RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 10a0315p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT _________________

NORTHVILLE DOWNS,

 Plaintiff-Appellant,

OIL CAPITAL RACE VENTURE, INC., dba Mt.

Pleasant Meadows; GREAT LAKES

QUARTERHORSE ASSOCIATION,

Plaintiffs,

v.

GOVERNOR OF THE STATE OF MICHIGAN,

Jennifer Granholm; MICHIGAN ATTORNEY

GENERAL, Michael A. Cox; MGM GRAND

DETROIT, LLC,

 Defendants-Appellees.

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No. 09-1370

Appeal from the United States District Court

for the Eastern District of Michigan at Detroit.

No. 08-11858—Avern Cohn, District Judge.

Argued: January 20, 2010

Decided and Filed: September 27, 2010 

Before: MERRITT, GIBBONS, and ROGERS, Circuit Judges.

_________________

COUNSEL

ARGUED: Phillip B. Maxwell, PHILLIP B. MAXWELL & ASSOCIATES, PLLC,

Oxford, Michigan, for Appellant. Melinda A. Leonard, OFFICE OF THE MICHIGAN

ATTORNEY GENERAL, Lansing, Michigan, Peter H. Ellsworth, DICKINSON

WRIGHT PLLC, Lansing, Michigan, for Appellees. ON BRIEF: Phillip B. Maxwell,

PHILLIP B. MAXWELL & ASSOCIATES, PLLC, Oxford, Michigan, Edward

Draugelis, DRAUGELIS & ASHTON LLP, Clawson, Michigan, for Appellant. Melinda

A. Leonard, Donald S. McGehee, OFFICE OF THE MICHIGAN ATTORNEY

GENERAL, Lansing, Michigan, Peter H. Ellsworth, Jeffery V. Stuckey, DICKINSON

WRIGHT PLLC, Lansing, Michigan, Phillip J. DeRosier, DICKINSON WRIGHT

PLLC, Detroit, Michigan, for Appellees. 

1
No. 09-1370 Northville Downs v. Governor of the

State of Mich., et al.

Page 2

GIBBONS, J., delivered the opinion of the court, in which ROGERS, J., joined.

MERRITT, J. (pp. 15–16), delivered a separate concurring opinion.

_________________

OPINION

_________________

JULIA SMITH GIBBONS, Circuit Judge. Plaintiff-appellant Northville Downs

appeals the district court’s grant of judgment on the pleadings to defendants-appellees

Jennifer Granholm, Governor of the State of Michigan, Michael A. Cox, Attorney

General of Michigan, and MGM Grand Detroit, LLC (collectively, “the defendants”).

Northville Downs, Oil Capital Race Venture, Inc., and Great Lakes Quarterhorse

Association (collectively, “the plaintiffs”) sued the defendants under 42 U.S.C. § 1983,

alleging that article IV, section 41 of the Michigan Constitution, as amended by voter

referendum, violates their federal constitutional rights under the First Amendment, Equal

Protection Clause, and Commerce Clause. For the following reasons, we affirm the

district court’s decision.

I.

The plaintiffs operate several horse-racing tracks in Michigan. A significant part

of their operations involves simulcast wagering, in which a horse race that takes place

in one location, often outside of Michigan, is simultaneously broadcast to one or more

other locations to allow bettors to wager in the same betting pool. The plaintiffs’

business has been decimated in recent years by competition from the state lottery and

casino gaming. According to the plaintiffs’ expert, Dr. Richard Thalheimer, wagering

at Detroit-area tracks, in real terms, declined eighty-five percent between 1972, when

casino gaming began in the state, and 2007. The defendants are state officials and the

operator of a casino in Detroit.

Before 1972, horse-racing was the only legal form of gambling in Michigan. In

1972, Michigan amended its constitution to allow the legislature to “authorize lotteries

and permit the sale of lottery tickets in the manner provided by law.” Mich. Const. art.
No. 09-1370 Northville Downs v. Governor of the

State of Mich., et al.

