIRE (ARGUED) 

 Saul, Ewing, Remick & Saul 

 240 North Third Street, Suite 700 

 P.O. Box 1291 

 Harrisburg, Pennsylvania 17101 

 WILLIAM M. JANSSEN, ESQUIRE 

 Saul, Ewing, Remick & Saul 

 3800 Centre Square West 

 Philadelphia, Pennsylvania 19102 

 Attorneys for Appellants 

 
2 

*The Honorable Maurice B. Cohill, Jr., United States District 

Judge for the Western District of Pennsylvania, sitting by 

designation. 
3 

 MATTHEW M. COLLETTE, ESQUIRE (ARGUED) 

 MARK B. STERN, ESQUIRE 

 United States Department of Justice 

 Civil Division, Appellate Staff 

 10th & Pennsylvania Avenue, N.W. 

 Washington, D.C. 20530-0001 

 Attorneys for Appellees 

__________________ 

OPINION OF THE COURT 

__________________ 

SCIRICA, Circuit Judge. 

 Pic-A-State Pa., Inc. brings a Commerce Clause 

challenge to the Interstate Wagering Amendment, which amended 18 

U.S.C. § 1301 (1994) by prohibiting the transmission in 

interstate commerce of information to be used for the purpose of 

procuring a lottery ticket. Because the Amendment regulates an 

activity affecting interstate commerce and rationally relates to 

the goals articulated by Congress, we hold the Amendment was a 

constitutional exercise of Congress' power to legislate under the 

Commerce Clause. 

I. FACTS AND PROCEDURAL HISTORY 

 Congress has restricted interstate traffic in lottery 

tickets for over a century. See generally United States v. Edge 

Broadcasting Co., 113 S. Ct. 2696 (1993); see also Act of July 

12, 1876, ch. 186, § 2, 19 Stat. 90; Anti-Lottery Act of 1890, 

ch. 908, § 1, 26 Stat. 465. Title 18 U.S.C. § 1301, the current 

prohibition on interstate traffic in lottery tickets, was enacted 
4 

by Congress in 1895. Before amendment by the Interstate Wagering 

Amendment, § 1301 provided: 

Whoever brings into the United States for the 

purpose of disposing of the same, or 

knowingly deposits with any express company 

or any common carrier for carriage, or 

carries in interstate or foreign commerce any 

paper, certificate, or instrument purporting 

to be or to represent a ticket, chance, 

share, or interest in or dependent upon the 

event of a lottery, gift enterprise, or 

similar scheme, offering prizes dependent in 

whole or part upon lot or chance, or any 

advertisement of, or list of prizes drawn or 

awarded by means of, any such lottery, gift 

enterprise, or similar scheme; or knowingly 

takes or receives any such paper, 

certificate, instrument, advertisement, or 

list so brought, deposited or transported, 

shall be fined not more than $1,000 or 

imprisoned not more than two years, or both. 

Act of March 2, 1895, 28 Stat. 963; 18 U.S.C. § 1301 (1988). 

 Pic-A-State Pa., Inc. is a Pennsylvania corporation 

that was engaged in the business of taking orders for, and 

purchasing, out-of-state lottery tickets on behalf of customers. 

Pic-A-State's operations were designed to avoid the longstanding 

prohibition on the interstate traffic in lottery tickets by 

keeping the tickets themselves in the state of origin and 

transferring only a computer-generated "receipt" to the customer. 

 The Commonwealth of Pennsylvania tried repeatedly to 

put a stop to Pic-A-State's operations. In 1993, the 

Pennsylvania legislature passed Act 8 of 1993, which prohibited 

the sale of any interest in another state's lottery. 72 Pa. 

Stat. Ann. § 3761-9(c) (1995). Pic-A-State challenged this 

legislation in federal court on dormant Commerce Clause grounds, 
5 

and the statute was struck down by the district court. Pic-AState Pa. v. Pennsylvania, No. 93-0814 (M.D. Pa. July 23, 1993). 

On appeal, we reversed citing an intervening change in federal 

law, the Interstate Wagering Amendment, which made the 

Pennsylvania statute fully consistent with federal law and not 

unduly burdensome on interstate commerce. Pic-A-State Pa. v. 

Pennsylvania, 42 F.3d 175, 178-80 (3d Cir. 1994) ("Pic-A-State 

I"). 

 The Interstate Wagering Amendment amended 18 U.S.C. 

