Full opinion text
TRIAL ORDER READE, District Judge. TABLE OF CONTENTS I. INTRODUCTION........................................................833 II. PROCEDURAL BACKGROUND............................... 833 III. JURISDICTION.........................................................834 IV. FINDINGS OF FACT....................................................835 A. The History of TouchPlay............................................835 B. The Players........................................................837 C. Documents Authored by the Lottery...................................838 D. HCP’s Business .....................................................839 E. The Ban............................................................840 V. COUNT III — IMPAIRMENT OF CONTRACT..............................841 A. The Contract Between HCP and the Lottery...........................842 1. Whether there is a substantial impairment on a pre-existing contractual relationship?.......................................843 a. Whether a contractual relationship exists?.....................843 i. Offer ...................................................844 ii. Acceptance..............................................845 iii. Consideration...........................................845 iv. Conclusion..............................................846 b. Whether the change in the law impairs that contractual relationship?...............................................846 c. Whether the contractual impairment is substantial?.............846 i. Nature of the impairment...................... 847 ii. Previous regulation...................... 847 2. Conclusion......................................... 849 B. The Location Contracts..............................................849 VI. COUNT I — THE TAKINGS CLAUSE......................................850 A. Property Rights .....................................................851 1. Machines........................................................851 2. Business ........................................................852 a. Business itself...............................................852 b. Continuing to operate the business ............................852 3. Contracts........................................................853 4. Conclusion......................................................854 B. Taking..............................................................854 1. Per se takings ...................................................854 a. Permanent physical invasion..................................854 b. All economically beneficial use................................855 2. Penn Central analysis............................................856 a. Economic impact.............................................856 b. The character of the governmental action......................857 VII. COUNTS II & IV — FOURTEENTH AMENDMENT.........................858 A. Equal Protection Clause.............................................858 B. Due Process Clause..................................................860 VIII. PERMANENT INJUNCTION.............................................861 IX. CONCLUSION...........................................................861 J. INTRODUCTION Plaintiff Hawkeye Commodity Promotions, Inc. (“HCP”) is a company that owns 724 TouchPlay lottery machines (“TouchPlay Machines”) and operates 572 of them in the State of Iowa (“the State”). On March 20, 2006, Senate File 2330 was signed into law by Iowa Governor Thomas J. Vilsack. The new law amends part of Iowa Code chapter 99G, the chapter governing the Iowa Lottery Authority (“the Lottery”). HCP seeks to enjoin Defendants from enforcing Iowa Code chapter 99G, as amended by Senate File 2330, because the amendment will make it illegal for “retailers” to offer TouchPlay Machines to the public after May 3, 2006 at 11:59 p.m. HCP also seeks a declaratory judgment that Senate File 2330 is unconstitutional as applied to HCP. The matters before the court are HCP’s Motion for Preliminary Injunctive Relief (docket no. 4) and the Second Amended Complaint for Declaratory and Injunctive Relief (docket no. 32). The court held a bench trial in this case on April 12, 2006. Attorneys Paula Lynn Roby and Roger J. Marzulla appeared on behalf of HCP. Deputy Attorney General Julie F. Pottorff and Assistant Attorney General Robert K. Porter represented Defendants. II. PROCEDURAL BACKGROUND On April 5, 2006, HCP filed a Complaint for Declaratory and Injunctive Relief against the Iowa Lottery Authority and four Iowa officials in their official capacities — Governor Vilsack, Attorney General Thomas J. Miller (“Attorney General Miller”), Iowa Department of Public Safety Commissioner Kevin Techau (“Commissioner Techau”) and Chief Executive Officer of the Lottery, Dr. Edward Stanek. The Complaint includes claims brought pursuant to 42 U.S.C. § 1983 for violations of the takings