Page 3

IV, § 41 (amended 1972). The legislature created a state lottery in 1972, Mich. Comp.

Laws § 432.1 et seq., and authorized charitable gambling soon thereafter, Mich. Comp.

Laws § 432.101 et seq. In the 1980s, a number of Indian gaming casinos also opened

in the state pursuant to a federal law under which tribes may negotiate compacts with

states and receive authorization for gambling activities. See 25 U.S.C. § 2701 et seq.

In 1996, Michigan voters expanded legalized gambling in the state through

Proposal E. Initiated Law 1 of 1996 (codified at Mich. Comp. Laws.

§§ 432.201–432.226). This provision allowed limited casino gambling in Detroit. The

legislature subsequently created the Michigan Gaming Control Board (“the Board”).

Mich. Comp. Laws. § 432.204. The new law permitted up to three gaming casinos in

any city whose local legislature enacted an ordinance approving casino gambling and

that met the following qualifications: (1) population of 800,000 or more; (2) located

within 100 miles of any other state or country in which gaming is authorized; and (3) has

had casino gaming approved by a majority of the voters in the city. Mich Comp. Laws

§§ 432.206(3), 432.202(I), 432.203, 432.206(1)(a), (2), (3). The Board does not have

authority over federally regulated Indian casinos. See Mich. Comp. Laws

§ 432.203(2)(d). 

In the early 2000s, horse-race tracks lobbied the legislature for approval to offer

slot machines, off-track racing theaters, and account wagering. They succeeded in

persuading the Michigan House of Representatives and Senate to pass bills in their favor

in 2004. These bills were not yet enacted when existing casino interests financed a

referendum initiative that appeared as Proposal 1 on the 2004 general election ballot.

As recounted by the district court, the official ballot language read:
No. 09-1370 Northville Downs v. Governor of the

State of Mich., et al.

Page 4

PROPOSAL 04-1

A PROPOSAL TO AMEND THE STATE CONSTITUTION TO

REQUIRE VOTER APPROVAL OF ANY FORM OF GAMBLING

AUTHORIZED BY LAW AND CERTAIN NEW STATE LOTTERY

GAMES

The proposed constitutional amendment would:

! Require voter approval of any form of gambling authorized by

law after January 1, 2004.

! Require voter approval of any new state lottery games utilizing

“table games” or “player operated mechanical or electronic

devices” introduced after January 1, 2004.

! Provide that when voter approval is required, both statewide

voter approval and voter approval in the city or township where

gambling will take place must be obtained.

! Specify that the voter approval requirement does not apply to

Indian tribal gaming or gambling in up to three casinos located

in the City of Detroit.

Should this proposal be adopted?

Yes

No

Northville Downs v. Granholm, No. 08-11858, 2009 WL 483076, at * 2 & n.3 (E.D.

Mich. Feb. 25, 2009).

The voters approved the proposal and amended article IV, section 41 of the state

constitution to read:

The legislature may authorize lotteries and permit the sale of lottery

tickets in the manner provided by law. No law enacted after January 1,

2004, that authorizes any form of gambling shall be effective, nor after

January 1, 2004, shall any new state lottery games utilizing table games

or player operated mechanical or electronic devices be established,

without the approval of a majority of electors voting in a statewide

general election and a majority of electors voting in the township or city

where gambling will take place. This section shall not apply to gambling

in up to three casinos in the City of Detroit or to Indian tribal gaming.

Mich. Const. art. IV, § 41 (amended 2004) (hereinafter “Proposal 1”). 
No. 09-1370 Northville Downs v. Governor of the

State of Mich., et al.

Page 5

In May 2008, the plaintiffs brought suit in federal district court under 42 U.S.C.

§ 1983, seeking an injunction against the enforcement of Proposal 1 and a declaration

of its invalidity on the grounds that it violated the federal Constitution and various state

laws. The district court dismissed the state law counts, leaving only federal

constitutional claims under the Commerce Clause, First Amendment, and Equal

Protection Clause of the Fourteenth Amendment.

