HomePublicationsNewsletter ArchiveVolume 19Issue 24Sixth Circuit Issues Ruling in Michigan Charitable Gaming Case

On Friday, September 6, 2013, the United States Court of Appeals for the Sixth Circuit issued its Opinion in Top Flight Entertainment, Ltd. v. Schuette, et al.,which both affirmed and overturned certain portions of an initial ruling by the United States District Court for the Eastern District of Michigan. The case involves allegations that charities were denied Millionaire Party licenses solely on the basis that the location where the events would be held, a topless bar, had recently challenged a separate Michigan law regulating the advertising of “sexually oriented businesses.”

The initial complaint filed in the Eastern District was dismissed in favor of the Defendants, which included state officials from the Attorney General, State Lottery, Michigan Gaming Control Board, and State Police. In its ruling, the Court held that the Plaintiffs, the owner of a topless bar and a charitable gaming supplier, did not have standing to bring the suit as they were not the entities actually receiving the charitable gaming licenses, which are issued directly to the charities seeking to hold each Millionaire Party event.

On appeal, the Sixth Circuit Court affirmed parts of the decision and partially overturned the court’s ruling.The Sixth Circuit Court held that the location had no property interests to millionaire party licensed events to be held there, and their “argument that they ‘accrued approved location/lessor status’” as a protected entitlement is contradicted by Michigan law and Plaintiffs’ own complaint, as discretionary benefits are not constitutionally protected entitlements.” In a concurring opinion, Circuit Judge Damon Keith stated: 

It is undisputed that there is no state law that gives anyone in the public a right to gambling. Millionaire-Party licenses are completely discretionary. If the commissioner chooses to issue a license for a Millionaire Party, that license is given to a charity—not the venue where the event will be held. There is no license to lease space for a millionaire party. There is no process for approving a would be lessor.

Although the Court found that there was no protected property interest, it overturned the decision of the lower court which found that the plaintiffs had no standing to bring the suit. 

“Plaintiffs have constitutional standing to bring suit. They allege an injury (the loss of future millionaire-party leasing contracts) that is a result of Defendant’s alleged policy of issuing blanket denials to all organizations wishing to conduct a millionaire party at Plaintiff’s business.”

As the Sixth Circuit found standing on this basis, and was utilizing a legal standard which obligated it to assume that all allegations in the complaint were factually true (for the limited purpose of deciding whether the case should be dismissed) it ruled that the case be remanded to the Eastern District Court to proceed on the merits of the case.

It is important to note, however, that the dismissal of the Attorney General and Lottery Commissioner in their individual capacities was fully affirmed by the Sixth Circuit.

 

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