A federal appeals court struck down the provision of the Pennsylvania gaming law that bans political campaign contributions by state gaming licensees. Judge Richard L. Nygaard wrote in the opinion by the U.S. Court of Appeals for the 3rd Circuit that the prohibition included in the 2004 Race Horse Development and Gaming Act, meant to prevent corruption, is unconstitutional because it violates free speech rights.
The case is an appeal of a lawsuit brought by Pasquale T. Deon Sr. and Maggie Hardy Magerko, both stakeholders in gaming businesses. Magerko, owner of Nemacolin Woodlands Resort (where Lady Luck Casino leases its land), and Deon, a shareholder in Sands Pennsylvania Inc., challenged the ban and won in U.S. Middle District Court, where Judge Sylvia H. Rambo barred the state from enforcing the ban.
In its appeal, the state claimed that the ban is a “critical element of a robust effort to prevent well-documented corruption in the gaming industry from taking root in Pennsylvania,” Nygaard wrote. “They contend that (Rambo’s) order will make it impossible to take proactive steps to protect against a known threat to its integrity.”
In upholding the lower court ruling, Nygaard held the ban goes too far. “It is axiomatic that a democratic government must make every effort to fight corruption, and the perception of it, to protect the integrity of its electoral, legislative, and regulatory processes,” he wrote. “But when it acts it must be mindful of the fundamental speech and associational rights guaranteed by the First Amendment of the United States Constitution at stake.”
Nygaard further held that most gaming states do not impose such a ban, but set limits on the amounts of political contributions. “In fact, the overwhelming majority of states with commercial, non-tribal casino gambling like Pennsylvania do not have any political contribution restrictions that apply specifically to gaming industry-related parties,” he wrote.