§1301 by providing that, in addition to § 1301's extant 

prohibition on the transfer in interstate commerce of any lottery 

ticket, any person who: 

being engaged in the business of procuring 

for a person in 1 State such a ticket, 

chance, share, or interest in a lottery, 

gift, enterprise or similar scheme conducted 

by another State (unless that business is 

permitted under an agreement between the 

States in question or appropriate authorities 

of those States), knowingly transmits in 

interstate or foreign commerce information to 

be used for the purpose of procuring such a 

chance, share or interest; . . . shall be 

fined not more than $1,000 or imprisoned not 

more than two years, or both. 

Violent Crime Control and Law Enforcement Act of 1994, Pub. L. 

No. 103-322, § 320905, 108 Stat. 2126, 2147 (emphasis added). 

This Amendment was explicitly intended to prohibit Pic-A-State's 

line of business. 

 Senator Arlen Specter of Pennsylvania was the primary 

sponsor of the Interstate Wagering Amendment. He explained that 

"current law prohibit[s] interstate transfer of lottery 

tickets . . . . However, due to advances in communication 
6 

technologies, current law does not accomplish its intended 

goals." 139 Cong. Rec. S15247. He also noted the district 

court's decision in Pic-A-State Pa. v. Pennsylvania, No. 93-0814 

(M.D. Pa. July 23, 1993), allowed "the sale of interests in outof-state lottery tickets via computer transaction with no paper 

crossing state lines." Id. The Amendment was designed to close 

this "loophole." Id.

 Senator Specter identified two other purposes for the 

Interstate Wagering Amendment. First, that the Amendment was 

necessary to preserve "the right of a State to regulate lottery 

[sic] and gambling within its borders." Id. He stated, "Federal 

laws should continue to limit the proliferation of interstate 

gambling to preserve the sovereignty of States that do not permit 

certain forms of gambling." Id. Second, that businesses such as 

Pic-A-State's would "undermine [the states'] ability to realize 

projected revenues." Id. Senator Joseph Biden echoed Senator 

Specter's concerns, noting the interstate sale of interests in 

lottery tickets "hurts the operation of lotteries in smaller 

States." Id.

 Three days after the Interstate Wagering Amendment was 

signed into law, Pic-A-State filed this suit seeking injunctive 

relief and a declaratory judgment that the Amendment was 

unconstitutional. The district court dismissed Pic-A-State's 

complaint, finding no merit in any of its arguments. Pic-A-State 

Pa. v. Reno, No. 94-1490 (M.D. Pa. Feb. 23, 1995). Since passage 

of the Amendment, Pic-A-State has terminated its business. 
7 

 We have jurisdiction to review the district court's 

final judgment dismissing the action under 28 U.S.C. § 1291 

(1988). "Our standard of review is plenary." Juzwin v. Asbestos 

Corp., 900 F.2d 686, 689 (3d Cir.), cert. denied, 498 U.S. 896 

(1990). 

II. RIPENESS, STANDING AND EQUITABLE RELIEF 

 As an initial matter, the Government disputes whether 

the district court had jurisdiction to hear this case under 28 

U.S.C. § 1331 (1988). Article III, section 2 of the United 

States Constitution requires an actual "controversy" for a 

federal court to have jurisdiction. U.S. Const. art. III, § 2. 

The Government argues no justiciable controversy exists because 

Pic-A-State has never been threatened with prosecution under 

amended § 1301. It asserts the controversy is not ripe, Pic-AState lacks standing, and Pic-A-State is not entitled to 

equitable relief.0 We will examine each of these contentions in 

turn. 

 A. Ripeness 

 In Abbott Lab. v. Gardner, 387 U.S. 136, 149 (1967), 

overruled on other grounds, Califano v. Sanders, 430 U.S. 99, 105 

(1977), and Pacific Gas & Elec. Co. v. State Energy Resources 

Conservation & Dev. Comm'n, 461 U.S. 190, 201 (1983), the Supreme 

 