In August 2008, the defendants moved for judgment on the pleadings. The

exhibits to the motion included the legislative history of the 2004 state House and Senate

bills, a newspaper article characterizing the proponents of Proposal 1 as “an unlikely

combination of anti-gambling interests, Detroit casino owners and Indian tribe-owned

casinos,” and a newspaper article reporting on the success of Proposal E’s expansion of

gambling in 1996. The plaintiffs filed a response to the motion and filed a cross-motion

for partial summary judgment on the basis of their second amended complaint, which

was included in the motion papers but had not yet been filed with the district court. The

exhibits to the plaintiffs’ response and motion included affidavits from one of the

sponsors of the state legislation, the plaintiffs’ economic expert, and one of the

plaintiffs’ owners; the texts of the 2004 state legislation; legislative analysis of these

bills; newspaper articles; and the texts of a proposed 2008 amendment to the state

constitution and implementing legislation allowing Detroit casinos to take bets on horseracing.

The district court denied the plaintiffs’ motion for partial summary judgment

without prejudice to its renewal after disposition of the motion for judgment on the

pleadings. The court then gave the plaintiffs leave to file their second amended

complaint and did not require the defendants to file an answer until the court ruled on

the motion for judgment on the pleadings. 

On February 25, 2009, the district court granted judgment on the pleadings to the

defendants on the allegations contained in the second amended complaint. With respect

to the First Amendment claim, the district court ruled that the plaintiffs lacked standing
No. 09-1370 Northville Downs v. Governor of the

State of Mich., et al.

Page 6

because they had alleged only a subjective chill of their speech that was insufficient to

show an injury-in-fact. The district court then ruled that the plaintiffs’ Dormant

Commerce Clause claim failed because they had not shown any discrimination in favor

of in-state interests and they had not shown that their decreasing revenues amounted to

a burden on interstate commerce. Finally, the district court reasoned that the plaintiffs

were not entitled to “heightened scrutiny” under the Equal Protection Clause. The court

granted judgment on this count and held that Proposal 1 survived rational basis review

because Michigan had a legitimate governmental interest in regulating gambling.

Northville Downs timely appealed. 

II.

Before turning to the merits, we first address the applicable standard of review.

Northville Downs contends that the district court committed reversible error by deciding

this case under Federal Rule of Civil Procedure 12(c) rather than Federal Rule of Civil

Procedure 56. It argues that the district court improperly considered matters outside the

pleadings and that the plaintiffs were not given a reasonable opportunity to respond.

“Motions for judgment on the pleadings pursuant to Federal Rule of Civil

Procedure 12(c) are analyzed under the same de novo standard as motions to dismiss

pursuant to Rule 12(b)(6).” Sensations, Inc. v. City of Grand Rapids, 526 F.3d 291, 295

(6th Cir. 2008) (citation omitted). It is well-established that “Rule 12(c) requires only

one action by the district court for the conversion to a summary judgment motion to

occur: failure to exclude presented outside evidence.” Max Arnold & Sons, LLC v. W.L.

Hailey & Co., 452 F.3d 494, 503 (6th Cir. 2006). Max Arnold makes clear that the

district court need not actually rely upon materials outside of the pleadings to require the

conversion of a Rule 12(c) motion into a motion for summary judgment. Id. If the

district court failed to exclude evidence outside of the pleadings, we “construe[] the

district court’s denial of [a] motion for judgment on the pleadings as a denial of [a]

motion for summary judgment.” Id. Although a district court should give the parties

notice and an opportunity to present all material relevant to a motion for summary
No. 09-1370 Northville Downs v. Governor of the

State of Mich., et al.

Page 7

judgment, “[t]he district court’s failure to give such notice and opportunity to respond

is not reversible error . . . where all parties in fact had a sufficient opportunity to present

pertinent materials.” Id. at 504 (citation omitted).

