Miami Valley Trotting, Inc.; Lebanon Trotting Club, Inc. (02-3466/3487) v. State of Ohio

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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0021P (6th Cir.)
File Name: 04a0021p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
RACEWAY PARK, INC.;
TOLEDO MAUMEE RACEWAY,
INC.; CEDAR DOWNS OTB,
LTD.; RIVER DOWNS JOCKEY
CLUB, INC.; RIVER DOWNS
TURF CLUB, INC. (02-3466);
MIAMI VALLEY TROTTING,
INC.; LEBANON TROTTING
CLUB, INC. (02-3466/3487),
Plaintiffs-Appellants,
v.
STATE OF OHIO; OHIO STATE
RACING COMMISSION;
NORTHFIELD PARK
ASSOCIATES; THISTLEDOWN,
INC.; SCIOTO DOWNS,
Defendants-Appellees.
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Nos. 02-3466/3487
Appeal from the United States District Court
for the Northern District of Ohio at Toledo.
No. 00-07720—David A. Katz, District Judge.
Argued: September 17, 2003
Decided and Filed: January 15, 2004
2 Raceway Park, Inc., et al. v.
State of Ohio, et al.
Nos. 02-3466/3487
Before: SUHRHEINRICH, COLE, and ROGERS, Circuit
Judges.
_________________
COUNSEL
ARGUED: William T. Maloney, MALONEY, McHUGH &
KOLODGY, Toledo, Ohio, John D. Smith, JOHN D. SMITH
CO., L.P.A., Springboro, Ohio, for Appellants. Shawn J.
Organ, JONES DAY, Columbus, Ohio, for Appellees.
ON BRIEF: William T. Maloney, MALONEY, McHUGH
& KOLODGY, Toledo, Ohio, John D. Smith, JOHN D.
SMITH CO., L.P.A., Springboro, Ohio, Jack M. Lenavitt,
LENAVITT LAW OFFICES, Toledo, Ohio, for Appellants.
Shawn J. Organ, Ronald E. Laymon, JONES DAY,
Columbus, Ohio, Thomas J. Rocco, OFFICE OF THE
ATTORNEY GENERAL OF OHIO, Columbus, Ohio, Orla
E. Collier III, N. Victor Goodman, BENESCH,
FRIEDLANDER, COPLAN & ARONOFF, Columbus, Ohio,
John J. Chester, Karen S. Hockstad, CHESTER, WILLCOX
& SAXBE, Columbus, Ohio, for Appellees.
_________________
OPINION
_________________
ROGERS, Circuit Judge. The instant action arises from the
passage of Substitute House Bill 561 (“HB 561”) by the Ohio
General Assembly. 1996 Ohio Laws H 561. HB 561
concerned, in relevant part, the terms under which horse
racing tracks and satellite facilities could receive simulcast
races conducted at other facilities. The plaintiffs — certain
owners of licensed race track facilities located in Cincinnati,
Toledo, and Lebanon, Ohio, and the satellite facility
associated with the Toledo track — sued the Ohio State
Racing Commission, among others, challenging the

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Nos. 02-3466/3487 Raceway Park, Inc., et al. v.
State of Ohio, et al.
3
1W agering on horse racing is comprehensively and strictly regulated
by the state of Ohio, and such wagering is prohibited unless authorized by
a permit issued by the Ohio State Racing Comm ission.
constitutionality of certain aspects of HB 561 under the
Takings Clause of the Fifth Amendment and the Equal
Protection and Due Process Clauses of the Fourteenth
Amendment. The district court granted the defendants’
motion for summary judgment, and dismissed the case.
Because the statutory scheme does not effectuate a taking for
Fifth Amendment purposes, and does not otherwise run afoul
of the Fourtheenth Amendment, we affirm the judgment of
the district court.
I. Background
The statutory provisions at issue in this case govern the
allocation of proceeds from simulcast horse racing in Ohio.