0

 The concepts of standing and ripeness require related but 

distinct inquiries. "The ripeness doctrine is often confused 

with the standing doctrine. Whereas ripeness is concerned with 

when an action may be brought, standing focuses on who may bring 

a ripe action. Although these doctrines are analytically 

distinct, both have evolved from Article III's case or 

controversy requirement." Armstrong World Indus. v. Adams, 961 

F.2d 405, 411 n.13 (3d Cir. 1992) (citations omitted). 
8 

Court held that ripeness turns on "the fitness of the issue for 

judicial decision" and "the hardship to the parties of 

withholding court consideration." For declaratory judgments, we 

have refined this test because declaratory judgments are 

typically sought before a completed injury has occurred. In 

determining whether to engage in pre-enforcement review of a 

statute in a declaratory judgment action, we look, among other 

factors, to (1) the adversity of the parties' interests, (2) the 

conclusiveness of the judgment, and (3) the utility of the 

judgment. Freehold Cogeneration Assocs. v. Bd. Reg. Comm'rs, 44 

F.3d 1178, 1188 (3d Cir.), cert. denied, 116 S. Ct. 68 (1995); 

Step-Saver Data Systems, Inc. v. Wyse Technology, 912 F.2d 643, 

647 (3d Cir. 1990). After considering these factors, we believe 

this case presents a controversy ripe for resolution. 

1. Adversity of Interest 

 "For there to be an actual controversy the defendant 

must be so situated that the parties have adverse legal 

interests." Step-Saver, 912 F.2d at 648 (quoting 10A Charles 

Wright, Arthur Miller & Mary Kane, Federal Practice and Procedure

§ 2757, at 582-83 (2d ed. 1983)). Although Pic-A-State has not 

been prosecuted under the Interstate Wagering Amendment, the 

impact of the Amendment is sufficiently direct and immediate to 

create an adversity of interest between Pic-A-State and the 

Government. Not only has Pic-A-State terminated its business and 

suffered economic loss in response to the passage of the 

Amendment, but any further attempt to pursue its line of business 
9 

would risk serious criminal penalties.0 "Where the legal issue 

presented is fit for judicial resolution, and where a regulation 

requires immediate and significant change in the plaintiffs' 

conduct of their affairs with serious penalties attached to 

noncompliance, access to the courts . . . under the Declaratory 

Judgment Act must be permitted, absent a statutory bar or some 

other unusual circumstances." Abbott Lab. v. Gardner, 387 U.S. 

at 153.0

 

0

 At oral argument, the Government suggested that review of the 

Interstate Wagering Amendment was inappropriate because the 

federal government was unlikely to prosecute Pic-A-State. Even 

if Pic-A-State were to resume its business, the Government 

asserted, any prosecution would be brought by the Commonwealth of 

Pennsylvania under Act 8 of 1993. Although a prosecution by 

state authorities would raise serious prudential concerns that 

might call for our abstention, see Younger v. Harris, 401 U.S. 37 

(1971), we need not address this eventuality now. Furthermore, 

whether Pennsylvania has threatened to prosecute Pic-A-State is 

irrelevant to a possible federal prosecution under the amended 18 

U.S.C. § 1301. 

 The Government's argument would also place Pic-A-State 

in an untenable position. The district court found Act 8 to be 

unconstitutional under the dormant Commerce Clause in Pic-A-State 

Pa. v. Commonwealth of Pennsylvania, No. 93-0814 (M.D. Pa. July 

23, 1993). We reversed because the intervening passage of the 

Interstate Wagering Amendment made Act 8 consistent with federal 

law. Pic-A-State I, 42 F.3d 175, 178-80 (3d Cir. 1994). If the 

Interstate Wagering Amendment is unconstitutional, our decision 

in Pic-A-State I is of doubtful vitality and prosecution of PicA-State by Pennsylvania under Act 8 of 1993 would be suspect on 

dormant Commerce Clause grounds. Thus, regardless of whether 

Pic-A-State is prosecuted by state or federal authorities, the 

central issue in this case is the constitutionality of the 

Interstate Wagering Amendment. Yet the Government seeks to bar 

adjudication of this issue at this time. 

0

 Pic-A-State argues that under Babbitt v. United Farm Workers 

Nat'l Union, 442 U.S. 289 (1979), and Steffel v. Thompson, 415 

U.S. 452 (1974), "it is not necessary that petitioner first 

expose himself to actual arrest or prosecution to be entitled to 

challenge a statute that he claims deters the exercise of his 

constitutional rights." Steffel, 415 U.S. at 459. While this 

statement is undoubtedly true, we note both Babbitt and Steffel
10 

 Moreover, courts have found sufficient adversity 

between parties to create a justiciable controversy when suit is 

brought by the only plaintiff subject to regulation by an 

enactment. See, e.g., Illinois v. General Elec. Co., 683 F.2d 

206, 210 (7th Cir. 1982) ("as the Act has only one conceivable 

target . . . it is extremely unlikely that the state would 

overlook the violation," and the controversy is therefore ripe), 

cert. denied, 461 U.S. 913 (1983); Entertainment Concepts, III v. 