Northville Downs contends that the district court converted the defendants’

motion into a motion for summary judgment because it: (1) referred to the affidavit of

their economic expert and data from the Michigan Attorney General; and (2) referred to

its own research on the history of horse-racing in Michigan. It argues that, had the

district court given the plaintiffs notice and an opportunity to submit all relevant

material, they would have presented material pertinent to their Commerce Clause claim,

namely evidence of the revenues they have lost from the decline in out-of-stategenerated simulcast wagering.

Because the district court did not exclude materials outside of the pleadings, we

conclude that it converted the defendants’ Rule 12(c) motion into a Rule 56(c) motion

for summary judgment under Max Arnold. First, Northville Downs is correct that the

district court did not exclude Thalheimer’s affidavit, which was not submitted with the

pleadings. Moreover, the district court relied upon an article from the Detroit Free Press,

submitted by the defendants as an exhibit to their Rule 12(c) motion. Finally, at no point

did the district court exclude the exhibits submitted by either party on the Rule 12(c)

motion, even though it denied the plaintiffs’ motion for partial summary judgment. 

The district court’s failure to exclude the extraneous materials is not reversible

error for four reasons, however. First, Max Arnold does not require reversal and remand

so long as the parties “in fact had a sufficient opportunity to present pertinent materials.”

452 F.3d at 504. Here, the plaintiffs themselves moved for summary judgment at the

same time they responded to the motion for judgment on the pleadings and, thus, had

every opportunity to present “pertinent materials” in support of their claims. The record

shows they did exactly that. The plaintiffs submitted seven exhibits, including affidavits

attesting to the economic impact of Proposal 1 on their businesses, legislative materials,

and newspaper articles rebutting the defendants’ arguments. Second, we have held:
No. 09-1370 Northville Downs v. Governor of the

State of Mich., et al.

Page 8

[A] party cannot raise for the first time on appeal an argument that [it]

was surprised by the conversion of the motion to dismiss into a motion

for summary judgment when the party was aware that materials outside

the pleading had been submitted to the court before the court granted the

motion.

Yeary v. Goodwill Indus.-Knoxville, Inc., 107 F.3d 443, 445 (6th Cir. 1997) (citation

omitted). Indeed, the plaintiffs submitted extraneous evidence in the exhibits that

ostensibly applied only to the defendants’ Rule 12(c) motion. Third, the district court’s

exposition of the background of Michigan gaming “considered matters outside the

pleadings [but] those matters simply filled in the contours and details of the plaintiff[s’]

complaint, and added nothing new.” Id. The district court was well within its discretion

to take judicial notice of the legislative and constitutional history of gaming regulation

in Michigan, especially where such materials did not speak to any disputed fact. See,

e.g., Commercial Money Ctr., Inc. v. Ill. Union Ins. Co., 508 F.3d 327, 336 (6th Cir.

2007) (“A court may consider matters of public record in deciding a motion to dismiss

without converting the motion to one for summary judgment.” (citation omitted)).

Finally, Northville Downs has shown no prejudice from its supposed inability to submit

more evidence on the Commerce Clause claim. As we explain below, this claim lacks

merit as a matter of law, and the plaintiffs had ample opportunity to submit evidence in

their favor. Any additional evidence would have no bearing on the underlying legal

issues.

When considering a motion that has been converted from a Rule 12(c) motion

to a motion for summary judgment, we still review the district court’s decision de novo.

Max Arnold, 452 F.3d at 504. However, we apply Rule 56(c), which provides that the

moving party is entitled to summary judgment if “the pleadings, discovery and

disclosure materials on file, and any affidavits show that there is no genuine issue as to

any material fact and that the movant is entitled to judgment as a matter of law.” Fed.

R. Civ. P. 56(c) (2). We must view the facts and all inferences drawn from the facts in

the light most favorable to the nonmoving party. Max Arnold, 452 F.3d at 504.
No. 09-1370 Northville Downs v. Governor of the

State of Mich., et al.

