Charles Crissman; Wendy Crissman; Christine Crissman v. Dover Downs Entertainment Inc.

PRECEDENTIAL
Filed April 30, 2002
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 00-5178
CHARLES CRISSMAN;
WENDY CRISSMAN;
*CHRISTINE CRISSMAN,
Appellants
v.
DOVER DOWNS ENTERTAINMENT INC.;
DOVER DOWNS, INC.
*(Dismissed as Party per Court’s 11/8/2000 Order)
On Appeal from the United States District Court
for the District of Delaware
(D.C. Civil No. 99-cv-00755)
District Judge: Honorable Roderick R. McKelvie
Originally Argued December 5, 2000
Before: McKEE, ROSENN and CUDAHY,**
Circuit Judges
Reargued En Banc November 28, 2001
Before: BECKER, Chief Judge, SLOVITER,
MANSMANN,*** SCIRICA, NYGAARD, ALITO, McKEE,
RENDELL, BARRY, FUENTES, and ROSENN,
Circuit Judges
_________________________________________________________________
** Honorable Richard D. Cudahy, Senior Judge, United States Court of
Appeals for the Seventh Circuit, sitting by designation.
*** The Honorable Carol Los Mansmann participated in the argument
and conference of the en banc court in this appeal, but she died before
the filing of the opinion.
(Filed: April 30, 2002)
Noel E. Primos
Jeffrey J. Clark [ARGUED]
Schmittinger & Rodriguez
414 South State Street
P.O. Box 497
Dover, DE 19903
Counsel for Appellants
Charles Crissman; Wendy Crissman
Thomas P. Preston [ARGUED]

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Reed Smith
1201 Market Street, Suite 1500
Wilmington, DE 19801
Counsel for Appellees
Dover Downs Entertainment Inc.;
Dover Downs, Inc.
James F. Burnett
Potter, Anderson & Corroon
6th Floor
1313 North Market Street
P.O. Box 951
Wilmington, DE 19899
Counsel for Amicus-Appellees
Thoroughbred Racing Associations of
North America, Inc.; DE Racing
Assoc.
Frederick J. Martin
Bleakley, Platt & Schmidt
One North Lexington Avenue
White Plains, NY 10601
Counsel for Amicus-Appellees
Harness Tracks of America
2
OPINION OF THE COURT
RENDELL, Circuit Judge.
We are called upon in this appeal to determine whether
the exclusion of Charles and Wendy Crissman from Dover
Downs race track was fairly attributable to the state of
Delaware. The Crissmans argue that Dover Downs and the
state were in a "symbiotic relationship" such that Dover
Downs acted under color of state law based on the
Supreme Court’s reasoning in Burton v. Wilmington Parking
Authority, 365 U.S. 715 (1961). The District Court held that
there was no state action and granted Dover Downs’ motion
for summary judgment. A panel of this court reversed, but
on rehearing en banc, we conclude that the regulation and
flow of funds involved here do not equate to the facts in
Burton and do not otherwise support a conclusion that the
state is responsible for the Crissmans’ exclusion. 1
Accordingly, we will affirm the District Court.
I.
Our jurisdiction is clear under 28 U.S.C. S 1291, and our
review of the District Court’s grant of summary judgment is
plenary, e.g., Pacitti v. Macy’s, 193 F.3d 766, 772 (3d Cir.
1999). We apply the same legal standard as the District
Court did, determining whether there is a genuine issue as
to any material fact, while viewing the facts and inferences
from them in the light most favorable to the Crissmans. Id.;
Fed. R. Civ. P. 56. If the Crissmans have failed to make a
showing sufficient to establish the existence of state action,
Dover Downs is entitled to judgment as a matter of law.

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Celotex v. Catrett, 477 U.S. 317, 322 (1986).
II.
Although little is straightforward in determining whether
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1. The panel opinion, later vacated by this Court, appears at 239 F.3d
357 (3d Cir. 2001).
3
a private actor has acted "under color of state law,"2 one
directive emerges clearly from the Supreme Court’s
jurisprudence: the facts are crucial. In Burton ’s often-
quoted words, "[o]nly by sifting facts and weighing
circumstances can the non-obvious involvement of the
State in private conduct be attributed its true significance."
Burton, 365 U.S. at 722. Accordingly, we will begin with a
discussion of the facts pertaining to the conduct at issue,
namely, the exclusion of the Crissmans from the Dover
Downs race track; then we will explore the relationship
between the Crissmans and Dover Downs and the nature of
the involvement of the state of Delaware.
A. The Crissmans and Dover Downs
Charles and Wendy Crissman live in Delaware and own
and train horses. They make their living exclusively from
harness racing, and have done so for many years, at least
since the late 1970s or early 1980s. In order to participate
in racing in Delaware, they are licensed by the Harness
Racing Commission of Delaware (the "Commission" or
"Harness Racing Commission"), which is part of the state’s
Department of Agriculture. 3 DEL. C.S 10002. We know
little else from the record about the Crissmans.
Dover Downs, Inc., is a private corporation that owns and
operates a harness racing facility in Dover, Delaware,
where, until 1997, the Crissmans raced their horses. The
corporation is a subsidiary of Dover Downs Entertainment,
Inc., which apparently has other interests in hotels and
NASCAR racing, but which is not named in this suit. Dover
Downs is one of two state-licensed harness racing tracks in
Delaware, each of which runs races for half the year.
Although excluded from Dover Downs, the Crissmans
continue to race at the other track, Harrington Raceway.
The Crissmans do not dispute that Dover Downs’ facilities
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2. Where a defendant’s conduct is state action under the Fourteenth
Amendment, it is also conduct "under color of state law" for S 1983. See
Brentwood Acad. v. Tennessee Secondary Sch. Athletic Ass’n, 531 U.S.
288, 295 n.2 (2001); Lugar v. Edmondson Oil Co. , 457 U.S. 922, 935
(1982). Because the difference is not significant here, we use the two
phrases interchangeably. See Groman v. Township of Manalapan, 47
F.3d 628, 638 n.15 (3d Cir. 1995).
4

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were privately built on private land, and are privately
owned.
Dover Downs is not only a state-licensed harness racing
association, as defined by the harness racing regulations,
but is also a state-licensed "video lottery agent." The three
lottery agents in Delaware -- Dover Downs, Harrington
Raceway, and a thoroughbred track -- have both racing
and video lottery machines (also called video slot machines
or "slots"). The video lottery machines were added to the
existing harness racing track in 1994 as a separately
managed operation. Both activities are subject to extensive
regulation by the state.
The general manager of harness racing for Dover Downs,
Charles Lockhart, runs the day-to-day operations of Dover
Downs’ racing facilities and recommended the exclusion of
the Crissmans to Dover Downs’ president. Lockhart became
the general manager on October 20, 1997, only days before
he decided to exclude the Crissmans from the harness
racing track. A letter was sent to each of the Crissmans --
dated October 27, 1997 -- informing them that they could
no longer race at Dover Downs. The one-sentence letter,
which was signed by the president of Dover Downs after
discussions with Lockhart, stated: "[A]s of this date you are
not welcome on the premises of Dover Downs nor will Dover
Downs be accepting any horses owned or trained by you."
The race track refused to explain this exclusion. 3 Despite
the Crissmans’ repeated requests to allow them access, the
exclusion continued through the 1997-1998 and 1998-
1999 seasons.
Lockhart indicated in his deposition testimony that he
excluded the Crissmans because of rumors of licensing
denials, doping, and financial irresponsibility, as well as
rumors that the Harness Racing Commission was
investigating Charles Crissman for false ownership in
connection with Delaware-only races. These races, limited
to horses wholly owned by Delaware residents or sired by
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3. A letter sent by Dover Downs’ General Counsel to the Crissmans’
lawyer in October 1999 stated that "we choose not to debate the merits
of our decisions with regard to our right to exclude individuals from our
facility."
5
Delaware stallions, were introduced by the race track in the
early to mid-1990s, and the rules governing eligibility were
formalized in 1998, see 3 DEL. C. S 10032. The rules or
policies that govern these Delaware-only races could be
circumvented through "false ownership" -- where the
formal owner (presumably a Delaware resident) is not the
"true" owner (presumably not a Delaware resident). These
races make up about five of the thirteen daily races.