Maciejewski, 631 F.2d 497, 500 (7th Cir. 1980) (same), cert. 

denied, 450 U.S. 919 (1981). In introducing the Interstate 

Wagering Amendment, its sponsors were motivated by the desire to 

halt the operations of Pic-A-State specifically. See 139 Cong. 

Rec. S15247. Its chief sponsor mentioned the district court's 

decision in Pic-A-State Pa. v. Pennsylvania, No. 93-0814 (M.D. 

Pa. July 23, 1993), and explained the Amendment would close the 

"loophole" in the statute that allowed Pic-A-State to run its 

business. Id.

 Under these circumstances, we believe the likelihood of 

prosecution under the Interstate Wagering Amendment is so strong 

that a justiciable issue is presented.0 We also note that the 

 

involved challenges to statutes that criminalized the exercise of 

First Amendment rights. Pic-A-State's claim does not involve 

these rights, and so we do not rely on Babbitt or Steffel in 

finding adversity between the parties. 

0

 Moreover, as a policy matter, strong reasons counsel against 

requiring Pic-A-State to engage in illegal conduct before its 

challenge can be heard. 

Fear that courts may find the statute valid 

will deter many from risking violation; 

defense of criminal proceedings on 

constitutional grounds simply is not an 
11 

Government, although it has stated that a federal prosecution is 

unlikely, has not expressly disavowed an intent to prosecute. See

Presbytery of the Orthodox Presbyterian Church v. Florio, 40 F.3d 

1454, 1463-68 (3d Cir. 1994) (failure of state to disavow intent 

to prosecute sufficient to create adversity between the parties); 

Salvation Army v. Department of Community Affairs, 919 F.2d 183, 

192 (3d Cir. 1990) (no adversity where state gives "express 

assurance that there will be no enforcement"). 

2. Conclusiveness 

 We next examine whether the issue raised here is "based 

on a `real and substantial controversy admitting of specific 

relief through a decree of conclusive character, as distinguished 

from an opinion advising what the law would be on a hypothetical 

state of facts.'" Step-Saver, 912 F.2d at 649 (quoting Aetna 

Life Ins. Co. v. Haworth, 300 U.S. 227, 241 (1937)) (emphasis 

added). 

 Where the question presented is "predominantly legal," 

a factual record is not as important as in fact-sensitive 

inquiries. Compare Pacific Gas & Elec. Co. v. State Energy 

Resources Conservation & Dev. Comm'n, 461 U.S. at 201 (question 

 

adequate remedy. In addition to this 

practical fact, more abstract principles 

suggest that a citizen should not be required 

to sacrifice his wish to conform to valid 

social prescriptions in order to test his 

belief of invalidity; citizens should be 

allowed to prefer official adjudication to 

private disobedience. 

13A Charles Wright, Arthur Miller & Mary Kane, Federal Practice 

and Procedure § 3532.5, at 183-84 (2d Ed. 1984). 
12 

of federal preemption is "predominantly legal" and need not await 

development of factual record); Abbott Lab. v. Gardner, 387 U.S. 

at 149 (declaratory judgment challenge to regulations presented 

purely legal issues fit for resolution even before prosecution 

instituted); with Hodel v. Virginia Surface Mining & Reclamation 

Ass'n, 452 U.S. 264, 294-95 (1981) ("actual factual setting" is 

"particularly important in cases raising allegations of an 

unconstitutional taking of private property."). Because Pic-AState brings a facial challenge to the constitutionality of the 

Interstate Wagering Amendment, further development of the factual 

record by the prosecution of Pic-A-State would not inform our 

legal analysis. Both parties have approached this case as one 

presenting the purely legal question of the scope of Congress' 

power to legislate under the Commerce Clause. The Government has 

made no attempt to justify the Interstate Wagering Amendment in 

factual terms. Accordingly, we believe the legal issues 

presented may be conclusively resolved even before the 

prosecution of Pic-A-State. 