Prior to the enactment of HB 561, wagering at Ohio tracks on
televised, simulcast horse races was significantly restricted.1
Tracks could offer simulcast racing only on days that they
also offered a live racing program. Ohio law also prescribed
how wagering revenues were allocated. Money wagered at
tracks was divided, with a percentage going to the track
operator as a “commission” and the balance distributed as
payoffs on winning wagers. After taxes and administrative
fees were subtracted from the commission, 50% of the
balance was allocated to the operator’s purse account (which
must be used to fund purses at the track) and 50% of the
balance was retained by the operator as income. See OHIO
REV. CODE ANN. § 3769.08 (West 1995).
This scheme for allocating wagering revenues on days on
which a track offered both live and simulcast racing was not
changed by the passage of HB 561. See OHIO REV. CODE
ANN. § 3769.08 (Anderson 2002). HB 561, however,
authorized tracks to offer simulcast racing on days on which
4 Raceway Park, Inc., et al. v.
State of Ohio, et al.
Nos. 02-3466/3487
2Mo re than one Ohio track can operate as a simulcast host for the
same out-of-state race . In such cases, the allocation of money wagered,
as described below , is divided equally among the ho sting tracks.
they offered no live racing program, and provided a separate
scheme for allocating wagering revenues from such days. See
generally OHIO REV. CODE ANN. § 3769.089 (Anderson
2002). The scheme was essentially the same, except that the
portion of the commission which had been allocated to the
purse fund at the track was diverted instead into a newly
created Combined Simulcast Purse Fund (“CSPF”). OHIO
REV. CODE ANN. § 3769.089(E) (Anderson 2002). Funds
from the CSPF are distributed periodically to the purse funds
at Ohio race tracks in accordance with a formula based on
each track’s historical share of the total amount wagered on
live racing days during the five calendar years immediately
preceding the distribution. OHIO REV. CODE ANN.
§ 3769.089(F) (Anderson 2002). The plaintiffs have each
paid more money into the CSPF than they have received in
distributions, while the racetrack defendants have each
received more money in distributions from the CSPF than
they have paid into it.
This case involves the constitutionality not only of the
CSPF, but also the so-called “50% Rule” that applies to
wagers made at satellite facilities. OHIO REV. CODE ANN.
§ 3769.26(F) (Anderson 2002). Satellites must be affiliated
with a particular race track but conduct no live racing
activities themselves. Consequently, a satellite depends
entirely on simulcasts of races conducted at other locations.
Satellites receive simulcasts from “simulcast hosts,” Ohio
race tracks that transmit live racing conducted at Ohio tracks
or that act as hosts for races taking place in other states.2
All money wagered at the simulcast host and all money
wagered at satellites is included in a common pari-mutual
pool at the simulcast host and, with limited exceptions not

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Nos. 02-3466/3487 Raceway Park, Inc., et al. v.
State of Ohio, et al.
5
relevant here, the payment on winning tickets is the same
whether the wager was placed at the simulcast host or at a
satellite. OHIO REV. CODE ANN. § 3769.26(E) (Anderson
2002). Under the 50% Rule, 50% of the money wagered at a
satellite location is “allocated” to the simulcast host, OHIO
REV. CODE ANN. § 3769.26(F) (Anderson 2002), which
effectively means that that portion is treated as if it were
wagered at the simulcast host for the purposes of determining
taxes to be paid and commissions to be retained by the host.
The remaining 50% is allocated to the satellite for the purpose
of determining taxes to be paid and the commission to be
retained by the satellite. The 50-50 allocation is the same
whether the simulcast host is transmitting live racing
conducted at its track or hosting racing conducted at out-of-
state tracks.
The plaintiffs filed a complaint in the district court, alleging
that the CSPF and the 50% Rule constituted unconstitutional
takings of their property under the Takings Clause of the Fifth
Amendment to the United States Constitution, and violated
their rights under the Equal Protection Clause and the Due
Process Clause of the Fourteenth Amendment. Faced with
cross-motions for summary judgment, the district court
granted the defendants’ motion for summary judgment,
denied the plaintiffs’ motion for summary judgment, and
dismissed the plaintiffs’ complaint. The court concluded that,
because the CSPF was created by the same legislation that
authorized simulcast-only racing, the plaintiffs had no
reasonable expectation to receive the revenues diverted to
CSPF and, thus, had no property interest in those funds that
could be taken in violation of the Takings Clause. The
district court further found that the plaintiffs’ failure to
demonstrate a protectable property interest in the revenues
diverted to the CSPF doomed their claims that the creation of
the CSPF arbitrarily deprived them of property in violation of
the Due Process Clause of the Fourteenth Amendment.