Page 9

III.

“The Equal Protection Clause protects against arbitrary classifications, and

requires that similarly situated persons be treated equally.” Bowman v. United States,

564 F.3d 765, 772 (6th Cir. 2008) (citation and internal quotation marks omitted). Thus,

“[t]o state an equal protection claim, a party must claim that the government treated

similarly situated persons differently.” Braun v. Ann Arbor Charter Twp., 519 F.3d 564,

574 (6th Cir. 2008) (citation omitted). 

Once disparate treatment is shown, the legal standard for analyzing any equal

protection claim depends upon the classification used by the government. City of

Cleburne v. Cleburne Living Ctr., 473 U.S. 432, 440–41 (1985). “The general rule is

that legislation is presumed to be valid and will be sustained if the classification drawn

by the statute is rationally related to a legitimate state interest.” Id. at 440 (citations

omitted). “When social or economic legislation is at issue, the Equal Protection Clause

allows the States wide latitude, and the Constitution presumes that even improvident

decisions will eventually be rectified by the democratic processes.” Id. “In areas of

social and economic policy, a statutory classification that neither proceeds along suspect

lines nor infringes fundamental constitutional rights must be upheld against equal

protection challenge if there is any reasonably conceivable state of facts that could

provide a rational basis for the classification.” FCC v. Beach Commc’ns, Inc., 508 U.S.

307, 313 (1993) (citations omitted).

In addition, the Supreme Court has recognized that laws restructuring the

political system to the detriment of protected classes may run afoul of the Equal

Protection Clause. See Hunter v. Erickson, 393 U.S. 385, 393 (1969) (“[T]he State may

no more disadvantage any particular group by making it more difficult to enact

legislation in its behalf than it may dilute any person’s vote or give any group a smaller

representation than another of comparable size.” (citations omitted)); Washington v.

Seattle Sch. Dist. No. 1, 458 U.S. 457, 467 (1982) (“[T]he Fourteenth Amendment also

reaches a political structure that treats all individuals as equals, yet more subtly distorts
No. 09-1370 Northville Downs v. Governor of the

State of Mich., et al.

Page 10

governmental processes in such a way as to place special burdens on the ability of

minority groups to achieve beneficial legislation.” (citation and internal quotation marks

omitted)).

With respect to the claim of discriminatory treatment, Northville Downs contends

that Proposal 1 creates two classes of gaming licensees: one required to obtain voter

approval for an expansion of gaming and another class exempted from such a

requirement. It argues that Proposal 1 is discriminatory on its face because the law treats

the plaintiffs and similarly situated casino gambling interests in Michigan differently.

Even if we accept this characterization of Proposal 1, we must sustain it as

economic regulation so long as there is “any reasonably conceivable state of facts that

could provide a rational basis for the classification.” Beach Commc’ns, 508 U.S. at 313

(citations omitted); see also City of Cleburne, 473 U.S. at 440–41. Proposal 1 easily

passes this test because it is well-established that the regulation of gambling, including

limitations on gaming such as those contained in Proposal 1, is a legitimate state interest.

See Posadas de P.R. Assocs. v. Tourism Co. of P.R., 478 U.S. 328, 341 (1986)

(recognizing that a state has an interest in regulating gambling to protect the “health,

safety, and welfare of its citizens”); United States v. Washington, 879 F.2d 1400, 1401

(6th Cir. 1989) (“The enactment of gambling laws is clearly a proper exercise of the

state’s police power in an effort to promote the public welfare.”). The exemptions for

Indian gaming and Detroit casinos similarly survive rational basis review under Beach

Communications because federal law preempts Michigan from regulating gaming on

tribal lands and because Michigan voters recognized the value of promoting the

economic revitalization of Detroit with casino gambling in Proposal E in 1996. See

Mich. Comp. Laws § 432.202(l) (defining a “city” such that only Detroit would qualify).