 3. Utility 

 Finally, we focus on the utility of the present 

resolution of this dispute. We consider "whether the parties' 

plans of action are likely to be affected by a declaratory 

judgment." Step-Saver, 912 F.2d at 649 n.9. Unlike our cases in 

which we have concluded that a judgment would not have a 

significant effect, see Armstrong World Indus. v. Adams, 961 F.2d 

405, 423-24 (3d Cir. 1992); Step-Saver, 912 F.2d at 649-50, we 

believe resolution of this case will materially affect the 
13 

parties. Pic-A-State has abandoned its line of business because 

of the passage of the Interstate Wagering Amendment. Were the 

Amendment to be declared unconstitutional, Pic-A-State would 

promptly resume its activities. Accordingly, we believe this 

case is ripe at this time. 

B. Standing 

 The Government also attacks Pic-A-State's standing to 

bring this suit, asserting no harm is imminent because no 

prosecution is pending. As the Supreme Court has stated, "there 

is no question in the present case that petitioners have 

sufficient standing as plaintiffs: the regulation is directed at 

them in particular; it requires them to make significant changes 

in their everyday business practices; if they fail to observe the 

. . . rule they are quite clearly exposed to the imposition of 

strong sanctions." Abbott Lab. v. Gardner, 387 U.S. at 154. 

Accordingly, we find no merit in the Government's argument. 

C. Equitable Relief 

 Finally the Government asserts equitable injunctive 

relief is unavailable because Pic-A-State is threatened with no 

immediate harm. The Government relies on Younger v. Harris, 401 

U.S. 37 (1971), and the line of cases that holds federal courts 

should not enjoin pending state criminal prosecutions. See, 

e.g., Douglas v. City of Jeannette, 319 U.S. 157, 163 (1943); 

Watson v. Buck, 313 U.S. 387, 400 (1941). Here there is no state 

prosecution, a federal statute is at issue, and there are no 

grounds for federal courts to abstain from hearing the challenge. 

 Therefore, we will reach the merits. 
14 

III. THE COMMERCE CLAUSE 

 The Commerce Clause of the United States Constitution 

provides that "Congress shall have Power . . . To regulate 

commerce with foreign Nations, and among the several States, and 

with the Indian Tribes." U.S. Const. art. I, § 8, cl. 3. This 

power is "complete in itself, may be exercised to its utmost 

extent, and acknowledges no limitations, other than are 

prescribed in the constitution." Gibbons v. Ogden, 9 Wheat. 1, 

196 (1824). Accordingly, "[t]he task of a court that is asked to 

determine whether a particular exercise of congressional power is 

valid under the Commerce Clause is relatively narrow." Hodel v. 

Virginia Surface Mining & Recl. Assn., 452 U.S. at 276. "The 

court must defer to a congressional finding that a regulated 

activity affects interstate commerce, if there is any rational 

basis for such a finding." Id. This established, the only 

remaining question for judicial inquiry is whether the means 

chosen by Congress are "reasonably adapted" to the asserted goals 

of the legislation. Id.; Heart of Atlanta Motel, Inc. v. United 

States, 379 U.S. 241, 258 (1964). "The judicial task is at an 

end once the court determines that Congress acted rationally in 

adopting a particular regulatory scheme." Hodel, 452 U.S. at 

276; see also United States v. Pozsgai, 999 F.2d 719, 733 (3d 

Cir. 1993) ("We will uphold application of the law if there is a 

`rational basis' for the congressional determination that the 

regulated activity `affects interstate commerce,' and if the 

means chosen to regulate the activity are reasonable."), cert. 

denied, 114 S. Ct. 1052 (1994); United States v. Frame, 885 F.2d 
15 

1119, 1126 (3d Cir. 1989) ("It is well settled that Congress will 

have validly exercised its power to regulate interstate commerce 

if the activity being regulated affects commerce, and if there is 

a rational connection between the regulatory means selected and 

the asserted ends."), cert. denied, 493 U.S. 1094 (1990). 