Finally, the district court concluded that HB 561 contained no
indiscriminate or arbitrary classification, but was “a studied
6 Raceway Park, Inc., et al. v.
State of Ohio, et al.
Nos. 02-3466/3487
3In granting summary judgment, the district court did not discuss the
plaintiffs claims concerning the 50% Rule.
and well-considered statutory scheme” established to protect
and promote live horse racing in Ohio.3 The plaintiffs filed
the instant appeal.
II. Analysis
Summary judgment is appropriate when the moving party
demonstrates that there are no genuine issues of material fact
and that the moving party is entitled to judgment as a matter
of law. See Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 256 (1986). In considering a motion for
summary judgment, the district court views the evidence in
the light most favorable to the non-moving party. Adickes v.
S.H. Kress & Co., 398 U.S. 144, 158-59 (1970) (citation
omitted). We review a district court’s grant of summary
judgment de novo. Pinney Dock & Transp. Co. v. Penn Cent.
Corp., 838 F.2d 1445, 1472 (6th Cir. 1988).
A. The challenged provisions do not constitute
unconstitutional takings of the Plaintiffs’ property under the
Takings Clause of the Fifth Amendment to the United States
Constitution.
The Takings Clause of the Fifth Amendment, made
applicable to the states through the Fourteenth Amendment,
Dolan v. City of Tigard, 512 U.S. 374, 383-84 (1994) (citing
Chicago, Burlington & Quincy R.R. Co. v. Chicago, 166 U.S.
226, 239 (1897)), provides that private property shall not be
taken for public use without just compensation. Even
assuming that the plaintiffs have a property interest in the
funds diverted under the CSPF or the 50% Rule, however, the
operation of those provisions does not constitute an unlawful
taking under the Fifth Amendment.

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Nos. 02-3466/3487 Raceway Park, Inc., et al. v.
State of Ohio, et al.
7
“Because the Constitution protects rather than creates
property interests, the existence of a property interest is
determined by reference to ‘existing rules or understandings
that stem from an independent source such as state law.’”
Phillips v. Wash. Legal Found., 524 U.S. 156, 164 (1998)
(quoting Bd. of Regents v. Roth, 408 U.S. 564, 577 (1972)).
Current law does not grant the plaintiffs any property interest
to wagering revenues diverted under the CSPF (aside from
their rights to distributions under the statutory formula) or the
50% Rule. Accordingly, the inquiry turns to whether the
plaintiffs had such an interest prior to the passage of HB 561.
It is apparent that they did not.
It is clear that, prior to the enactment of HB 561, the
plaintiff race tracks were statutorily entitled to commissions
earned from wagering on simulcast racing at their tracks on
days when live racing was also conducted at the tracks. The
race tracks’ entitlement to those commissions was not
affected by the passage of HB 561 and the establishment of
the CSPF. The plaintiffs did not, however, have a statutory
entitlement to commissions earned on days when they offered
only simulcast racing because, under pre-HB 561 law, no
such racing could be conducted. There could therefore have
been no property interest in such commissions. It was the
passage of HB 561 that created the right to conduct simulcast-
only racing in Ohio, and, therefore, any property rights to
commissions on such racing could not pre-date the passage of
HB 561.
Nor did the plaintiffs have a property interest in the
revenues diverted under the 50% Rule prior to the passage of
HB 561. While the plaintiffs generally assert that “the mere
fact that an activity is pursued under an authorization or
license obtained by the government does not mean that
licensees have no property interest in the fruits of their
labors,” and that they have a property interest “in funds
generated though the conduct of a licensed business
activity—the simulcasting of horse racing events,” they do
8 Raceway Park, Inc., et al. v.
State of Ohio, et al.