Plaintiffs’ reliance on Craigmiles v. Giles, 312 F.3d 220 (6th Cir. 2002), is

misplaced. In that case, we held unconstitutional a Tennessee statute that prohibited the

sale of caskets by anyone other than a state-licensed funeral director, including

businesses that sold caskets but did not provide other services. Id. at 229. We
No. 09-1370 Northville Downs v. Governor of the

State of Mich., et al.

Page 11

determined that the statute failed rational basis review because the state’s desire to

protect “a discrete interest group from economic competition” was not a legitimate state

interest. Id. at 224 (citing Dormant Commerce Clause cases). However, Proposal 1 does

not, on its face, protect a discrete interest group. Instead, the provision applies generally

to all businesses seeking to establish new forms of gambling in the state. Thus, Proposal

1 is rationally related to Michigan’s legitimate interests in regulating gambling and

promoting economic revitalization.

Next, Northville Downs contends that Proposal 1 violates the Equal Protection

Clause, as interpreted by Hunter v. Erickson, by altering the political structure of

Michigan to render the plaintiffs’ attempts to obtain favorable gambling legislation

futile. See 393 U.S. at 393. In Hunter, the Supreme Court invalidated an amendment

to the Akron, Ohio, city charter that suspended the city’s housing discrimination law and

prevented the city council from implementing any ordinance dealing with racial,

religious, or ancestral discrimination in housing without the approval of the city’s voters.

Id. at 387. The Supreme Court concluded that a law explicitly treating racial housing

issues differently from other housing issues impermissibly disadvantaged groups that

would have benefitted from laws barring such discrimination. Id. at 393. 

Hunter does not require that Proposal 1 apply to the entire gambling market in

Michigan in order to survive constitutional scrutiny. Northville Downs’s reliance upon

the phrase “any particular group,” id., and Justice Harlan’s concurrence, id. at 393–94

(concluding that laws may permissibly structure political institutions using “neutral

principles” or “general democratic principle”) (Harlan, J., concurring), overlooks the

reality that, by its terms, Hunter confronted a constitutionally impermissible

classification on the basis of race that is not present here. Furthermore, Northville

Downs cannot overcome governing precedent holding that states may make fine

distinctions in regulating gaming, up to and including favoring certain forms of gambling

over others. Posadas de P.R. Assocs., 478 U.S. at 341; Washington, 879 F.2d at 1401.
No. 09-1370 Northville Downs v. Governor of the

State of Mich., et al.

Page 12

IV.

In its next claim for relief, Northville Downs argues that it engages in interstate

commerce because it broadcasts races from out-of-state tracks and takes bets on the

interstate simulcast and, thus, Proposal 1 discriminates against interstate simulcast

wagering in favor of in-state casino wagering in violation of the Dormant Commerce

Clause doctrine. 

The Dormant Commerce Clause doctrine focuses on “economic

protectionism—that is, regulatory measures designed to benefit in-state economic

interests by burdening out-of-state competitors.” New Energy Co. of Ind. v. Limbach,

486 U.S. 269, 273 (1988) (citations omitted). Courts inquire “whether a challenged law

discriminates against interstate commerce.” Dep’t of Revenue of Ky. v. Davis, 553 U.S.

328, 338 (2008) (citation omitted). “A discriminatory law is virtually per se invalid and

will survive only if it advances a legitimate local purpose that cannot be adequately

served by reasonable nondiscriminatory alternatives.” Id. (citations and quotation marks

omitted). If a state law does not discriminate and “regulates even-handedly to effectuate

a legitimate local public interest, and its effects on interstate commerce are only

incidental, it will be upheld unless the burden imposed on [interstate] commerce is

clearly excessive in relation to the putative local benefits.” Pike v. Bruce Church, Inc.,

397 U.S. 137, 142 (1970). The Dormant Commerce Clause “protects the interstate

market, not particular interstate firms, from prohibitive or burdensome regulations.”

Exxon Corp. v. Governor of Md., 437 U.S. 117, 127–28 (1978). 