A. Affects Commerce 

 It is beyond dispute that state lotteries affect 

interstate commerce. In the Lottery Case, 188 U.S. 321, 354 

(1903), the Supreme Court held that "lottery tickets are subjects 

of traffic and therefore are subjects of commerce, and the 

regulation of the carriage of such tickets from State to 

State . . . is a regulation of commerce among the several 

states." Although Pic-A-State does not transport actual lottery 

tickets across state lines, but only sells interests in lottery 

tickets via computer, its activities may still be regulated by 

Congress. The power of Congress to regulate interstate commerce 

extends not only to "the exchange and transportation of 

commodities, or visible, tangible things, but the carriage of 

persons and the transmission by telegraph of ideas, wishes, 

orders, and intelligence." Id. at 351-52. Congress' power to 

regulate interstate commerce also reaches the transmission of 

information by computer for the purpose of purchasing lottery 

tickets. Moreover, Pic-A-State itself notes that national 

lottery sales exceeded $30 billion in 1993. Brief of the 

Appellants at 20 n.5. A business of such enormous economic 

impact is a proper subject for congressional regulation under the 

Commerce Clause. 
16 

B. Rational Basis 

1. 

 Accordingly, the task before us is to determine whether 

Congress acted rationally in adopting the regulatory scheme of 

which the Interstate Wagering Amendment is a part. Hodel, 452 

U.S. at 276. Pic-A-State asserts the Interstate Wagering 

Amendment cannot survive scrutiny under a "rational basis" review 

because it is not "reasonably adapted" to a legitimate end. It 

makes three arguments. 

 First, Pic-A-State argues the historical rationale for 

federal regulation of lotteries was Congress' perception that 

lotteries were "evils" to be strictly contained, if not 

absolutely prohibited. In the wake of the legalization of 

lotteries by over thirty states, Pic-A-State contends that 

regulation of lotteries as "evils" is no longer rational. Second, 

Pic-A-State asserts the protection of the states' ability to 

regulate gambling within their own borders is an impermissible 

purpose for federal lawmaking. Third, it contends the Interstate 

Wagering Amendment will insulate state lotteries from 

competition, and this restraint on trade is irrational. 

 Pic-A-State misapprehends the nature of a "rational 

basis" review of legislation under the Commerce Clause. We do 

not substitute our judgment for that of Congress. "Where the 

legislative judgment is drawn in question," our inquiry "must be 

restricted to the issue of whether any state of facts either 

known or which could reasonably be assumed affords support for 

it." United States v. Carolene Prod. Co., 304 U.S. 144, 154 
17 

(1938). The Supreme Court's recent decision in United States v. 

Lopez, 115 S. Ct. 1624 (1995), does not change the nature of this 

inquiry. Lopez asks whether the activity at issue could 

rationally be understood to affect commerce. The Court did not 

reach the question of whether the legislation itself was 

rationally related to its announced goal.0

 In introducing the Interstate Wagering Amendment on the 

Senate floor, its proponents advanced several justifications, 

including the prevention of reductions in state lottery revenues, 

the preservation of "the sovereignty of State lottery programs," 

and the enforcement of the federal laws prohibiting interstate 

gambling. See 139 Cong. Rec. S15247. The Interstate Wagering 

Amendment is rationally related to achieving these goals. 

 First, Congress could rationally determine that the 

sale of interests in lottery tickets across state lines might 

cause revenue shortfalls in some lottery states, particularly 

smaller states. The Chair of the Pennsylvania Council on Aging 

stated in a letter to Senator Specter that the sale of out-ofstate lottery tickets would "have a direct and negative impact on 

Pennsylvania lottery sales.0 The final result will be revenue 

 

0

 The impetus behind striking down the Gun-Free School Zones Act 

under the Commerce Clause in Lopez was a concern for federalism. 

See United States v. Lopez, 115 S. Ct. 1624, 1629 (1995). The 

Interstate Wagering Amendment supplements and guarantees, not 

usurps, the states' power to regulate their own lotteries. 

Despite Pic-A-State's arguments, it therefore seems an unsuitable 

object for a Commerce Clause challenge under Lopez. 

0

 The Director of Public Relations and Special Events for the 

Pennsylvania Lottery testified that "800,000 to a million 

dollars" is an "extremely conservative" estimate of the losses 

suffered by the Pennsylvania lottery in 1991-92 due to the 

interstate sale of lottery tickets. App. at 213a-215a. 
18 

losses for programs that assist very vulnerable older citizens of 

Pennsylvania."0 139 Cong. Rec. S15247. The Governor of Delaware 

also submitted a letter complaining that such sales "have the 

potential to negatively affect state revenues from lottery ticket 

sales, especially for smaller states." Id. at S15248. As 

Senator Specter noted, "[a]ny erosion of revenues due to the sale 

of out-of-State lottery tickets is contrary to the purpose of 

State lottery programs." Id. at S15247. "State lottery programs 

are based on the premise that the revenues derived from the 

lottery go toward State programs for the betterment of that 

particular State." Id. Congress made a reasonable determination 

that the prohibition of interstate sales of lottery tickets would 

promote the purposes for which the various states have instituted 

lotteries. We will not second-guess this judgment. 