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Lockhart had heard all of these rumors before beginning
his employment with Dover Downs. From 1973 to 1997,
Lockhart had worked for an association of harness horse
owners, trainers, breeders and drivers. It was in that
capacity that he first met Charles Crissman in the late
1970s or early 1980s. Because of Lockhart’s position in the
association, horsemen came to him with complaints,
including complaints that Charles Crissman was
circumventing the Delaware-only racing policies and that
he had misrepresented horses that he sold.
There is no evidence in the record that the state
authorities were involved in any way in the exclusion. It so
happened that Lockhart had known Robert Collison, the
Harness Racing Commission investigator who was looking
into the claims of false ownership, for fifteen or twenty
years and had discussed Charles Crissman’s alleged
misconduct with him before Lockhart began working at the
race track. Lockhart himself acknowledged that he had two
conversations with Collison about the investigation while
Lockhart was employed by Dover Downs, but both of them
took place after the Crissmans had been excluded. There
was no evidence of any interaction between Lockhart and
Collison -- and thus between Dover Downs and the state --
in connection with the decision to exclude, or the exclusion
of, the Crissmans.
B. Involvement of the State of Delaware
The state of Delaware has consistently taken the position
that the decision to exclude the Crissmans was Dover
Downs’ alone. In February 1999, Delaware’s Department of
Justice sent the Crissmans a letter (seemingly in response
to a request for some action or intervention on its part)
stating that the Commission can only request that racing
6
licensees provide the state with a list of excluded people,
and that the Commission’s licensing power "does not
supersede the common law right of a track to exclude
individuals for lawful grounds."4 It directed the Crissmans
to take up their complaints with the track.
In fact, the Crissmans acknowledged at oral argument
that the state had no "direct" involvement in Dover Downs’
conduct, arguing instead that state regulation and the flow
of funds between Dover Downs and the state by virtue of
the video lottery operation made their exclusion"fairly
attributable to the state." Both the harness racing and the
slot machines are heavily regulated, as is true in most
states where gambling or racing are permitted.
The statute establishing the Harness Racing Commission
gives it power to promulgate regulations regarding harness
racing operations. These are detailed in their provisions,
reaching such aspects of racing as the videotaping systems
to be used, the appropriate surface for the race track, and
even the colors to be worn by the various starting-gate

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positions. Delaware Harness Racing Commission Rules and
Regulations ("Commission Rules"), ch. IV, III. C, D, H.
The regulations subject certain race track personnel to
regulatory approval. Horse owners and trainers, race track
owners, and various officials must be licensed by the state,
and some of the employees’ positions are defined by the
Commission Rules. See, e.g., 3 DEL. C. S 10023.
Nonetheless, Dover Downs pays, supervises, and is in
charge of hiring decisions and, generally, decisions to fire
employees. There are a few exceptions. Some judges may be
paid by the state, which is then reimbursed by the track,
and the state veterinarian is state-appointed, Commission
Rules, ch. III, XII.A.1. But neither has a role in managing
the track’s operations; the judges oversee the fairness of the
races and the state veterinarian evaluates the horses’
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4. A Commission regulation specifically provides:"An association may
eject or exclude a person for any lawful reason. An association shall
immediately notify the State Steward and the Commission in writing of
any person ejected or excluded by the association." Delaware Harness
Racing Commission Rules and Regulations ("Commission Rules"), ch. IV,
IV. E.
7
health. Commission Rules, ch. III, XII.A.3. Moreover, there
can be no involvement going the other way; no one with an
official relationship to a harness racing association can be
an employee of the Commission. 3 DEL. C. S 10007.
The Commission has reserved for itself numerous rights
and powers, including the right to regulate admission
charges, approve changes to a track’s buildings, compel
production of books or other documents showing a track’s
receipts and disbursements, require removal of any of the
track’s employees or officials, place expert accountants in
the track’s offices to ensure compliance, and issue
subpoenas for the attendance of witnesses and production
of documents before the Commission. 3 DEL. C. S 10029.
While comprehensive from a regulatory standpoint, these
regulations stop short of giving the state any interest or role
in the day to day operations of Dover Downs or its decision-
making as to how it runs its business.5
The state regulations also reflect the state’s concern for
the finances of harness racing associations like Dover
Downs, in that the associations are subject to audits by the
Commission and must periodically submit financial
statements. 3 DEL. C. SS 10029(e); 10030; Commission
Rules, ch. IV, II.B. The Commission can enforce these
measures through several of the special powers it has
reserved -- particularly the power to place an accountant in
a licensee’s office, see 3 DEL. C. S 10029(e) -- and,
presumably, through its power to suspend or revoke
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5. The regulatory scheme governing racing is similar to Pennsylvania’s,

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which we had the opportunity to consider in Fitzgerald v. Mountain
Laurel Racing, Inc., 607 F.2d 589 (3d Cir. 1979), where we held that "the
State’s relationship to the heavily regulated racing industry [was] not
sufficient to establish a symbiotic relationship under Burton." Id. at 596.
The scheme there included detailed regulations, licensing of officials and
description of their job duties, state approval of officers and even
stockholders of private racing associations, a substantial state financial
interest in tax revenue, as well as a rule calling for the track to "enforce"
Racing Commission Rules. Ultimately we found state action because
racing officials, who were privately paid but had authority from the
Commission to oversee the races, had participated in the decision to
expel a trainer from the track. But the regulatory scheme in itself did not
make the action "fairly attributable to the state." Id.
8
licenses, 3 DEL. C. S 10026. Nonetheless, Dover Downs
makes its own independent fiscal decisions.
The horse racing regulations are only one aspect of the
state’s relationship with Dover Downs, of course, and we
agree with the panel opinion that Dover Downs’ video
lottery and racing activities should be considered together.
Whereas the state has been involved in the regulation of
horse racing for some time,6 state licensing of video lottery
at horse tracks is a fairly recent development. 7 It was first
permitted in Delaware upon the passage in 1993 of an act
known as the "Horse Racing Redevelopment Act" (the "Act"),
which had as its stated purpose the revitalization of the
horse racing industry in Delaware. 69 Del. Laws 446. The
video lottery machines were introduced in 1994 and were
limited to existing tracks. See 29 DEL. C. S 4819(a).8 Dover
Downs and Harrington Raceway are permitted to house
video lottery machines and to become "agents" only because
they were racing tracks in existence when the Act was
passed. Further, when Dover Downs chose to become a
video lottery agent, its racing activities became subject to
certain additional restrictions -- video lottery agents are
required, for instance, to conduct more days of harness
racing than they did before the passage of the Act, and to
increase the number of employees. See 3 D EL. C.
S 10148(1).
Like harness racing, the video lottery is subject to
detailed regulations. These include licensing requirements
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6. Several of the provisions of the statute regulating harness racing in
Delaware date back to 1945. See 45 Del. Laws 303 (1945).
7. Similar legislation exists in a few other states. See, e.g., W. VA. CODE
S 29-22A-2 (2001) (authorizing video lottery machines at horse or dog
tracks); S.D. CODIFIED LAWS S 42-7A (2001) (establishing a video lottery
business under the direction of an independent state agency). Amici
curiae, the Thoroughbred Racing Associations of North America and
Delaware Racing Association, suggest that such an arrangement is
under consideration in several more states.
8. The statutory provisions governing the video lottery were added to an

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existing statute, which permitted a state lottery and described its
mechanisms, including the duties of the director of the state lottery to
"operate and administer" the lottery, as well as to promulgate rules and
regulations. 29 DEL. C. S 4805(a).
9
and certain restrictions on the lottery agents, such as caps
on the number of machines that can be at any one location.
29 DEL. C. S 4820. The machines, which the state
purchases, or in some instances leases, from the
manufacturers, are connected to a central state computer,
but are housed and operated on private property. See 29
DEL. C. SS 4819(c), 4820 (licensees submit a proposed plan
for obtaining video lottery machines but the state lottery
director actually leases or purchases them from the
manufacturers).
Statutory provisions also govern the handling of proceeds.9
A portion of the video lottery proceeds flows directly to the
track’s racing operation as purse enhancements. 29 D EL. C.
S 4815(b)(3)b; 3 DEL. C. S 10048(2). Even racing tracks that
are not video lottery agents receive funds from the video
lottery, provided that they maintain a certain purse size
and number of racing days. 29 DEL. C.S 4821. In addition
to this subsidy, Dover Downs acts essentially like a
government contractor -- the state pays Dover Downs a
commission for housing and operating the slots. 29 D EL. C.
S 4815.
The funds also flow in the other direction, as the state
receives a portion of the video lottery proceeds. Indeed,
raising money for the state is what makes the lottery
permissible under the Delaware Constitution, which
generally prohibits gambling, but makes an exception for
lotteries "under State control" designed to raise money for
the state. DEL. CONST.S 17. The revenues from the slot
machines -- minus the money won by players -- go to a
state fund, from which money is paid out as dictated by
statute. See 29 DEL. C. S 4815. In addition to the payments
to the racing tracks described above, funds flow to the state
to reimburse it for administrative costs, to organizations
that help compulsive gamblers, and to the state’s general
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9. See 29 DEL. C. S 4815. Parts of this section were revised in 1997, but
the changes do not affect our analysis. The revised statute allocates
funds to jockey organizations and the Delaware Standardbred Breeder’s
Program, and instead of the video lottery agents’ reimbursing the state
for equipment costs, these costs are paid out of funds allocated to the
state. See 29 DEL. C. S 4815(b)(3) (2001).
10
fund. See id. The revenues coming to the state of Delaware
from the video lottery operation have been quite significant
-- in 1997, video lottery contributions to the state general
fund were $152.3 million and Dover Downs earned $90.13

