After the Attorney General certified the question for the ballot, George Carney, the owner of the Raynham-Taunton dog track, sued. Carney argued that the question concerns only local matters (because dog racing exists in only two places in MA), and because it would effect an uncompensated taking of private property. The Court rejected the first argument outright (citing, among other things, the rent control case from 1994).
The takings part of the decision is quite interesting, especially in light of the considerable discussion of that issue here on BMG. Carney raised two distinct takings arguments:
they assert that the proposed law constitutes (1) a regulatory taking of their real property and facilities at Raynham Track, and (2) a categorical taking of their expectation of renewal of their racing licenses.
The Court held that the first argument was premature. Regulatory takings cases are heavily fact-intensive, and the Court has previously held that the AG does not need to undertake a detailed factual investigation at the certification stage. The Court held, therefore, that
the facts available to the Attorney General at the certification stage do not permit an adequate determination of the potential residual use of the plaintiffs’ real and personal property or the diminution in the property’s value as a result of the proposed regulation. We therefore conclude that the Attorney General properly certified that the proposed law does not necessarily effect a regulatory taking of the plaintiffs’ tangible property. It of course remains open to the plaintiffs to challenge the law on regulatory takings grounds after its adoption, “on appropriate proof and following the necessary factual resolutions.”
In other words, if the question passes, look for another lawsuit on regulatory takings. Fair enough.
But the Court flatly rejected Carney’s argument that he could be entitled to compensation because of the non-renewal of his dog racing license. The Court explained it this way — I’ve emphasized a couple of key sections.
We conclude, however, that whatever interest the plaintiffs may have in their licenses, it does not entitle them to compensation in the event that legislation duly enacted by either the Legislature or the people eliminates all parimutuel dog racing in the Commonwealth….
Applying the Peanut Quota Holders [421 F.3d 1323 (Fed. Cir. 2005)] analysis leads us to the conclusion that the plaintiffs here have no compensable property interest in their racing licenses. It is true that there is no “express statutory language precluding the formation of a property right” in racing licenses, and the licenses are transferable, albeit with the approval of the commission. G. L. c. 128A, § 3 (m). However, contrary to the plaintiffs’ assertion, the licenses lack the essential attribute of exclusivity. Indeed, the Peanut Quota Holders court emphasized the general nonexclusivity of a license: “A license represents a limited suspension of the otherwise general restrictions imposed by the government . . . . Each additional license dilutes the value of the previously issued licenses. So long as the government retains the discretion to determine the total number of licenses issued, the number of market entrants is indeterminate. Such a license is by its very nature not exclusive.” Id. at 1333-1334. The racing licenses at issue here are not exclusive: the plaintiffs lack the power to prevent other market entrants from obtaining licenses to conduct races at fairs or at an additional track (or more, if the Legislature should amend the statute). Moreover, even if we were to conclude that the licenses did “have aspects of property,” id. at 1334, the Peanut Quota Holders case teaches that such a right is not subject to compensation where the government chooses to modify the program that created the benefit in the first place. Id. at 1335 (“Since Congress at all times retains the ability to amend statutes, a power which inheres in its authority to legislate, Congress at all times retains the right to revoke legislatively created entitlements”).
Finally, it is worth pointing out that gambling on dog races is a heavily regulated industry that only exists by virtue of legislatively created narrow exceptions to common-law and statutory bans and that, “because of the nature of the business[, it] can be abolished at any time that the Legislature may deem proper for the safeguarding and protection of the public welfare.” Selectmen of Topsfield v. State Racing Comm’n, 324 Mass. 309, 315 (1949). “Although mere ‘participat[ion] in a heavily regulated industry’ does not bar a plaintiff from ever prevailing on a takings claim, . . . it does greatly reduce the reasonableness of expectations and reliance on regulatory provisions.” Conti v. United States, 48 Fed. Cl. 532, 537 (2001), aff’d, 291 F.3d 1334 (Fed. Cir. 2002), cert. denied, 537 U.S. 1112 (2003). See Mitchell Arms, Inc. v. United States, 7 F.3d 212, 216 (Fed. Cir. 1993), cert. denied, 511 U.S. 1106 (1994), quoting Mitchell Arms, Inc. v. United States, 26 Cl. Ct. 1, 5 (1992) (rejecting claim for compensation on revocation of license to import assault rifles because “a taking claim against the United States cannot arise in an area voluntarily entered into and one which, from the start, is subject to pervasive Government control”).
Bottom line: you have no compensable property interest in your racing license.
All in all, a big win for the proponents of banning dog racing. The question will appear on the ballot. If it passes, the most that could happen is that Carney & Co. win a regulatory takings case, pursuant to which they would recover from the state the diminution in the value of their property caused by the law. And, especially in light of the SJC’s language emphasizing that dog racing “is a heavily regulated industry that only exists by virtue of legislatively created narrow exceptions to common-law and statutory bans,” there is no guarantee that they would win that case.