 Moreover, Congress rationally believed that the 

Interstate Wagering Amendment served the purpose of preserving 

state sovereignty in the regulation of lotteries. Senator 

Specter explained: 

the right of a State to regulate lottery 

[sic] and gambling within its borders must be 

preserved. Federal gambling laws have 

traditionally enabled the States to regulate 

in-State gambling. Federal laws should 

continue to limit the proliferation of 

interstate gambling to preserve the 

sovereignty of States that do not permit 

certain forms of gambling. 

 

0

 Proceeds from the Pennsylvania lottery are earmarked for 

programs that benefit senior citizens. See 72 Pa. Stat. Ann. 

§3761-2 (1995). 
19 

Id. The Interstate Wagering Amendment furthered these goals by 

giving the states the sole right to regulate lottery sales within 

their borders. The states need not permit the sale of interests 

in out-of-state lottery tickets, but may do so by concluding an 

agreement for that purpose with other states. 18 U.S.C. § 1301. 

The Interstate Wagering Amendment thus allows the various states 

to gauge the economic effects of their own lotteries without outof-state interference, to form their own judgments about the 

propriety of lotteries, and to regulate the types of statesponsored gambling they wish to allow within their borders. 

 Finally, Congress could rationally conclude that the 

Interstate Wagering Amendment was necessary to effectuate the 

purposes for which 18 U.S.C. § 1301 was originally enacted. As 

Senator Specter stated, the federal gambling laws were clearly 

intended to prohibit the interstate transportation and sale of 

lottery tickets, but "the development of communications 

technology resulted in [a] loophole in the Federal lottery law" 

that allowed such transactions to be consummated by computer with 

no papers crossing state lines. 139 Cong. Rec. S15247. Both 

Pennsylvania Senators believed this loophole "plainly violat[ed] 

the spirit and intent of the Federal law" and introduced the 

Interstate Wagering Amendment in order to close it. Id. at 

S15247-48. 

 In the context of the one-hundred year history of §1301 

and the federal regulation of lotteries, Congress could 

rationally conclude the need for an amendment to close a loophole 

created by advances in technology unforeseeable at the time the 
20 

statute was originally drafted. Congress believed that since the 

sale of lottery tickets across state lines was illegal, the sale 

of interests in tickets across state lines by computer should be 

illegal as well. We believe the Commerce Clause requires no more 

indication of rationality for us to uphold the statutory scheme 

adopted by Congress.0

2. 

 Even evaluating the rationality of the Interstate 

Wagering Amendment on the terms suggested by Pic-A-State, we hold 

it was a constitutional exercise of Congress' power to legislate 

under the Commerce Clause. Pic-A-State argues that because 

lotteries have been legalized by the majority of states, the 

interstate sale of lottery tickets may no longer rationally be 

prohibited on moral grounds. We disagree. Although many states 

have legalized lotteries, some have not. Congress could 

rationally decide to legislate in support of the policies of 

nonlottery states by placing the regulation of lotteries within 

the discretion of each state and prohibiting out-of-state 

interference. See United States v. Edge Broadcasting Co., 113 S. 

 

0

 Pic-A-State notes Congress did not conduct factfinding or rely 

on empirical research in drafting the Interstate Wagering 

Amendment and argues that this undermines the Amendment's 

rationality. We are unpersuaded, as several of the 

justifications advanced by Congress are rational on their face. 

Pic-A-State further argues Congress' conclusion that the 

Amendment would prevent revenue shortfalls in smaller states is 

mistaken as a factual matter. Even were this so, we would uphold 

the Interstate Wagering Amendment under rational basis review. 