Proposal 1, even if it were deemed to put a regulatory burden on the racetracks,

does not create a discriminatory burden that triggers Dormant Commerce Clause

scrutiny. Proposal 1 is instead exactly like the state statute upheld in Exxon, supra.

Maryland precluded ownership of gas stations by oil refiners, and all of the oil refiners

were out-of-state. Nonetheless, the Supreme Court flatly concluded that there was no

burden for purposes of the Dormant Commerce Clause. “The fact that the burden of a

state regulation falls on some interstate companies does not, by itself, establish a claim
No. 09-1370 Northville Downs v. Governor of the

State of Mich., et al.

Page 13

of discrimination against interstate commerce.” Id. at 126. Proposal 1 does not regulate

horse-racing or betting on horse-racing. In effect, it merely prevents the horse-racing

tracks from installing slot machines, running off-track racing theaters, and offering

account wagering without voter approval while not banning such gaming activities at

entirely different casino facilities in Detroit. Plaintiffs have not shown that, in effect,

Michigan has protected the in-state simulcast wagering market against out-of-state

simulcast wagering. See Exxon Corp., 437 U.S. at 127–28. Proposal 1 does not, for

example, prohibit out-of-state simulcast producers from broadcasting races in Michigan

in order to protect in-state forms of gambling that compete with betting on horse races.

The effect of Proposal 1 is to allow one set of in-state firms, namely three Detroit-area

casinos, to offer slot machines and other forms of gambling that other in-state firms,

namely the plaintiff race tracks, may not without voter approval. Thus, whatever burden

Proposition 1 places on the racetracks, it is not a burden on interstate commerce for

Dormant Commerce Clause purposes.

Because Proposal 1 does not prohibit out-of-state simulcast producers from

broadcasting races into Michigan, Northville Downs’s argument that Granholm v. Heald,

544 U.S. 460 (2005), and Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456 (1981),

demonstrate the constitutional infirmity of Proposal 1 is likewise unavailing. In Heald,

the Supreme Court invalidated Michigan and New York laws that permitted in-state

wineries to ship directly to customers while requiring out-of-state wineries to either use

in-state distributors or establish a distribution operation in-state. 544 U.S. at 473–74.

The plaintiffs in that case were the owners of out-of-state wineries that sought access to

the Michigan market. Id. at 468. By contrast, the plaintiffs in this case operate in-state

race tracks that have, in effect, been prevented from establishing certain forms of

gambling. Whereas the Granholm Court emphasized that Michigan’s wine-importation

and distribution laws deprived out-of-state citizens of “their right to have access to the

markets of other States on equal terms,” id. at 473, Proposal 1 does not prevent out-ofstate simulcast providers from offering their product in Michigan either at the existing
No. 09-1370 Northville Downs v. Governor of the

State of Mich., et al.

Page 14

1

We need not reach Northville Downs’s First Amendment claims because, as Northville Downs

conceded at oral argument, the merits of these claims depend upon the success of its Equal Protection

Clause and Commerce Clause claims.

race tracks, establishments that obtain voter approval permission to offer new forms of

gambling, or at the three Detroit casinos. 

In Clover Leaf Creamery Co., the Supreme Court sustained a Minnesota law that

prohibited the sale of dairy products in certain plastic containers while allowing the sale

of dairy products in other containers, such as paperboard milk cartons. 449 U.S. at 458.

The Court found that the law regulated commerce “evenhandedly by prohibiting all milk

retailers from selling their products in plastic, nonreturnable milk containers, without

regard to whether the milk, the containers, or the sellers [were] from outside the State.”

Id. at 471–72 (internal quotation marks omitted). Further, the Court held that the burden

imposed on interstate commerce by the law was “relatively minor” because although

out-of-state dairies would have to conform their packaging to Minnesota’s standards,

there was “no reason to suspect that the gainers [would] be Minnesota firms, or the

losers out-of-state firms.” Id. at 472–73. Thus, Clover Leaf undermines Northville

Downs’s position in this case because Proposal 1 “evenhandedly” regulates Michigan’s

gaming market and the plaintiffs have not shown that in-state firms would gain from

such regulation at the expense of out-of-state simulcast providers.