clauses, the equal protection clauses, the due process clauses and the contract clauses of the Iowa Constitution and the United States Constitution. HCP also asserted a claim for breach of contract. On the same date, HCP filed a Motion for Preliminary Injunctive Relief (“Motion”). On April 6, 2006, the court held a status hearing regarding the Motion. At that status hearing, the court utilized Federal Rule of Civil Procedure 65(a)(2) and determined that the hearing on the Motion would be consolidated with an April 12, 2006 trial on the merits of the Complaint. See Fed.R.Civ.P. 65(a)(2) (“Before or after the commencement of the hearing on an application for a preliminary injunction, the court may order the trial of the action on the merits to be advanced and consolidated with the hearing of the application.”). On April 11, 2006, Defendants filed a Motion to Dismiss. Citing the Eleventh Amendment and 42 U.S.C. § 1983, Defendants sought to dismiss each of the state law claims and the Lottery as a party-defendant. Just before the trial on April 12, 2006, HCP filed an Amended Complaint, eliminating the state law claims. During the trial, HCP’s counsel represented that, although HCP had intended to eliminate the Lottery as a party-defendant from the caption of the Amended Complaint, it inadvertently neglected to do so. On April 13, 2006, HCP filed a Second Amended Complaint naming only the four individuals as defendants. On April 14, 2006, Defendants filed Defendants’ Brief in Support of Resistance to Plaintiffs Request for Preliminary and Permanent Injunction (docket no. 33). In footnote one of the brief, Defendants represented that “Plaintiff agreed to remove the remaining individual defendants from this suit.” On April 17, 2006, when HCP filed its Reply Brief, it listed only Attorney General Miller and Commissioner Techau as defendants (docket no. 38). Therefore, only Attorney General Miller and Commissioner Techau remain as defendants in this suit. III. JURISDICTION Because HCP raises claims pursuant to the Declaratory Judgment Act (28 U.S.C. § 2201 et seq.), the Fifth Amendment of the Constitution, the Fourteenth Amendment of the Constitution, Article I of the Constitution, 42 U.S.C. § 1981 and 42 U.S.C. § 1983, this court has federal question subject-matter jurisdiction over this matter. See 28 U.S.C. § 1331 (“The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.”); see also 28 U.S.C. § 1343(a) (providing that district courts have original jurisdiction over certain civil rights actions). The court also has jurisdiction over Defendants Attorney General Miller and Commissioner Techau. The Eleventh Amendment of the United States Constitution provides: “The Judicial power of the United States shall not be construed to extend to any suit ... commenced or prosecuted against one of the United States by Citizens of another State.... ” U.S. Const, amend. XI. This provision “has been interpreted to provide a state with immunity from suit in federal court by ... its own citizens.” Skelton v. Henry, 390 F.3d 614, 617 (8th Cir.2004) (citing Hans v. Louisiana, 134 U.S. 1, 10, 10 S.Ct. 504, 33 L.Ed. 842 (1890)). The Ex Parte Young exception to immunity applies to state officials “who threaten and are about to commence proceedings, either of a civil or criminal nature, to enforce against parties affected an unconstitutional act, violating the Federal Constitution.... ” Ex Parte Young, 209 U.S. 123, 156, 28 S.Ct. 441, 52 L.Ed. 714 (1908). “[T]he Ex Parte Young doctrine describes an exception to Eleventh Amendment immunity for a state official where the relief sought is prospective and not compensatory.” Heartland Acad. Cmty. Church v. Waddle, 427 F.3d 525, 530 (8th Cir.2005) (citations omitted). “A federal court may therefore issue an injunction to prevent state officials from violating the Constitution without running afoul of the Eleventh Amendment.” Id.; see also Skelton, 390 F.3d at 617 (“State immunity under the Eleventh Amendment does not apply to awards for prospective relief....”). “[T]he Supreme Court held that the Eleventh Amendment does not bar a suit against a state official to enjoin enforcement of an allegedly unconstitutional statute, provided that ‘such officer [has] some connection with the enforcement of the act.’ ” Reprod. Health Servs. v. Nixon, 428 F.3d 1139, 1145 (8th Cir.2005) (quoting Ex Parte Young, 209 U.S. at 157, 28 S.Ct. 441). In Reproductive Health, the Eighth Circuit Court of Appeals held that the Missouri Attorney General had “a sufficient connection with the enforcement of [the statute] to make the Attorney General a potentially proper party for injunctive relief, in which case he would be within the scope of the Ex Parte Young exception to Eleventh Amendment immunity.” Id. (emphasis in original). “Under Missouri law, the Attorney General is authorized to aid prosecutors when so directed by the Governor, and to sign indictments ‘when so directed by the trial court.’ ” Id. (quoting Mo.Rev.Stat. § 27.030). The Eighth Circuit Court .of Appeals held that the district court should have dismissed the Attorney General because neither the Governor nor a trial court had directed the Attorney General to enforce the statute in question and, therefore, the plaintiff could not show a threat of irreparable injury. Id. In the case at bar, Attorney General Miller is obliged to “[p]rosecute and defend ... all actions and'proceedings ... in which the state may be a party or interested, when, in the attorney general’s judgment, the interest of the state requires such action, or when requested to do so by the governor, executive council, or general assembly.” Iowa Code § 13.2(2). The use of the disjunctive “or” in the Iowa Code makes Attorney General Miller’s duties distinct from the duties of the Missouri Attorney General in Reproductive Health. Attorney General Miller need not be “directed” to enforce laws by the Governor or a trial court. Instead, he has been given discretion to determine when to enforce a law. Therefore, the court finds that Attorney General Miller has “some connection with the enforcement” of Senate File 2330. See Reprod. Health, 428 F.3d at 1145. Because Attorney General Miller may, in his discretion (or if directed to by Governor Vilsack, the Executive Council or the General Assembly) enforce Senate File 2330 on May 4, 2006, the court finds Attorney General Miller to be an appropriate defendant pursuant to the Ex Parte Young doctrine. Likewise, Commissioner Techau is obligated to “enforce all state laws.” See Iowa Code § 80.9(2)(a); see also id. § 80.1 (creating the Department of Public Safety and the Commissioner); id. § 80.2 (providing that the Commissioner is the Chief Executive Officer of the Department of Public Safety). Therefore, because Commissioner Techau must enforce Iowa Code chapter 99G, as amended by Senate File 2330, the court finds that Commissioner Techau is an appropriate defendant under the Ex Parte Young exception to Eleventh Amendment immunity. TV. FINDINGS OF FACT A. The History of TouchPlay This case involves the legality of Touch-Play Machines in Iowa. In 1985, the State created the Lottery. The Iowa Code requires the Lottery to manage and operate lottery games “in a manner that provides continuing entertainment to the public, maximizes revenues, and ensures that the lottery is operated with integrity and dignity and free from political influence.” Iowa Code § 99G.2(3). Today, the following lottery games are legal in Iowa:' Instant Win, Pull-Tab, Lotto and Touch-Play. (Pi’s Ex. 2 at p. 8; Pi’s Ex. 13). Lotto games include: Powerball, Hot Lotto-, Pick 3, Pick 4 and Iowa’s $100,000 Cash Game. (Pi’s-Ex. 13). Between 1985 and 2005, nearly $1.9 billion was awarded in prizes and nearly $935 million was raised for the State. (Id. at p. 6). The State uses lottery earnings to pay for educational programs, natural resources programs, health and family services and public safety programs. In fiscal year 20Q5, the Lottery raised over $51 million in revenue for the State. (Id.). In addition to lottery games, the Iowa General Assembly (“the Legislature”) has made other forms of gambling legal. The ■ Legislature legalized pari-mutuel wagering in 1983; riverboat gambling and simulcasting at pari-mutuel racetracks in 1989; and slot machines at pari-mutuel racetracks in 1994. See Iowa Admin. Code ch. 491; Iowa Code chs. 99D and 99F. In 2000 and 2001, the State suffered from a revenue shortfall. -As a result, the Legislature instructed the Lottery to develop a program which would produce additional revenues for the State. It instructed the Lottery to investigate whether the deployment of vending machines with video screens would enhance the lottery’s ability to perform its statutory duties and if, in the business judgment of the lottery commissioner and the lottery board, it would do so, ... the lottery is authorized to establish a plan to implement the deployment of pull-tab vending machines with video monitors.... 2002 Iowa Acts, 2d Extra Sess., Ch. 1003, § 21(3)2. The instructions .prompted the Lottery to create the TouchPlay Program. A TouchPlay Machine is “a vending machine that dispenses or prints and dispenses lottery tickets that have been determined to be winning or losing tickets by a predetermined pool drawing machine prior to the dispensing of the tickets.” Iowa Admin. Code r. 531-14.3. Additionally, each TouchPlay Machine has “a video monitor for display of ticket symbols and audio capabilities to aid in play of a game.” Id. TouchPlay winners are determined just as Pull-Tab winners are determined. That is, TouchPlay games have predetermined outcomes. (Pi’s Ex. 6 at p. 3). The TouchPlay tickets are loaded into the machine electronically and the outcome of each ticket is predetermined before a consumer