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million, while the next year they earned $206 and $113.12
million, respectively.
Factually, then, the Crissmans complain of an act by an
employee of a privately owned race track in which the state
was, undisputedly, not directly involved. However, Dover
Downs acknowledges that its harness racing and video
lottery activities are subject to extensive state regulation,
and both the track and the state receive funds from the
operation of the video lottery machines. It is the
characterization of the relationship formed by these
elements that is at the heart of the disagreement between
the parties.
III.
After having been excluded from Dover Downs for two
seasons, and on the day before the 1999-2000 season
began, the Crissmans filed a complaint in federal district
court in Delaware. They made a claim under S 1983 that
Dover Downs’ exclusion of them without a hearing violated
their Fourteenth Amendment Due Process rights. A
necessary element of this claim was that Dover Downs had
violated these rights while acting "under color of state law."
42 U.S.C. S 1983.
The District Court invited and then considered further
evidence specifically on the state action issue before
granting Dover Downs’ motion for summary judgment on
the ground that the Crissmans had not sufficiently shown
this element.10 Crissman v. Dover Downs, Inc., 83 F.
Supp.2d 450, 453, 455 (D. Del. 2000). The Court concluded
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10. Dover Downs filed a cross-motion for summary judgment in response
to the Crissmans’ motion for a preliminary injunction. The District
Court’s decision on the summary judgment motion resolved both. The
parties agreed that the record for the motions would consist of a
stipulation of undisputed facts and the items presented as the record at
the preliminary injunction hearing.
11
that state regulation and receipt of revenue did not make
this privately owned harness racing facility a state actor
under the test urged by the Crissmans, namely the
"symbiotic relationship" test first announced by the
Supreme Court in Burton. Id. at 454. Further, it found no
evidence that state officials participated in the decision to
exclude the Crissmans. Id. at 455. That is, it found no
evidence of a "close nexus" between the state and the
conduct, which could establish state action under Jackson
v. Metropolitan Edison Co., 419 U.S. 345 (1974).
The Crissmans filed a timely appeal of this decision. A
panel of this Court reversed the District Court’s grant of
summary judgment for Dover Downs based on its view that
the track did have a "symbiotic relationship" with the state
of Delaware. Crissman v. Dover Downs Entm’t Inc. , 239 F.3d

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357, 358 (3d Cir. 2001). The panel reasoned that Burton
established an exception to the general rule that the state
must be involved in the challenged conduct, and that
Burton permitted state action to be based on the facts here,
namely, facts demonstrating what it termed "overall
involvement of the State in the affairs of the private entity."
Id. at 361. This was the first opinion in which we applied
Burton to find state action since 1984, and one of only a
few to reach that conclusion without a finding that the
entity involved was an "instrumentality" of the state.11
Interestingly, the Supreme Court’s most recent
pronouncement in the area of state action does not
reference Burton, and the scope of Burton, and its
applicability here, presents an important issue. We vacated
the panel opinion so that this issue could be considered by
the entire Court.
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11. Most of our cases finding state action under Burton date from the
1970s and involved universities and libraries. See Krynicky v. University
of Pittsburgh, 742 F.2d 94 (3d Cir. 1984) (University of Pittsburgh and
Temple University); Benner v. Oswald, 592 F.2d 174 (3d Cir. 1979)
(Pennsylvania State University); Chalfant v. Wilmington Inst., 574 F.2d
739 (3d Cir. 1978) (en banc) (library); Braden v. University of Pittsburgh,
552 F.2d 948 (3d Cir. 1977) (en banc) (University of Pittsburgh);
Hollenbaugh v. Carnegie Free Library, 545 F.2d 382 (3d Cir. 1976)
(library).
12
IV.
The basic question we must ask, and answer, in the state
action arena is whether the exclusion of the Crissmans
from Dover Downs can be fairly attributed to the state. See,
e.g., American Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40,
50 (1999). The Supreme Court has established a number of
approaches to this general question, which it has recently
said are essentially "facts that can bear on the fairness of
such an attribution." Brentwood Acad. v. Tennessee
Secondary Sch. Athletic Ass’n, 531 U.S. 288, 296 (2001).
Regardless of whether these are "tests" or"facts,"12
Brentwood directs courts to focus on the fact-intensive
nature of the state action inquiry, mindful of its central
purpose: to "assure that constitutional standards are
invoked ‘when it can be said that the State is responsible
for the specific conduct of which the plaintiff complains.’ "
Id. at 295 (quoting Blum v. Yaretsky, 457 U.S. 991, 1004
(1982) (emphasis in original)).
The Crissmans rely primarily on the "symbiotic
relationship test" the Supreme Court announced in Burton
v. Wilmington Parking Authority, 365 U.S. 715 (1961).
Alternatively, but clearly less vigorously, they assert that
state action here could also be based on the "close nexus"
between the challenged action and the state, which we will
discuss below. First we will address Burton, its relationship
to the general state action inquiry, its scope, and how its
facts compare to those before us here.

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A. Burton
In Burton, a restaurant located in the Wilmington Parking
Authority, a state-owned parking facility, refused to serve a
customer because of his race. The Court concluded that
this discriminatory conduct was state action. The state’s
parking facility was highly dependent on the revenue from
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12. The Supreme Court pointed out in Lugar v. Edmondson Oil Co., 457
U.S. 922 (1982), that it has never been clear "[w]hether these different
tests are actually different in operation or simply different ways of
characterizing the necessarily fact-bound inquiry that confronts the
Court in [each] situation." Id. at 939; see also Groman v. Township of
Manalapan, 47 F.3d 628, 639 n.16 (3d Cir. 1995). Brentwood seems to
embrace the second understanding.
13
the leases -- nearly 70% of the funds necessary to pay the
financing for the facility came from leases, while only 30%
came from parking revenue. Patrons of the state’s activity
(parking) benefitted from the lessee’s activity (restaurant
services). And the activity complained of -- the
discriminatory service of restaurant patrons -- was the
source of revenue needed for the state’s operation of the
project: "profits earned by discrimination not only
contribute to, but also are indispensable elements in, the
financial success of a governmental agency." Burton, 365
U.S. at 724.13
Moreover, the restaurant was on publicly owned land and
was located within the exterior walls of a public parking
garage. Signs on the garage indicated that the building as
a whole was public, and the Supreme Court concluded that
the state had "elected to place its power, property and
prestige behind the admitted discrimination." Id. at 719,
725. The physical location of the restaurant involved the
state further in its operations: any improvements the
restaurant made to the building would be tax exempt and
the state was responsible for physical maintenance and
provision of utilities. The Court held that the"symbiosis" --
close association of mutual benefit -- dictated a finding of
state action.
We must consider at the outset the panel’s view that
Burton contains an exception to the principle that the state
must have been implicated in the conduct complained of.
Justice Souter’s recent blanket statement in Brentwood
seems to leave no room for such an exception. There, he
stated categorically that in order to determine whether an
action is fairly attributed to the state, we must look at the
challenged conduct: "state action may be found if, though
only if, there is such a ‘close nexus between the State and
the challenged action’ that seemingly private behavior ‘may
be fairly treated as that of the State itself.’ " Brentwood, 531
U.S. at 295 (emphasis added).
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13. The conclusion that the state benefitted was based in part on the
restaurant’s assertion that serving African-Americans would hurt its
business. See Burton, 365 U.S. at 724.
14
In Burton, the Supreme Court characterized the conduct
as bearing a very significant relationship to the state: "[T]he
profits earned by discrimination not only contribute to, but
also are indispensable elements in, the financial success of
a governmental agency." Burton, 365 U.S. at 724; see also
Rendell-Baker v. Kohn, 457 U.S. 830, 843 (1982)
(emphasizing the role this fact played in the outcome of
Burton). By referring in general terms to Burton’s "joint
participation test," courts often forget that Burton
concluded that there the state was "recognized as a joint
participant in the challenged activity," and not in the private
entity as a whole. Burton, 365 U.S. at 725; see also id. at
724 (concluding that all of the activities "indicate[ ] that
degree of state participation and involvement in
discriminatory action which it was the design of the
Fourteenth Amendment to condemn" (emphasis added)).
Accordingly, we conclude that Burton stands for the
proposition that, if a "symbiotic" relationship does exist,
then, by virtue of the close involvement of the state and
interdependence of the actors in the association formed and
the challenged activity, the conduct complained of is in fact
"fairly attributable" to the state. Instead of examining the
conduct and, then, the state’s role in it, Burton would have
us look first at the relationship and test whether the
conduct could be linked to the joint beneficial activities --
as it was in Burton due to the essential revenues flowing
from the discriminatory restaurant operation. We view
Burton, then, not as an exception to the rule that the
conduct complained of must be fairly attributable to the
state, but, rather, as providing another vantage point or
way of assessing the necessary connection to the state.
B. Burton’s Scope
How, and whether, we then apply Burton depends on the
extent to which its principles still control our analysis. The
Supreme Court has had occasion in the more than 40 years
since Burton was decided to consider state action in no less
than a dozen cases, and while referring to and
characterizing the Burton "test" in several opinions, the
15
Supreme Court has never relied upon it again to find state
action. Nor, however, has it overruled it.14
The Court itself, and several of the Justices, have noted
the narrow reach of Burton. In American Manufacturers
Mutual Insurance v. Sullivan, 526 U.S. 40, 57 (1999), seven
Justices opined that "Burton was one of our early cases