Rational basis review "is not a license for courts to judge the 

wisdom, fairness, or logic of legislative choices." FCC v. Beach 

Communications, 113 S. Ct. 2096, 2101 (1993)). "Congress need 

not make particularized findings in order to legislate." Perez 

v. United States, 402 U.S. 146, 156 (1971). 
21 

Ct. 2696, 2703 (1993) ("[T]he Government has a substantial 

interest in supporting the policy of nonlottery States, as well 

as not interfering with the policy of States that permit 

lotteries."); Lottery Case, 188 U.S. at 357 (Congress may 

"supplement[ ] the action of those States . . . which, for the 

protection of the public morals, prohibit the drawing of 

lotteries, as well as the sale or circulation of lottery tickets, 

within their respective limits."). Moreover, in arguing that the 

Interstate Wagering Amendment is irrational because lotteries are 

no longer morally proscribed, Pic-A-State necessarily implies 

that all of 18 U.S.C. § 1301, not just the Interstate Wagering 

Amendment, is now irrational. As we have noted, § 1301 has been 

in the United States Code since 1895 and was upheld by the 

Supreme Court against a Commerce Clause challenge. Lottery Case, 

188 U.S. 321 (1903). We do not believe that circumstances have 

changed so substantially as to render this body of law 

unconstitutional. 

 As for Pic-A-State's argument that the Interstate 

Wagering Amendment is contrary to the spirit of the antitrust 

laws and therefore irrational, "neither the Sherman Act nor any 

other antitrust statute restricts the United States government in 

directing action in complete contradiction to antitrust policy." 

Hecht v. Pro-Football, Inc., 444 F.2d 931, 935 (D.C. Cir. 1971), 

cert. denied, 404 U.S. 1047 (1972) (citations omitted). The 

interstate sale of lottery tickets affects commerce and is 

contrary to the policy of several states. In these 

circumstances, Congress can rationally exercise its enumerated 
22 

powers to prohibit the passage in interstate commerce of lottery 

tickets or information relating to them. 

IV. DORMANT COMMERCE CLAUSE 

 Pic-A-State also contends Congress did not have the 

power to enact the Interstate Wagering Amendment. Under dormant 

Commerce Clause principles, states may not discriminate against 

the flow of out-of-state goods in commerce. Pic-A-State asserts 

that Congress, in legislating to supplement the states' police 

powers, cannot give the states the power to discriminate against 

out-of-state goods because such discrimination is forbidden by 

the dormant Commerce Clause. 

 The Supreme Court rejected this argument in Prudential 

Ins. Co. v. Benjamin, 328 U.S. 408 (1946). In Benjamin, South 

Carolina imposed a three percent tax on foreign insurance 

companies as a condition of their doing business in the State. No 

similar tax was imposed on South Carolina corporations. By 

statute Congress had authorized state regulation and taxation of 

the business of insurance. Id. at 412, 429-30. Prudential 

challenged the discriminatory tax, contending Congress could not 

legislatively override the dormant Commerce Clause's prohibition 

on discriminatory state legislation. Rejecting Prudential's 

argument, the Supreme Court distinguished between the Commerce 

Clause and the dormant Commerce Clause: 

The one limitation bounds the power of 

Congress. The other confines only the powers 

of the states. And the two areas are not 

coextensive. The distinction is not always 

clearly observed, for both questions may and 

indeed at times do arise in the same case and 

in close relationship. But to blur them and 
23 

thereby equate the implied prohibition with 

the affirmative endowment is altogether 

fallacious. There is no such equivalence. 

Benjamin, 328 U.S. at 423. The Supreme Court concluded the 

Commerce Clause places no limitations on Congress' affirmative 

power to legislate, other than that the regulated activity must 

affect commerce. Id. It is now clear that Congress may consent 

to state regulation that discriminates against interstate 

commerce. Northeast Bancorp, Inc. v. Board of Governors, 472 

U.S. 159, 174 (1985) ("When Congress so chooses, state actions 

which it plainly authorizes are invulnerable to constitutional 

attack under the Commerce Clause."); Pic-A-State I, 42 F.3d 175, 

179 (3d Cir. 1994). Congress had the authority to enact the 

Interstate Wagering Amendment in order to supplement state 

legislation, even though the Amendment enables states to 

discriminate against out-of-state lottery tickets. 

 V. CONCLUSION 

 The Interstate Wagering Amendment regulates lotteries--

an activity affecting interstate commerce. It rationally relates 

to Congress' goals of protecting state lottery revenues, 

preserving state sovereignty in the regulation of lotteries, and 

controlling interstate gambling. The Amendment was a 

constitutional exercise of Congress' power to legislate under the 

Commerce Clause. We will affirm.