ever begins to operate the Touch-Play Machine. (Id). TouchPlay Machines are different from slot machines because they do not have an internal ran-domizer. (Id) (“The key difference between the machines is that a slot machine payout is random, as determined by a ran-domizer within the slot machine, while a [TouchPlay Machine] payout is predetermined as with conventional scratch tickets in finite pools distributed by a central computer.”). To the consumer, however, TouchPlay Machines are exceedingly similar to slot machines. Both slot machines and TouchPlay Machines barrage the consumer with flashing lights and attention-grabbing sounds. Because it did not have the ability to borrow money from the State to place TouchPlay Machines into operation, the Lottery partnered with private businesses that would raise the capital and assume the risk of placing TouchPlay Machines in businesses throughout Iowa. (Pi’s Exs. 1 and 2). HCP is such a partner. In fiscal year 2005, net sales from TouchPlay Machines totaled about 6.4 million. (Pi’s Ex. 2). TouchPlay net sales were projected at $381.6 million for fiscal year 2006. (Pi’s Ex. 21). Prior to the passage of Senate File 2330, the State was projected to receive approximately $30 million in net revenues and approximately $3.5 million in state income tax for prize monies paid to consumers in fiscal year 2006. (Id.). B. The Players In May of 2003, TouchPlay Machines were first distributed in bars in the Des Moines and Waterloo/Cedar Falls areas during a six-month testing period. (Pi’s Exs. 13 and 21). Statewide TouchPlay sales began in April 2004. (Pi’s Ex. 13). As of April 8, 2006, there are 6,432 Touch-Play Machines in the State. (Pi’s Ex. 21). Distribution of TouchPlay Machines involves manufacturers, distributors, operators or “MVM Retailers” and “business premise owners.” Only four companies manufacture Touchplay Machines that are in use in the State: (1) Bally Gaming, Inc. of Las Vegas, Nevada; (2) Diamond Games Enterprises, Inc. of Chattsworth, California; (3) Oasis Gaming of Omaha, Nebraska; and (4) Multimedia Games of Austin, Texas. Each manufacturer maintains a central computer which can be accessed by the Lottery. Four distributors market the TouchPlay Machines for these four manufacturers. The distributors include: (1) Moss Distributing of Des Moines, Iowa; (2) Greater America of Johnston, Iowa; (3) Central Distributing of Omaha, Nebraska; and (4) Redline Vending of New Hampton, Iowa. There are ninety licensed MVM Retailers who may purchase or lease the Touch-Play Machines, find business locations to place the TouchPlay Machines and maintain the TouchPlay Machines. (Pi’s Ex. 21). Of the ninety licensed MVM Retailers, eighty-one have been active at some point in the Touchplay Program. (Id.). As of April 8, 2006, seventy-five MVM Retailers are active. (Id.). In addition to the manufacturers, distributors and MVM Retailers, there are 3,839 licensed business premises. (Id.). As of April 8, 2006, there are 2,909 active licensed business premises. (Id.). The licensed business premises include convenience stores, gas stations, truck stops, grocery stores, drug stores, liquor stores, bars, restaurants, bowling alleys and i fraternal organizations. (Pi’s Ex. 13). Distribution of TouchPlay Machines throughout Iowa has cost approximately $100 million. (Pi’s Ex. 5). The Lottery does not own any of the TouchPlay Machines. (Pi’s Ex. 21). The Lottery performs certain functions in the TouchPlay Program, including the following eight functions: (1) certifying TouchPlay Machines and having contracts with the manufacturers; (2) licensing distributors, MVM Retailers and business premises for the TouehPlay Machines; (3) testing and approving specific TouehPlay games; (4) setting criteria for TouehPlay games, including the number of winning plays and the amount of prizes to be paid to players; (5) collecting financial data from the individual TouehPlay Machines through each manufacturer’s central computer; (6) collecting revenues from all Touch-Play Machines for the State by electronic transfers at a current rate of twenty-four percent of the total revenues from all of the manufacturers upon verification of financial data sent from each manufacturer’s central computer; and (7) paying manufacturers a share of the revenues at the rate of approximately fifteen percent of the revenue from all of the manufacturers’ TouehPlay Machines upon presentation of an invoice and verification of financial data sent from each manufacturer’s central computer. (Id.). C. Documents Authored by the Lottery On December 20, 2004, the Lottery issued a two-page Memorandum addressed to “Lottery MVM Retailers” (“the 2004 Memorandum”). (Pi’s Ex. 8). The 2004 Memorandum, in part, provides:' Compensation for all parties shall be based on a percentage of net revenues. Lottery compensation will be: CY 2005 24% CY 2006 24% CY 