-- 12 of 30 --

dealing with ‘state action’ under the Fourteenth
Amendment, and later cases have refined the vague‘joint
participation’ test embodied in that case."15 Further, in
American Manufacturers, the Supreme Court reversed our
court’s determination that private insurers became state
actors by providing benefits under the extensively regulated
and state-controlled workers’ compensation system,
admonishing our court for having "figuratively thrown up
_________________________________________________________________
14. As the Supreme Court has directed, "it is this Court’s prerogative
alone to overrule one of its precedents." State Oil Co. v. Khan, 522 U.S.
3, 20 (1997). There, it stated that the court of appeals was correct to
apply the relevant Supreme Court decision despite what the court of
appeals described as the case’s "infirmities,[and] its increasingly wobbly,
moth-eaten foundations." Id.
15. See also NCAA v. Tarkanian, 488 U.S. 179, 192 (1988) (explaining
that there is state action under Burton where the state "knowingly
accepts the benefits derived from unconstitutional behavior").
Justice O’Connor has written two dissenting opinions indicating
Burton’s narrow scope. In Lebron v. National Railroad Passenger Corp.,
513 U.S. 374 (1995), she wrote:
Our decision in Burton . . . was quite narrow. We recognized "the
limits of our inquiry" and emphasized that our decision depended on
the "peculiar facts [and] circumstances present." . . . We have since
noted that Burton limited its "actual holding to lessees of public
property," Jackson v. Metropolitan Edison Co. , [419 U.S. at 358,] and
our recent decisions in this area have led commentators to doubt its
continuing vitality . . . .
Id. at 409 (O’Connor, J., dissenting). Similarly, in Edmonson v. Leesville
Concrete Co., 500 U.S. 614 (1991), she questioned "the continuing
vitality of Burton beyond its facts" and noted that "the decision in
[Burton] depended on the perceived symbiotic relationship between a
restaurant and the state parking authority from whom it leased space in
a public building" and that "the State stood to profit from the
restaurant’s discrimination." Id. at 636 (O’Connor, J., dissenting).
16
its hands and fallen back on language in our decision in
Burton." Id.
And, curiously, in its most recent pronouncement in
Brentwood, the Supreme Court reviewed the extensive
litany of "facts" that bear on whether there is state action,
but did not reference Burton. Justice Souter wrote:
[A] challenged activity may be state action when it
results from the State’s exercise of "coercive power,"
Blum [v. Yaretsky, 457 U.S. 991, 1004 (1982)], when
the State provides "significant encouragement, either
overt or covert," ibid., or when a private actor operates
as a "willful participant in joint activity with the State
or its agents," Lugar [v. Edmondson Oil Co., Inc., 457
U.S. 922 (1982)] (internal quotation marks omitted).

-- 13 of 30 --

We have treated a nominally private entity as a state
actor when it is controlled by an "agency of the State,"
Pennsylvania v. Board of Directors of City Trusts of
Philadelphia, 353 U.S. 230, 231, 77 S.Ct. 806, 1
L.Ed.2d 792 (1957) (per curiam), when it has been
delegated a public function by the State, cf. , e.g., West
v. Atkins, [487 U.S. 42, 56 (1988)]; Edmonson v.
Leesville Concrete Co., 500 U.S. 614, 627-628, 111
S.Ct. 2077, 114 L.Ed.2d 660 (1991), when it is
"entwined with governmental policies," or when
government is "entwined in [its] management or
control," Evans v. Newton, 382 U.S. 296, 299, 301, 86
S.Ct. 486, 15 L.Ed.2d 373 (1966).
Brentwood, 531 U.S. at 296. Notably absent is any
reference to the "symbiotic relationship test," or to Burton.
In fact, Burton is never mentioned in the majority opinion.16
_________________________________________________________________
16. "The Crissmans point to the use of the word "symbiosis" in footnote
four in Brentwood as evidence that the Court still embraces the Burton
"test," despite the fact that the majority does not cite to Burton or
expound on the theory. See Brentwood Acad. v. Tennessee Secondary
Sch. Athletic Ass’n, 531 U.S. 288, 301 n.4 (2001). But the footnote
pertains to an unrelated point, the rejection of formalism in determining
state action, and "symbiosis" arises only as an example of a criterion
that looks to underlying reality. In the footnote, the majority’s only
reference to "symbiosis" is as a criterion of state action "which the
dissenters accept," which could be said to imply that the majority does
17
The fact remains, however, that Burton has not been
overruled, nor its reasoning discredited by the Supreme
Court in the text of any opinion, despite numerous
opportunities. Because the full range of Supreme Court
precedent that now guides our analysis appears to narrow,
but not to overrule, Burton, we must conclude that, while
Burton remains good law, it was crafted for the unique set
of facts presented, and we will not expand its reach beyond
facts that replicate what was before the Court in Burton.
C. Application of Burton
Given the thrust of recent Supreme Court precedent, and
given the fact pattern presented by the operation before us,
the conduct complained of, and the regulatory scheme, we
cannot conclude that the state and Dover Downs had a
"symbiotic relationship" as existed in Burton such that the
exclusion of the Crissmans could be found to be fairly
attributable to the state of Delaware. Unlike the state in
Burton, Delaware was not conducting any operation
together with the race track at Dover Downs. It was not
operating a mutually beneficial business there. Rather, it
licensed Dover Downs to operate as a harness racing track
and as a video lottery agent, it regulated both operations, it
authorized the use of video lottery proceeds to subsidize
harness racing, it paid Dover Downs a commission for
housing and operating the video lottery machines, and it

-- 14 of 30 --

received funds from the video lottery operation.
Although some public property was involved, since the
slot machines were owned or leased by the state, the
conduct did not take place on state property as in Burton,
so that there is no basis for finding that the state was in
any way putting its support behind the conduct of the
private entity. See, e.g., Gannett Satellite Info. Network, Inc.
v. Berger, 894 F.2d 61, 67 (3d Cir. 1990) ("The fact that the
[newspaper] concessionaires lease their premises from a
_________________________________________________________________
not accept it. The dissenting Justices did, in fact, cite Burton and include
the "symbiotic relationship test" among the approaches they discussed
and applied. They found no state action under Burton because the
private entity acted as a contractor and the state did not profit from the
challenged activity. Id. at 935, 939 (Thomas, J., dissenting).
18
governmental entity also falls short of triggering state
action. . . . In such circumstances, state action will be
recognized only when there is a ‘symbiotic’ relationship
between the private and governmental entities, such that
the public might reasonably conclude from that
relationship that the government has lent its support to the
private entity’s actions.").
In fact, the type of state-private relationship present here
seems more analogous to the fact patterns involved in cases
that have addressed whether government regulation and
funding convert private action to state action. The Supreme
Court made clear early in its state action jurisprudence
that state licensing was not enough to make a private entity
a state actor, see Moose Lodge v. Irvis, 407 U.S. 163, 176
(1972), and the Court has repeatedly opined that regulation
-- even detailed regulation, as we have here -- does not
equate to state action, see, e.g., Jackson v. Metro. Edison
Co., 419 U.S. 345, 350 (1974) (a heavily regulated utility
company was not a state actor).
The Supreme Court has stated with equal force that the
flow of funds does not implicate the state in private activity.
The state of Delaware subsidizes harness racing by using
some of the revenue from the video lottery, but it is clear
that "[t]he Government may subsidize private entities
without assuming constitutional responsibility for their
actions." San Francisco Arts & Athletics, Inc. v. United
States Olympic Comm., 483 U.S. 522, 544 (1987). Here, the
state also pays Dover Downs a substantial commission for
housing and operating the video lottery, but, as the
Supreme Court directed in Rendell-Baker v. Kohn , 457 U.S.
830 (1982), neither the fact nor the size of this commission
makes Dover Downs anything more than a private
contractor that performs a service. In Rendell-Baker, a
privately operated school that treated students with special
needs received at least 90% of its operating budget from the
state. Id. at 843. Nonetheless, the Supreme Court
characterized the school’s "fiscal relationship with the

