Opinion ID: 784910
Heading Depth: 3
Heading Rank: 2

Heading: Interference with investment backed expectations.

Text: 20 Second, the challenged provisions of HB 561 do not interfere with legitimate investment backed expectations. The district court observed that the same legislation that authorized simulcast-only racing also included the revenue allocation formulas to which the plaintiffs objected and concluded that the plaintiffs could have no reasonable expectation of a greater return on their investment than that provided under the CSPF and 50% Rule. 21 The plaintiffs offer several arguments as to why this up-front disclosure of the terms of participation did not prevent them from reasonably expecting higher returns. First, they argue that the district court's conclusion is tantamount to finding that participants in heavily-regulated industries have no choice but to accept even the most confiscatory regulations. [I]t is not objectively reasonable, they contend, to expect that the state will condition participation in the racing industry upon acceptance of a system which transfers earnings from one set of race track owners to another. Next, the plaintiffs charge that HB 561 disrupts normal expectations as to how value generated through economic activity is apportioned among those performing the activity, because the distribution of funds from the CSPF is based on historical shares of racing revenues at Ohio race tracks, and because both the CSPF and the 50% Rule create disproportionate benefits and burdens among race track operators. Finally, the plaintiffs argue that they had a reasonable investment backed expectation that the introduction of simulcast-only racing would enhance revenues and enable them to offer larger purses at their own tracks. 6 22 Even assuming, however, that the plaintiffs have accurately characterized the provisions of HB 561, these contentions are beside the point. To say that it is not reasonable to expect that the government enact such regulations, that such regulations are subject to challenge, or that such regulations conflict with normal business expectations does not change the fact that the plaintiffs were well aware of the CSPF and the 50% Rule prior to making any investments related to simulcast-only racing, and could not, therefore have reasonably expected a greater return. Consequently, this factor also weighs against finding a taking. 23