Nos. 02-3466/3487
not identify any specific pre-HB 561 property interest that is
affected by the 50% Rule.
It follows that funds diverted by HB 561 to the CSPF, and
funds allocated under the 50% Rule, are not the private
property of plaintiffs for Fifth Amendment Takings Clause
purposes. This conclusion is consistent with Phillips and
Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155
(1980), because the conclusion is not, contrary to plaintiffs’
assertions, dependent on any theory of “government-created
value.” In Phillips, the Supreme Court concluded that interest
earned on funds deposited in pooled accounts under an
Interest on Lawyers Trust Accounts (“IOLTA”) program was
private property. Phillips, 524 U.S. at 172. Under Texas law,
attorneys were required to pool client deposits in an IOLTA
account if the funds could not earn net interest if deposited
separately. The interest on the pooled account was not
apportioned among the clients, but diverted to foundations
that financed legal services for low-income individuals. The
Court found that the interest was, in fact, the private property
of the clients, reasoning that the clients owned the principal
and, under Texas law, interest is presumed to follow the
principal that generates it. Id. at 165-66. The Court found
that the fact that net interest could not have been earned had
the clients’ funds been deposited separately rather than in an
IOLTA account, was irrelevant to the question of whether the
interest, once earned, was private property. Id. at 169-70.
The Court had reached a similar result in Webb’s, concluding
that interest accruing on an interpleader fund was the private
property of the fund’ s beneficiaries. Webb’s, 449 U.S. at 164-
65. Florida law required that interpleader funds be deposited
in the registry of the county clerk, and the interest earned on
such funds was retained by the county as income. The Court
found that the county’s retention of the interest, under the
specific statutory scheme in place, was a taking in violation
of the Fifth and Fourteenth Amendments. In doing so, the
Court relied heavily on a “long established general rule” that
interest on interpleaded and deposited funds follows the

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Nos. 02-3466/3487 Raceway Park, Inc., et al. v.
State of Ohio, et al.
9
4It might be argued that if the earnings (interest) on principal are the
property of the owner of the principal under Phillips and Webb’s
Fabulous Pharmacies, then by parity of reasoning the earnings (profits)
of an enterprise are the property of the owner of the enterprise. The fact
that a controversial way of making money may over the years be
alternately banned, heavily licensed, or permitted by the state, does not
mean that the profits of such private enterprises, when legal, can be taken
by the state without being subject to Takings Clause protection. And it is
at least questionable whether this conclusion should be any different just
because the alleged taking is effectuated by the same statute that legalizes
the activity. Thus if peddling in a particular city, previously forbidden,
were allowed by an ordinance, we might be reluctant to say that the city
could— pursuant to the same ordinance — confiscate the peddler’s profits.
In our view, the fixed allocation of a new gambling pool is much farther
removed in nature from the interest earnings on principa l involved in
Phillips than the hypothetical peddler’s earnings from his efforts.
principal and should be allocated to the owners of the
principal. Id. at 162-63. In the instant case, as in Webb and
Phillips, the relevant inquiry is whether state law recognizes
the asserted property right. The conclusion we reach here
results from the fact that there is no long-standing right to the
revenues earned from gambling on horse racing.
We could appropriately end our Takings Clause analysis
here, as there is no taking if there is no private property in the
first place. We are reluctant to do so, however, because our
conclusion is potentially subject to counterarguments
(outlined in the margin4) that have some force, though not
enough to persuade us. We therefore assume for the sake of
argument that revenues diverted to the CSPF and revenues
diverted under the 50% Rule were—sufficiently for Takings
Clause purposes—the private property of plaintiffs. Even if
so, HB 561 clearly does not effectuate an unconstitutional
taking.
The Supreme Court has consistently declined to create a set
formula for identifying a “taking” forbidden by the Fifth
Amendment and has instead prescribed an ad hoc, factual
10 Raceway Park, Inc., et al. v.
State of Ohio, et al.