-- 15 of 30 --

State" as "not different from that of many contractors
performing services for the government." Id. ; see also Blum
v. Yaretsky, 457 U.S. 991, 1011 (1982) ("That programs
undertaken by the State result in substantial funding of the
19
activities of a private entity is no more persuasive than the
fact of regulation of such an entity in demonstrating that
the State is responsible for decisions made by the entity in
the course of its business."). And, the use of the term
"agent" does not change this reasoning. Brentwood directs
us to look to reality rather than form, and Dover Downs
does not function as a traditional agent, who could, for
instance, bind the state.
Under the regulatory scheme here, the state does benefit
from the proceeds of the video lottery. The Supreme Court
has had little opportunity to address the impact on the
state action inquiry of the flow of funds in this direction, as
most cases have involved the flow of money from the state
to private entities. This is not surprising, for it would be a
radical concept if the state’s receipt of funds from private
actors were to convert them into state actors. If this were
the case, the state’s receipt of tax revenue from a private
entity’s operations would qualify most corporations as
federal actors, which is surely not a desirable result. See
Brown v. Philip Morris Inc., 250 F.3d 789, 803 (3d Cir.
2001).
While the Court’s ruling in Burton did turn to some
extent on the state’s receipt of and need for the restaurant
revenue, we submit that its fact pattern was unique and
must be so limited. There, the state would not have been
able to finance or pay for the parking facility absent the
restaurant’s lease, the demand for its parking was
potentially increased by the restaurant’s presence, and, as
noted above, it financially benefitted directly from the
specific discriminatory conduct.
As government’s contractual involvement and interaction
with private industry in so many ways is not only the norm
today, but indeed arguably on the rise, if a financially
advantageous contractual relationship providing revenue to
the state were enough to make a private entity a state
actor, it would tip the careful balance between preserving
"an area of individual freedom" and "assuring that
constitutional standards are invoked" when the state is
responsible for the conduct at issue. Brentwood , 531 U.S.
at 295.
20
In sum, the presence of both these elements -- regulation
and flow of funds -- that are separately unpersuasive in the
state action inquiry does not amount to more than each
alone; the combination brings no greater result-- namely,
no state action.17 Delaware is not associated in the harness

-- 16 of 30 --

racing or video lottery operation, nor are the monies that
flow to the state tied in any way to the conduct the
Crissmans complain of. The deeper involvement and
"interdependence" present in a unique way in the fact
pattern considered in Burton simply are not present here.18
_________________________________________________________________
17. This is consistent with the conclusion of most courts of appeals,
including our court, that the conduct of employees of state-regulated
race tracks is not state action absent a showing of a direct connection
between the state and the specific conduct at issue. In Fitzgerald v.
Mountain Laurel Racing, Inc., 607 F.2d 589 (3d Cir. 1979), we held that
Pennsylvania’s regulatory scheme did not make the action of a race track
"fairly attributable to the state," although we ultimately found that this
was state action based on the direct involvement of racing officials in the
conduct. We compared the case to Jackson and Moose Lodge, and
concluded that the state was not a "joint venturer" with the track such
that every act of the track could be said to be an act of the state. Id. at
596. See also Hadges v. Yonkers Racing Corp., 918 F.2d 1079, 1082 (2d
Cir. 1990) (exclusion of a harness racehorse driver was not state action
under Burton where the state had no proprietary interest in the track
and did not have a "neighboring, interlinked business, and consequently
lack[ed] as direct a financial stake in [the track’s] success as was present
in Burton"); Roberts v. Louisiana Downs, Inc., 742 F.2d 221, 226 (5th Cir.
1984) (denial of stall space was state action because of regulation
combined with direct participation of a racing official in the decision);
Bier v. Fleming, 717 F.2d 308, 311 (6th Cir. 1983) (exclusion of a
harness race driver was not state action where there was extensive
regulation and revenue to the state but no evidence that the state
participated in the conduct); Fulton v. Hecht , 545 F.2d 540, 542-43 (5th
Cir. 1977) (failure to renew contract to race greyhounds was not state
action despite the state’s role in auditing the track’s books and issuing
licenses and permits, the extensive revenue to the state, the presence of
a state veterinarian at the track, and the fact that the track was the only
one available during one-third of the year).
18. Our dissenting colleagues argue "tests" -- joint venture and
partnership -- never specifically espoused by the Supreme Court as
"tests" for state action. They do so based upon language in Moose Lodge
v. Irvis to the effect that certain facts did not make the state a partner
in any real sense. However, we do not take this reference as establishing
21
D. Third Circuit State Action Jurisprudence
We find nothing in our own jurisprudence regarding state
action or Burton that would require a different analysis or
result. At the same time that the Supreme Court has been
developing the law in this area, we have written many
opinions of our own focusing on state action, and have
referenced Burton perhaps more than other courts (and
definitely more than the Supreme Court). But, like the
Supreme Court in its jurisprudence, we originally noted the
presence of Burton as a test, but have gradually come to
appreciate its limitations.
We have revisited Burton periodically as the Supreme
Court’s state action jurisprudence has evolved. When faced

-- 17 of 30 --

with the question whether Burton survived the
announcement of the "close nexus test" in Jackson v.
Metropolitan Edison Co., 419 U.S. 345 (1974), we concluded
that it remained a viable framework. See Braden v.
University of Pittsburgh, 552 F.2d 948, 957-58 (3d Cir.
1977) (en banc). We reached the same conclusion in
Krynicky v. University of Pittsburgh, 742 F.2d 94, 98-99 (3d
Cir. 1984), after the Supreme Court decided the so-called
Lugar trilogy, Lugar v. Edmondson Oil Co. , 457 U.S. 922
(1982), Rendell-Baker v. Kohn, 457 U.S. 830 (1982), and
Blum v. Yaretsky, 457 U.S. 991 (1982). But Krynicky and
Braden have limited relevance to the situation here, not
only because both predate the Supreme Court’s most recent
pronouncements, but also because they involved
universities that we held to be "instrumentalities" of the
state -- factually and statutorily. We also held that the
state was "deeply enmeshed in operations of the University"
_________________________________________________________________
that every partnership or venture with the state will result in a finding
of state action. Rather, any relationship formed would have to be tested
against the attributes found to be hallmarks of state action in cases
such as Burton. Thus, even if called by another name, the relationship
must permit one to conclude that the action is fairly attributable to the
state. Even if the Supreme Court were to espouse affirmatively a state
action theory of joint venture or partnership (which does not seem to "fit"
given the concept of joint and several liability and the sufficiency of other
tests to accomplish the same result), we do not view the facts here as
implicating the state in the exclusion of the Crissmans.
22
including "its financing and its basic decision-making
processes," Braden, 552 F.2d at 959, and that the state
had taken the affirmative step of "statutorily accepting
responsibility for these institutions," Krynicky, 742 F.2d at
102, neither of which is the case here.
We have consistently noted the fact-specific nature of the
"involvement and interdependence" present in Burton. Boyle
v. Governor’s Veterans Outreach & Assistance Ctr. , 925 F.2d
71, 76 (3d Cir. 1991). In Boyle, we characterized Burton as
depending on the fact that "the state had many obligations
and responsibilities regarding the operation of the
restaurant; mutual benefits were conferred; and the
restaurant operated physically and financially ‘as an
integral part of a public building devoted to a public
parking service.’ " Id. Two years later, in Black v. Indiana
Area School District, 985 F.2d 707 (3d Cir. 1993), we took
a slightly narrower view, noting that Burton"turned on" the
facts listed in Boyle and, further, that the profits from the
discriminatory conduct were "indispensable" to the finances
of a government agency. Id. at 711.
And, in our most recent pronouncement in the area of
state action, we voiced our doubts as to Burton ’s continued
force. In Brown v. Philip Morris Inc., 250 F.3d 789 (3d Cir.
2001), we were called upon to decide whether tobacco
companies were government actors. Calling Burton

