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A group of racetracks that earn revenue from gambling sued the state of Iowa, claiming that the state's practice of taxing racetrack gambling at a higher rate than riverboat gambling violated the Fourteenth Amendment's Equal Protection Clause. The group asserted that gambling at racetracks and riverboat casinos is is not substantially different, and that the state should therefore charge the same tax rate for both activities. A state district court sided with the state, ruling that important differences did exist between riverboat and racetrack gambling; the Iowa Supreme Court reversed in a 4-3 decision.

Do different tax rates levied against racetrack and casino gambling violate the Fourteenth Amendment's Equal Protection Clause?

No. In a unanimous opinion delivered by Justice Stephen G. Breyer, the Court held that Iowa's differential tax rate, which distinguishes between adjusted revenues from slot machines at racetracks and revenues from riverboat slot machines, does not violate the Equal Protection Clause. The Court found that the facts did not preclude an inference that the reason for the different tax rates was to help the riverboat industry or the river communities. Thus, the Court reasoned there was a rational basis for the law.