Nos. 02-3466/3487
5At oral argument, counsel for the plaintiffs suggested for the first
time that the diversion of revenues effected by the challenged provisions
should be analyzed as per se takings, as the plaintiffs were comp letely
deprived of such revenues. The m erits of counsel’s sugge stion is
questionable, see Conn olly, 475 U.S. at 222-23 (recognizing that
employer was permanently deprived of assets necessary to satisfy
statutory liability to private party, but rejecting argument that said liab ility
always constituted uncomp ensated taking prohibited by Fifth
Amendm ent), and we d ecline to consider it absent briefing, pa rticularly
considering its potentially far-reaching implications for other areas of
government regulation, and indeed upon the government’s power to tax.
inquiry into the circumstances of each particular case. See,
e.g., Connolly v. Pension Benefit Gty. Corp., 475 U.S. 211,
224 (1986). In conducting such an inquiry, three factors have
particular significance: the economic impact of the regulation
on the claimant, the extent to which the regulation interfered
with reasonable investment-backed expectations, and the
character of the governmental action. Id. In the instant case,
each of these factors weighs against finding a taking
prohibited by the Fifth Amendment.
1. The nature of the action.
First, the challenged provisions are not by nature takings.
Under HB 561, the government does not physically invade or
permanently appropriate any of the plaintiffs assets for its
own use. Instead, HB 561 represents an attempt by Ohio’s
General Assembly to protect and preserve Ohio’s horse racing
industry. It is true that the statutory scheme created by HB
561 includes provisions that allocate revenues from wagering
on horse racing according to prescribed formulas, and that
those formulas burden some race track operators and benefit
others. It is well settled, however, that legislation that
“adjusts the benefits and burdens of economic life to promote
the common good . . . does not constitute a taking requiring
Government compensation.” Connolly, 475 U.S. at 225
(citations omitted).5

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Nos. 02-3466/3487 Raceway Park, Inc., et al. v.
State of Ohio, et al.
11
The plaintiffs contend that the CSPF and the 50% Rule do
not benefit the general public, but instead benefit a select
group of race track operators—namely the racetrack
defendants. They argue that Ohio’s aims of protecting and
preserving its horse racing industry could have been
accomplished by liberalizing the restrictions on simulcast
racing, and that therefore the CSPF and the 50% Rule are
extras that inure only to the benefit of private parties. Even
assuming that Ohio could have achieved its goals of
providing economic relief to the horse racing industry in
another fashion, however, it does not follow that the
balancing of interests codified in HB 561 was beyond Ohio’s
power to modify the economic benefits and burdens from
wagering on horse races. Accordingly, we conclude that the
nature of the action weighs against finding a taking.
2. Interference with investment backed expectations.
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.
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
12 Raceway Park, Inc., et al. v.
State of Ohio, et al.
Nos. 02-3466/3487
6Curio usly, the plaintiffs do not actually allege that revenues have not
increased or that they have been precluded from offering higher purses
than before the implementation of HB 561. They simp ly allege that purse
money that could have gone into their purse fund was diverted to the
CSPF. At worst, it appears that the plaintiffs’ revenues have increased
after the passage of HB 561, just not as much as the plaintiffs would have
liked.
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
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.
3. Economic Impact.
Finally, consideration of the economic impact of the
challenged provisions of HB 561 does not support the
conclusion that there has been a taking. The district court
acknowledged that the CSPF and the 50% Rule had an
adverse economic impact on the plaintiffs, at least to the

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Nos. 02-3466/3487 Raceway Park, Inc., et al. v.
State of Ohio, et al.
13
7As noted above, the p laintiffs do not actually claim that their
revenues decreased after the passage of HB 561, but instead claim that
their revenues would have increased more absent the challenged
provisions.
extent that they were deprived of a portion of simulcast
wagering proceeds.7 The plaintiffs emphasize that, under the
challenged provisions, significant portions of the revenue
from wagering on simulcast-only racing at their facilities is
diverted to others. The plaintiffs allege that, under the CSPF
regulations, they have paid millions more into the CSPF than
they have received in disbursements, and they note that, under
the 50% Rule, one-half of the money wagered at the plaintiff
satellite facility is allocated to other tracks.