-- 18 of 30 --

"seminal, albeit somewhat idiosyncratic," we noted that the
government’s and the cigarette manufacturers’ relationship
-- forged by beneficial revenue and by labeling regulations
-- did not constitute the "interdependence" necessary
under Burton. Id. at 803. We stated:
Virtually all enterprises are subject to tax collection
and, to varying degrees, to regimes of administrative
regulation; were these attributes enough to satisfy the
test of Burton, substantially all businesses in the
country would effectively become federal actors. . ..
Moreover, although Burton retains much of its
precedential value, it should be noted that the
Supreme Court has recently cast some degree of doubt
upon that decision.
23
Id. Thus, our own jurisprudence is quite consistent with
the limited applicability of Burton to its facts -- facts not
present here.
E. Other Bases for State Action
In the absence of facts equating to those present in
Burton, the Crissmans still could show that their exclusion
was fairly attributable to the state if the situation were to
"fit" within one of the other approaches or"tests." They
argue that the "close nexus" test applies. We disagree.
The Crissmans conceded at oral argument that the state
had no "direct" involvement in the action, but they
nonetheless urged the "close nexus" argument in their
briefs and maintained at oral argument that it applies here.
They argued that "the state has delegated sufficient
authority to Dover Downs to make Dover Downs an agent
of the state" and that "Dover Downs’ exclusive authority
over racing activity for six months each year" establishes
the required nexus.
The Crissmans theorize that their exclusion was, in
effect, a decision that they were ineligible for Delaware-only
races for the six months of the year during which Dover
Downs was the only harness racing track in operation. So,
they urge, the Commission effectively delegated to the race
track its power to determine eligibility, see 3 DEL. C.
S 10032(e), making Dover Downs a state actor. But this
argument is without merit. The Crissmans challenge their
exclusion from the track itself and from all of the races, not
only from those with limited eligibility. Further, they do not
allege that any decision about their eligibility -- whether
they were or were not Delaware residents, for instance --
violated their Due Process rights. Cf. Hadges v. Yonkers
Racing Corp., 918 F.2d 1079, 1084 (2d Cir. 1990) (rejecting
the argument that a track was a "monopoly" so that its
exclusion of a horse owner was a de facto license revocation
by the state). Moreover, the section of the statute the
Crissmans rely on -- 3 DEL. C. S 10032 -- became effective
in July 1998, after the initial decision to exclude them.

-- 19 of 30 --

The Crissmans advance a second argument based on the
fact that Dover Downs is the only race track in operation
for six months of the year. They contend that since the
24
Commission has the power to designate the days a harness
racing track can operate, see 3 DEL. C. S 10023(c), it had
granted the track a "six-month monopoly." This argument
relies on the Supreme Court’s suggestion in Jackson v.
Metropolitan Edison Co., 419 U.S. 345 (1974), that conduct
of "a heavily regulated [business] with at least something of
a governmentally protected monopoly will more readily be
found to be ‘state’ acts than will the acts of an entity
lacking these characteristics." Id. at 453. But Jackson itself
then proceeded to ask whether the conduct was fairly
attributable to the state. Id. Even if Dover Downs had a
"six-month monopoly," this would not alter our conclusion
that, for the reasons given above, the state can not be said
to be responsible for the Crissmans’ exclusion. Indeed,
Jackson reached the same result -- no state action. See
also Fulton v. Hecht, 545 F.2d 540, 543 (5th Cir. 1977)
(rejecting the argument that state action was present
because the dog track was "granted a monopoly one-third
of the year").
In their opposition to Dover Downs’ petition for rehearing,
the Crissmans also pointed to the Commission Rule that
provides that an association "shall abide by and enforce the
Act and the rules and orders of the Commission" as
involving Dover Downs in the state enforcement activity.
Commission Rules, ch. 5, I.1 (emphasis added). The panel
opinion termed Dover Downs "an executive arm" of the
Commission, and, thus, of the state of Delaware, on the
ground that this rule delegated to Dover Downs a power
traditionally associated with sovereignty. Crissman v. Dover
Downs Entm’t Inc., 239 F.3d 357, 362 (3d Cir. 2001)
(quoting Jackson, 419 U.S. 345, 352-53 (1974) ("If we were
dealing with the exercise by [the utility] of some power
delegated to it by the State which is traditionally associated
with sovereignty, . . . our case would be quite a different
one.")). But we are unpersuaded by a single provision in the
context of all of the other facts we have noted indicating
that the exclusion was not fairly attributable to the state.
Moreover, a sensible reading of the verb "enforce" in this
context would be "to oversee compliance," rather than "to
enforce" in the sense of actual policing or active
governmental or official "enforcement" of rules and
25
regulations.19 This reading is consistent with our conclusion
in Fitzgerald v. Mountain Laurel Racing, 607 F.2d 589 (3d
Cir. 1979), that the Pennsylvania racing scheme, which
contained a similar "enforcement" provision, did not make
a track’s conduct state action.

-- 20 of 30 --

In sum, there is no evidence of a close nexus between the
exclusion of the Crissmans and the state of Delaware.
Further, the Crissmans have not argued, or demonstrated,
that their exclusion was state action under any other of the
"tests" or "facts" established by the Supreme Court.20
V.
For the reasons above, we conclude that the District
Court appropriately granted summary judgment in favor of
Dover Downs, and we will accordingly AFFIRM.
_________________________________________________________________
19. In fact, the rule has since been amended so that "abide by and
enforce" is replaced with "comply with." 5 Del. Register of Regs. S 3.2.4
(Oct. 1, 2001).
20. Because we will affirm the grant of summary judgment on the basis
of the state action issue, we need not reach the question of whether a
constitutional right was denied. Also, given our ruling, we do not need to
address the Crissmans’ request that we reverse the District Court’s
denial of their motion for a preliminary injunction.
26
ROSENN, Circuit Judge, Dissenting:
In 1993, Delaware departed from its role as solely a
regulatory body of the three horse racing tracks in the state
and decided to mount joint enterprises with each of them.
Therefore, the expulsion without a hearing of the
Crissmans, "licensees in good standing with the Harness
Racing Commission for the State of Delaware," 1 after about
twenty-five years as horse trainers and horse owners at the
Dover Downs race track fairly may be attributed to the
State under 42 U.S.C. S 1983.2 I, therefore, respectfully
dissent.
I.
The courts have never succeeded in formulating and
applying a precise test for the recognition of state action
under the Equal Protection Clause. In "sifting[the] facts
and weighing [the] circumstances," Burton v. Wilmington
Parking Auth., 365 U.S. 715, 722 (1961), the
entrepreneurial involvement of the State in the formerly
private operations of Dover Downs is evident. Fortunately,
the facts are transparent and undisputed.
The majority concludes that the regulations and flow of
funds do not equate to the facts in Burton and do not
otherwise support the exclusion of the Crissmans from the
Dover Downs race track as "fairly attributable to the state
of Delaware." (Maj. op. at 3). The majority is correct that
the facts do not equate to Burton. The facts here are not
only distinct from Burton but far more impressively support
state action.
Dover Downs attempts to portray a relationship with the

-- 21 of 30 --

State at the time the Crissmans were expelled as simply
regulatory. I agree that a regulatory relationship alone
_________________________________________________________________
1. Paragraph 2, Stipulation of Undisputed Facts.
2. 42 U.S.C. S 1983 provides: "Every person who, under color of any . . .
regulation . . . of any State . . . subjects, or causes to be subjected, any
citizen of the United States . . . to the deprivation of any rights,
privileges, or immunities secured by the Constitution and laws, shall be
liable to the party injured in an action at law, suit in equity, or any other
proper proceeding for redress."
27
clearly is insufficient to constitute state action. The
Supreme Court so held in Jackson v. Metropolitan Edison
Co., 419 U.S. 345, 350 (1974), and we have so held in
Fitzgerald v. Mountain Laurel Racing, Inc., 607 F.2d 589,
596 (1979). Nonetheless, we noted in Fitzgerald that:
Where a private enterprise stands, in its operations, as
a veritable partner with the state, then it seems proper
to hold such enterprise subject to the same
constitutional requirements to which the state is
accountable.
Id. at 595 (quoting Braden v. Univ. of Pittsburgh (Braden II),
552 F.2d 948, 958 (1977)).
Similarly, in Moose Lodge No. 107 v. Irvis, 407 U.S. 163
(1972), the Supreme Court in essence held that extensive
and detailed regulation of a private club generally is
insufficient to convert it into a state actor. Id. at 176-77.
The Supreme Court, however, also observed that although
the Moose Lodge was heavily regulated, it could not be said
to be "a partner or even a joint venturer in the club’s
enterprise," id. at 177, thus implying that a partnership, or
even a joint venture relationship between the State and a
private enterprise, as we have here, might bring different
consequences.
In this case, the record demonstrates that when Delaware
enacted the Horse Racing Redevelopment Act (HRRA) in
1993 to rejuvenate a declining state horse-racing industry
and, at the same time, enhance its own revenues, it
augmented its regulatory relationship. The State and Dover
Downs became joint entrepreneurs in a lottery and race
track enterprise. The slot machines used by Dover Downs
were the property of, or leased by, the State, not Dover
Downs. The State exercised control over the slot machines
by directly connecting them to the central computer system
at the State Lottery Office. To this enterprise, the race track
contributed its race track premises, its infrastructure, its
organization, and its operating capital. In this joint
enterprise fashioned and molded by the State, the State
acts in a business capacity, not as a regulatory force. Dover
Downs is a licensed state lottery agent.