V.

For the foregoing reasons, we affirm the district court’s decision.1
No. 09-1370 Northville Downs v. Governor of the

State of Mich., et al.

Page 15

1

Pike v. Bruce Church, Inc., 397 U.S. 137 (1970).

2

Exxon Corp. v. Governor of Md., 437 U.S. 117 (1978).

3

Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456 (1981).

4

Philadelphia v. New Jersey, 437 U.S. 617 (1978).

______________________

CONCURRENCE

______________________

MERRITT, Circuit Judge, concurring. State regulation of gambling is different

from state regulation of cantaloupes,1

 oil and gas,2 milk,3 trash,4 and similar products

and services. Gambling may be outlawed altogether as a vice that is a threat to the

health, safety and welfare of the public. Through a democratic referendum process, it

may be outlawed or the market for gambling limited. Although Proposal 1 creates on

its face a monopoly for three Detroit casinos engaged in casino-type gambling games,

the law continues to permit plaintiffs to engage in para-mutual betting on in-state racing

and “simulcast” out-of-state racing. In the case of gambling, whether a law

discriminates facially or otherwise against potential in-state or out-of-state gambling

enterprises appears to be constitutionally irrelevant. The ban on gambling may be either

total or selective because the Supreme Court has made it clear that the “greater includes

the lesser.” If gambling is to be treated as any other normal item of commerce, the

Supreme Court will have to overrule Posadas de Puerto Rico Associates v. Tourism

Company of Puerto Rico, 478 U.S. 328 (1986), in which the Court reasoned as follows:

[I]t is precisely because the government could have enacted a wholesale

prohibition of the underlying conduct [gambling] that it is permissible for

the government to take the less intrusive step of allowing the conduct but

reducing the demand through restrictions . . . . It would just as surely be

a strange constitutional doctrine which would concede to the legislature

the authority to totally ban a product or activity, but deny to the

legislature the authority to forbid the stimulation of demand for the

product or activity . . . . 
No. 09-1370 Northville Downs v. Governor of the

State of Mich., et al.

Page 16

5

The language from Posadas quoted in the text has been questioned in later cases but not

overruled. See Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 509 (1996); Greater New Orleans

Broadcasting Ass’n v. United States, 527 U.S. 173, 182-83 (1999).

In the Posadas case, the Supreme Court was dealing with a prohibition on the

advertising of gambling enterprises to residents of Puerto Rico, but allowing such

advertising to people everywhere else. Puerto Rico was happy to let nonresidents lose

their money at casinos but not its own citizens. The law clearly discriminated on its face

and created a prior restraint on speech directed at Puerto Ricans. If such in-state and

out-of-state discrimination is irrelevant when dealing with what would otherwise

constitute a clear free speech violation, it is certainly irrelevant with respect to less

restrictive constitutional provisions like the Commerce Clause.5 Therefore, I do not see

the need for an analysis of the degree of the “discriminatory burden that triggers

Dormant Commerce Clause scrutiny.” (Maj. op. 12.) The more general rule of Posadas

makes a weighing process unnecessary concerning the amount of interstate commerce

affected by the Proposal 1’s gambling restrictions.

If the economic activity were different so that the monopoly consisted of three

TV stations or three barge companies and the aggrieved party was a newspaper or a

manufacturer of tow boats, we would most likely say that we have a law discriminatory

on its face and that the monopoly burdens interstate and intrastate commerce. In such

an obvious case of economic protectionism, our analysis and weighing process would

be entirely different. These hypothetical cases prove to me that the outcome is driven

by the fact that the activity is gambling. If it were milk, news or shipping, our attitude

and the result would change. Posadas is the key, not Exxon.