In applying the economic impact factor, the Supreme Court
has made clear that a complete deprivation of money that an
enterprise is obligated to pay does not necessarily require the
finding of a taking. In Connolly, the Court found that the
retroactive application of the withdrawal liability provisions
of the Multiemployer Pension Plan Amendments Act of 1980
did not effect an unconstitutional taking under the Fifth
Amendment. Connolly, 475 U.S. at 221-28. In considering
the economic impact of the provisions, the Court reasoned:
as to the severity of the economic impact of the
[amendment], there is no doubt that the Act completely
deprives an employer of whatever amount of money it is
obligated to pay to fulfill its statutory liability. The
assessment of withdrawal liability is not made in a
vacuum, however, but directly depends on the
relationship between the employer and the plan to which
it had made contributions. Moreover, there are a
significant number of provisions in the Act that moderate
and mitigate the economic impact of an individual
employer's liability. There is nothing to show that the
withdrawal liability actually imposed on an employer
14 Raceway Park, Inc., et al. v.
State of Ohio, et al.
Nos. 02-3466/3487
will always be out of proportion to its experience with
the plan, and the mere fact that the employer must pay
money to comply with the Act is but a necessary
consequence of the [amendment]'s regulatory scheme.
Id. at 225-26 (footnote omitted). Similarly in this case, the
allocations are not made “in a vacuum,” but depend upon
factors that the legislature found reasonably related to the
encouragement of live horse racing. As in Connolly, the
payment of the revenues at issue is “a necessary consequence
of the . . . regulatory scheme.”
The plaintiffs argue that the economic impact of the CSPF
is particularly onerous, because the formula for determining
distributions creates a cycle in which they will always pay
more into the fund than they receive out of it. Under the
CSPF distribution formula, the plaintiffs contend, tracks with
higher historical wagering are rewarded by higher
distributions, which are dedicated to the tracks purse funds.
More money available in a track’s purse fund means that the
track can attract better horses, which increases wagering,
which in turn increases the track’s share of the CSPF
distributions. Indeed, the plaintiffs project that they will
always pay more into the fund than they receive in
distributions.
It appears, however, that the cycle complained is not a
necessary consequence of the CSPF formula, but is instead
rooted in the plaintiffs’ business decisions. Tracks contribute
to the CSPF only on days that they offer simulcast racing
without also offering live racing. Plaintiff Raceway Park and
Defendant Scioto Downs conducted live racing on roughly
the same number of days, but Raceway Park conducted
simulcast-only racing on 237 days, while Scioto Downs
conducted such racing on only 9 days. Consequently,
Raceway Park contributed significantly more to the CSPF.
Raceway Park could have chosen to minimize its
contributions to the fund by limiting the number of simulcast-

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Nos. 02-3466/3487 Raceway Park, Inc., et al. v.
State of Ohio, et al.
15
8The Supreme Court followed its Conno lly economic burd en ana lysis
in a later case, also upholding the withdrawal liability provisions of the
same amendments to ERIS A against a Takings Clause challenge, where
application of the statute resulted in loss of 46% of the affec ted party’s net
worth. Con crete Pipe and Prod s. of Cal., Inc. v. Constr. Labo rers
Pension Trust for S. Cal, 508 U.S. 602, 645 (1993). The Court relied
upon earlier cases holding squarely that diminution in the value of
property is insufficient to demonstrate a taking. Id., citing Village of
Euclid v. Am bler R ealty C o., 272 U.S. 365 , 384 (1926) (app roxim ately
75% diminution in value), and Hadacheck v. Sebastian, 239 U.S. 394,
405 (19 15) (92.5% diminution).
only race days it conducted. It made a business decision not
to do so. Accordingly, we conclude that the economic burden
factor weighs against finding a taking in this case.8
B. The challenged provisions do not violate the Equal
Protection Clause or the Due Process Clause of the
Fourteenth Amendment.