-- 22 of 30 --

28
The record also reflects that the state joint video lottery
is inextricably linked with harness-racing. The State of
Delaware’s avowed purpose in creating the video lottery was
to provide "assistance in the form of increased economic
activity and vitality for Delaware’s harness and
thoroughbred horse racing industries, which activity and
vitality will . . . cause increased employment." 29 Del. Code
Ann. tit. 29, S 4801(b)(1). Under Delaware law, Dover
Downs would not be permitted to operate a video lottery if
it did not conduct harness racing meets. Id.S 4819(a).
Another purpose of the state-created lottery was to
establish a joint venture with state race tracks to provide
Delaware with additional income. To effectuate this
purpose, Delaware shares a portion of the lottery’s revenue
with Dover Downs to be applied to Dover Downs’s harness
racing purses under the direction of the Harness Racing
Commission. Id. S 4815(b)(3) b.2. Thus, the recipients of
harness racing purses are direct beneficiaries of money
derived from the video lotteries jointly operated by the State
and the race track. Furthermore, the State and Dover
Downs also share jointly, although not equally, in the
earnings generated by the video lottery.
Because of the entrepreneurial relationship that Delaware
has established with Dover Downs, the State stands to gain
and indeed receives substantial revenue. The direct stake of
Delaware in the financial arrangements it established in
1993 with its race tracks is undisputed.
Finally, it must be noted that the State of Delaware is
involved in Dover Downs’ harness racing activities. There
are many positions that Dover Downs is not permitted to fill
without State approval. The Harness Racing Commission
requires no fewer than 14 harness racing officials to be
licensed3 and it reserves the right to designate other
positions that require licenses. Although Dover Downs pays
and supervises these officials, the Commission’s rules
_________________________________________________________________
3. The following individuals must be licensed by the HRC: state steward,
board of judges, racing secretary, paddock judge, horse identifier and
equipment checker, clerk of the course, official starter, official charter,
official timer, photo finish technician, patrol judge, program director,
State veterinarian, and LASIX veterinarian. (App. at 59).
29
describe their duties and responsibilities in detail. Most
importantly, the Commission’s rules require Dover Downs
not only to abide by, but also to "enforce the [Harness
Racing] Act and the rules and orders of the Commission."
(emphasis added).
In Jackson, the Supreme Court stated that the
petitioner’s case for state action would have been stronger

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if the private actor had "exercise[d] . . . some power
delegated to it by the State which is traditionally associated
with sovereignty." 419 U.S. at 352-53. The power to enforce
laws is one such power, the delegation of which renders
Dover Downs an arm of the Commission. Of course, heavy
state regulation of a private entity alone does not
necessarily give rise to a joint venture relationship.
However, the undisputed facts here show a deliberate
entwining and interdependence between the State and
Dover Downs, not only in the operation of the State Lottery
but also in the harness racing operations at the track.
Since 1993, the State’s concerns for the "economic activity
and vitality" of the racetrack operation is a matter of
statutory expression. The overall involvement of the State in
the race track’s affairs is manifest.
The majority analyzes the Burton rationale and
concludes, especially in light of the Supreme Court decision
in Brentwood, decided after the District Court’s opinion and
panel opinion in this case, that Burton must be limited to
its unique facts. I find no fault with such limitations,
especially since the Brentwood court carefully refrained
from citing Burton. However, the facts in this case bear no
resemblance to Burton. This is a much stronger case for the
fair attribution of state action than was the case in Burton.
Here, we have a joint venture of the State and Dover Downs
in the operation of the video lottery and the harness racing
track, not merely a symbiotic relationship.
This court has defined a joint venture as "an association
of persons or corporations who by contract, express, or
implied, agree to engage in a common enterprise for their
mutual profit." Richardson v. Walsh Constr. Co., 334 F.2d
334, 336 (3d Cir. 1964). The Richardson court further
described the essential elements of a joint venture as: "(a)
a joint proprietary interest in, and a right to mutual control
30
over, the enterprise; (b) a contribution by each of the
parties of capital, materials, services or knowledge; and (c)
a right to participate in the expected profits." Id. A joint
venture relationship may exist where parties engage in an
undertaking without entering upon their business
undertaking "as strict partners, but engage in a common
enterprise for their mutual benefit." First Mechs. Bank v.
Comm’r of Internal Revenue, 91 F.2d 275, 278 (3d Cir.
1937); accord Plant-Erickson v. Ditter, 24 A.2d 379, 381
(N.J. Ch. 1942). A modern definition of a joint venture and
some of its incidents is set forth in the current edition of
Williston on Contracts:
A joint venture is a special combination of two or more
persons, whether corporate, individual or otherwise,
formed for some specific venture in which a profit is
jointly sought without the parties designating
themselves as an actual partnership or corporation.
The essence of the contract among the joint venturers
is that it binds the coventurers. While, as between the

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parties themselves, a contract is essential for the
creation of a joint venture, this is not necessarily so as
to third persons; although the parties may never have
intended to become joint venturers, under certain
circumstances, they may be held estopped to deny
their participation in a joint venture, and all members
of the joint venture will be held jointly and severally
liable on its contracts."
12 Richard A. Lord, Williston on ContractsS 36:9 (4th ed.
1999)(footnotes omitted). Thus, in Tompkins v.
Commissioner of Internal Revenue, 97 F.2d 396 (4th Cir.
1938), the Court of Appeals applied essentially the same
definition and held that an arrangement between a
partnership and a corporation in a specific transaction
constituted a joint venture between the partnership and the
corporation. The court concluded that the agreement
between the partnership and corporation "fulfilled all the
requisites of a joint venture although informal and[ ] never
reduced to writing." Id. at 399.
In Irvis, the Supreme Court observed that although
Pennsylvania engaged in extreme and detailed regulation of
private clubs, this was insufficient to make the Moose
31
Lodge a state actor. 407 U.S. at 177. However, it intimated
that had the relationship between the Lodge and the State
been a partnership or joint venture, its decision would be
different. Id. ("[The regulations cannot] be said to make the
State . . . a partner or even a joint venturer.").
Similarly, in Fitzgerald, we did not find that the heavy
state regulation of race tracks amounted to a symbiotic
relationship between the race track and the state, but we
noted that the result would have been different had the
race track in its operations been a "veritable partner with
the state." 607 F.2d at 595. Under such circumstances, "it
seems proper to hold such enterprise subject to the same
constitutional requirements to which the state is
accountable." Id. (quoting Braden, 552 F.2d at 958). We
have such a situation here.
The majority draws a comparison between Fitzgerald and
this case. The only basis for comparison is that both involve
horse harness racing activities that are state regulated. The
majority notes that in Fitzgerald we concluded that the
state was not a "joint venturer." However, Fitzgerald is
vastly different from this case. Fitzgerald did not have slot
machines; there was no sharing of profits; the track was
not a state agent in the operation of the slot machines, in
the collection of the proceeds and in transmitting them to
the state; the state and the race track did not commit their
separately owned property to the joint enterprise; the state
did not use monies generated by the video lottery to cross-
fertilize the horse racing activities; and there was no lottery
and no joint venture.