The challenged provisions also do not violate the Equal
Protection Clause. Social and economic legislation, such as
HB 561, that does not employ suspect classifications or
intrude on fundamental rights must be upheld against equal
protection attacks so long as the legislative means are
rationally related to a legitimate government purpose. Hodel
v. Indiana, 452 U.S. 314, 331 (1981). Such legislation carries
a presumption of rationality that can only be overcome by a
clear showing of arbitrariness and irrationality. Id. at 331-32.
Indeed, “social and economic legislation is valid unless ‘the
varying treatment of different groups or persons is so
unrelated to the achievement of any combination of legitimate
purposes that [a court] can only conclude that the legislature’s
actions were irrational.’” Id. at 332 (alteration in original)
(quoting Vance v. Bradley, 440 U.S. 93, 97 (1979)). In this
case the plaintiffs have not met the heavy burden of showing
that the classifications employed by the Ohio General
Assembly were irrational.
16 Raceway Park, Inc., et al. v.
State of Ohio, et al.
Nos. 02-3466/3487
9For example, live horse races in Ohio support related ind ustries in
ways that simulcasts do not. Ohio could reasonably conclude that
simulca st-only racing produced fewer benefits than live racin g, and
regulate to make such racing less profitable than live racing.
In rejecting the plaintiffs’ equal protection claim, the
district court concluded that HB 561 made no indiscriminate
classifications, but instead represented a “studied and well-
considered statutory scheme established to address legitimate
government objectives.” The plaintiffs argue that the CSPF
regulations are arbitrary and irrational because the provisions
bear no rational relationship to Ohio’s asserted purpose and
that they arbitrarily shift business revenues from one private
business to another. The plaintiffs’ argument boils down to
a disagreement with Ohio’s determination on how best to
protect and preserve horse racing in Ohio. They claim that
Ohio’s goal could have been satisfied by liberalizing
restrictions on simulcast racing and, therefore, that both the
CSPF and the 50% Rule are unnecessary extras that confer
benefits on the defendants at their expense. Even assuming
that Ohio’s goals could have been achieved without the
challenged provisions, they are not so unrelated to Ohio’s
purpose as to be irrational. Ohio could reasonably determine
that the benefits and burdens accompanying simulcast-only
racing are different from those created by live horse racing,
and determine that revenues for the two should be allocated
differently.9
Similarly, the challenged provisions do not violate the Due
Process Clause of the Fourteenth Amendment. “It is by now
well established that legislative Acts adjusting the burdens
and benefits of economic life come to the Court with a
presumption of constitutionality, and that the burden is on one
complaining of a due process violation to establish that the
legislature has acted in an arbitrary and irrational way.”
Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15 (1976).
The plaintiffs argue that the challenged provisions are

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Nos. 02-3466/3487 Raceway Park, Inc., et al. v.
State of Ohio, et al.
17
irrational and arbitrary because they are unrelated to Ohio’s
goal, that the CSPF is impermissibly retroactive, and that the
regulations impermissibly seize private property for private
use.
Although the plaintiffs would have preferred a different
scheme than that embodied by HB 561, the measures enacted
by the Ohio Assembly, as noted above, are related to Ohio’s
goal of protecting and promoting live horse racing in Ohio.
The CSPF provisions, moreover, are not retroactive. While
the distribution formula for the CSPF is based on historical
calculations of racing revenue, a statute “is not made
retroactive merely because it draws upon antecedent facts for
its operation.” Landgraf v. USI Film Prods, 511 U.S. 244,
270 n. 24 (1994) (quoting Cox v. Hart, 260 U.S. 427, 435
(1922)). Indeed, the plaintiffs can easily avoid any liability
to the CSPF by refraining from taking advantage of the
provisions permitting them to offer simulcast-only racing.
Finally, the challenged provisions do not take private property
for private use, as the plaintiffs have failed to establish a
“taking” at all. Accordingly, we find that the plaintiffs have
failed to establish that the challenged provisions violate their
right to due process under the Fourteenth Amendment.
III. Conclusion
For the reasons stated herein, the judgment of the district
court is AFFIRMED.

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