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The majority acknowledges "that Dover Downs’ video
lottery and racing activities should be considered together."
(Maj. op. at 9). However, the majority ignores the financial
structure created by the HRRA. The majority summarily
concludes that "Delaware was not conducting any operation
together with the race track at Dover Downs. It was not
operating a mutually beneficial business there." (Maj. op. at
18). These conclusions are the backbone of the majority’s
decision but the facts and the HRRA are to the contrary.
Delaware transformed the regulatory structure of its
relationship with Dover Downs in 1993 when it enacted the
32
Horse Racing Redevelopment Act. One purpose of the Act is
"to establish a state-operated lottery . . . which will produce
the greatest income for the State." Del. Code Ann. tit. 29,
S 4801(a). A second purpose is to provide"nonstate
supported assistance in the form of increased economic
activity and vitality for Delaware’s harness and
thoroughbred horse racing industries, which activity and
vitality will enable the industry to improve its facilities and
. . . cause increased employment." Id.S 4801(b)(1)
(emphasis added).
The HRRA authorizes harness race tracks such as Dover
Downs to operate slot machines on their premises. As I
have stated above, the race track provides its premises,
infrastructure, and organization for the enterprise, and the
State provides the slot machines. The race tracks, as "video
lottery agents," are responsible for securing and operating
the machines and are free to determine the number of
machines they choose to house, up to the statutory
maximum of 1000. Id. S 4820.
The HRRA also provides for the distribution of the profits
generated by the race tracks in the operation of the slot
machines. Dover Downs is required to send all monies
generated by the machines, net of payments to patrons, to
an account controlled by the State Lottery Office. Id.
S 4815(b). The monies received by this account are then
distributed in accordance with the HRRA. First, the State
pays the administrative costs associated with the operation
of the lottery, including the salaries of state lottery
personnel. Next, Gamblers Anonymous and similar
programs receive a share. The State then splits the balance
with Delaware race tracks, including Dover Downs. A large
percentage of the remaining funds is distributed to
racetracks such as Dover Downs "to be applied under the
direction of the Delaware Thoroughbred Racing Commission
for races conducted at such agent’s racetrack." Id.
S 4815(b)(3)b. Finally, Dover Downs, as a video lottery
agent, receives a statutorily designated "commission." Id.
S 4815(b)(3)c. The State general fund receives the most
substantial share of the profits. The flow of funds from the
race track to the State is generated by the business
arrangement under the HRRA between Delaware and the

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33
race track, not by state regulation of the industry. The
relationship established is one that was obviously
"mutually beneficial" and "conducted together." The
majority’s assertion to the contrary has no record support.
Under Delaware law, an arrangement between two
individuals and a corporation to which each party made a
definite contribution to the enterprise, shared in the profits,
and had a proprietary interest in the venture, constitutes a
joint venture. J. Leo Johnson, Inc. v. Carmer , 156 A.2d 499,
503 (Del. 1959). The State and Dover Downs are joint
venturers, a "widely recognized legal relationship . . . of
modern origin," id. at 502, in the operation of the race
tracks.
More recently, in In re McKinney-Ringham Corp. , No.
Civ.A. 15071, 1998 WL 118035 (Del. Ch. Feb. 27, 1998), a
Delaware court found a relationship between one general
partner and six limited partnerships a joint venture
because they shared a community of interest between the
managing entity, a right of each party to share in any
profits, and a duty to share in the losses of the entity. The
majority in this case baldly states that "the state was in
[no] way putting its support behind the conduct of the
private entity." (Maj. op. at 18). This ignores HRRA
legislation specifically devised to rejuvenate the horse
racing industry and enhance the State’s Treasury.
Operating the video lottery was indeed "a mutually
beneficial business." In 1997, the net proceeds generated
by the slot machines were $298.1 million, of which
Delaware received $152.3 million and Dover Downs
received $90.13 million. In 1998, the net proceeds were
$350.82 million, of which Delaware received $206 million
and Dover Downs received $113.12 million. In the first ten
months of 1999, the Delaware race tracks netted $351.67
million. With tens and hundreds of millions of dollars in
proceeds raised annually by the State of Delaware and
Dover Downs, they both enjoyed significant mutual benefits
from the joint venture that enriched their coffers.
The majority’s description of the financial arrangement
between the State and the race tracks as a "subsidy" is
inaccurate. This inaccuracy is highlighted by the HRRA
which states that one of the purposes of the Act is to
34
provide "nonstate supported assistance." See ante p. 33. A
subsidy is a grant made by the government to any
enterprise whose promotion is considered to be in the
public interest. BLACK’S LAW DICTIONARY 1442 (7th ed. 1999).
Delaware did not grant funds here. The payment of the
administration expenses and salaries, the charitable
contributions, and the split between the race tracks and
the State of the monies earned in the enterprise were
profits, not subsidies. The funds generated by Dover Downs

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are therefore "earned," (maj. op. at 11) not subsidized. Nor
is there any basis for the majority’s equivocal
characterization of of Dover Downs’s relationship to the
State "like a government contractor." (Maj. op. at 10).
In Krynicky v. University of Pittsburgh, 742 F.2d 94 (3d
Cir. 1984), we again reviewed our decisions and recent
decisions by the Supreme Court relating to state action. We
concluded that Braden was still good law, that the Supreme
Court had not developed a uniform test for ascertaining
state action and had even questioned whether such a
unitary test was possible. Id. at 98. As in Braden, we held
that the University was "in name and in fact" an
instrumentality of the State. Id. at 103.
The majority concludes that our decisions in Krynicky
and Braden "have limited relevance" to this case. I disagree.
The majority reaches its conclusion because these decisions
predate the Supreme Court’s most recent pronouncement
and because they involved universities that we held to be
"instrumentalities" of the state. (Maj. op. at 22). Essentially,
the issue there, although in an academic ambience far
removed from horse racing tracks, was whether the
participation of a state in an otherwise private activity was
so significant that the acts of the seemingly private
enterprise should be considered state action. That is the
issue before us except that in this instance the relationship
has more of the characteristics of the partnership asserted
by the Crissmans rather than a private entity acting as a
state instrumentality.
The Braden court observed that Burton and Jackson
stand as two separate models of state action analysis
designed by the Supreme Court. 552 F.2d at 958. What
emerges from Braden and Krynicky is another model for
35
state action, "state instrumentalities." The cases stand for
the proposition that where a private enterprise stands as a
"veritable partner" with the state in the operation of an
educational institution, the enterprise is subject to the
same constitutional requirements as the state. Brentwood
Academy v. Tennessee Secondary School Ass’n, 531 U.S.
288 (2001), is yet another model. The applicability of each
approach "rest[s] on the type of setting which may be
present." Braden, 552 F.2d at 958.
Summarizing, the State of Delaware and Dover Downs
engaged in a joint enterprise as a result of the relationship
structured between them by the HRRA. Delaware’s
participation in and the financial benefits it derives from
the operations are so significant that the acts of this
seemingly private enterprise must be deemed state action
for the purposes of Section 1983. Therefore, even though
the State did not participate in the decision to expel or
exclude the Crissmans, its relationship to Dover Downs as
a joint venturer subjects the act of expulsion to
constitutional standards. Accordingly, I would reverse the

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District Court’s grant of summary judgment and remand
this case for trial.
II.
Finally, the Crissmans ask this court to reverse the
District Court’s denial of their motion for a preliminary
injunction. A court ruling on a motion for a preliminary
injunction must consider the following four factors:
whether the movant has shown a reasonable
probability of success on the merits;
whether the movant will be irreparably injured by
denial of the relief;
whether granting preliminary relief will result in even
greater harm to the nonmoving party; and
whether granting the preliminary relief will be in the
public interest.
Allegheny Energy, Inc. v. DQE, Inc., 171 F.3d 153, 158 (3d
Cir. 1999)(quoting ACLU v. Black Horse Pike Reg’l Bd. of
36
Educ., 84 F.3d 1471, 1477 n.2 (3d Cir. 1996)(en banc)). We
review the denial of a preliminary injunction only for "an
abuse of discretion, a clear error of law, or a clear mistake
on the facts." Id. (internal quotations omitted).
I believe the Crissmans have a reasonable chance of
succeeding on the merits because the State and Dover
Downs are joint venturers, and the substantial evidence
presented by the Crissmans supports their claim that they
were denied due process of law.
All of the above factors cut in favor of the Crissmans. The
Crissmans have suffered irreparable harm due to the denial
of the injunction "because the nature of harness racing is
such that no adequate remedy exists at law to compensate
[them] for losses to income and reputation sustained from
an unlawful suspension." Fitzgerald, 607 F.2d at 601.
There is no evidence that Dover Downs would be harmed if
the Crissmans, who are licensees in good standing with the
Delaware Harness Racing Commission, were allowed to
race. Finally, there is no evidence that the public would be
adversely affected if the Crissmans were reinstated at Dover
Downs. Thus, the District Court’s denial of the Crissmans’
motion for preliminary injunctive relief should be reversed.
III.
Accordingly, for the reasons set forth above, summary
judgment in favor of Dover Downs, Inc. should be reversed
and the case remanded to the District Court, with
directions to grant plaintiffs’ motion for preliminary
injunctive relief, and for such further proceedings as are

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consistent with this opinion.
Judge McKee joins in this dissent.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
37

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