2007 27% CY 2008 30% CY 2009 34% ... Net revenue is defined as funds accepted by the MVM less the amount of tickets issued that are payable on the premises and less a percentage of sales used to fund payment of single-play prizes in excess of $600 as set forth in the game’s prize structure. (Id.). On January 26, 2005, the Lottery’s Vice President of Sales, Larry L. Loss, sent a five-page letter to “MVM Retailer,” along with a packet of information that pertained to becoming a “licensed Iowa Lottery retailer” (collectively referred to as the “January 2005 Packet”). (Pi’s Ex. 9). Enclosed in the January 2005 Packet was HCP’s non-transferable MVM Retailer license (“HCP’s License”), which has a January 10, 2005 issue date. (Id.; Defs Ex. D). HCP’s License is a one-page certificate and identification card. (Defs Ex. D). Also enclosed in the January 2005 Packet is a seven-page document entitled “Licensing Terms and Conditions (January 2005).” (Pi’s Ex. 9). The seven-page document tracks the language of chapter 531 of the Iowa Administrative Code. It provides that Iowa Code chapter 99G and Iowa Administrative Code chapter 531 are incorporated by reference. (Id.). The January 2005 Packet instructs HCP to begin selling tickets through TouehPlay Machines by October 29, 2005. (Id.). The Lottery further instructs HCP on various topics, including: restrictions on Touch-Play logos and advertising, the installation of TouehPlay Machines, the law pertaining to TouehPlay Machines, information about revenue splits and information regarding obtaining and paying for the ticket stock. (Id.). The January 2005 Packet informed HCP that the Lottery’s percentage of net revenue would be 24% in calendar years 2005 to 2006; 24% in calendar year 2007; 27% in calendar year 2008; 30% in calendar year 2009; and 34% in calendar year 2010. (Id.). At the end of the January 26, 2005 letter, Vice President Loss wrote: “We look forward to providing entertaining games for your customers and making your business more profitable.” (Id.). On June 2, 2005, Vice President Loss again wrote a letter to “MVM Retailers” (“June 2005 Letter”). (Pi’s Ex. 11). In part, the June 2005 Letter provides: The Iowa Lottery is making changes to its Retailer Licensing Terms and Conditions related to [TouchPlay Machines]. A copy of the revised Terms and Conditions [] is enclosed. Amendments were made to Section A, number 23, and Section E, numbers 11 and 12. These revisions will become effective June 16, 2005.... Due to the changes to the Terms and Conditions, processing of MVM premises operator license applications will be put on hold until June 16. The Lottery also is implementing a formal inspection process for MVM premises.... Thanks for participating in the Touch-Play program. We value your partnership! (Id.). The June 2005 Licensing Terms and Conditions is nearly identical to the Licensing Terms and Conditions issued in January 2005. (Pi’s Ex. 20; Defs Ex. F). It, too, incorporates by reference chapter 99G of the Iowa Code and chapter 531 of the Iowa Administrative Code, and it provides that the statutory and regulatory provisions preempt any conflicting provisions. (Id.). D. HCP’s Business HCP is a licensed MVM Retailer that owns 724 TouchPlay Machines and lawfully operates 572 of them in approximately 187 business locations throughout the State. (Declarations of Rodney Clennon, Timothy Youmans and Marshall Armstrong [hereinafter collectively referred to as “HCP’s Declarations”]; Affidavit of Steve King). HCP spent $4.7 million to purchase and install the TouchPlay Machines, and it spent more than $2.1 million in related expenses — such as paying business premises owners and servicing and maintaining the TouchPlay Machines. (HCP’s Declarations). It is financially obligated for $3.1 million in debt for the purchase of the TouchPlay Machines. (Id.). Additionally, HCP entered into approximately 200 contracts (“Location Contracts”) with business premise owners. (Id.). The Location Contracts, in part, provide: In consideration for the sum of $10.00, Proprietor hereby grants unto HCP the exclusive right for five (5) years to install and maintain all [TouchPlay Machines] as may be allowed by law or promulgated regulation ... upon the Proprietor’s business premises.... (Id.). HCP also entered into other contracts related to its business needs. (Id.). It employs twenty Iowans. (Id.). HCP began reporting TouchPlay revenue to the Lottery in the week ending March 19, 2005. (Affidavit of Steve King). As of the week ending April 1, 2006, HCP operated 572 machines. (Id.). HCP remitted approximately $2.5 million to the Lottery since commencing its TouchPlay business. (HCP’s Declarations). After subtracting TouchPlay prizes, HCP’s TouchPlay Machines produced $12,186,006 in revenue between March 2005 and the week ending April 1, 2006. (Affidavit of Steve King). Between the week ending March 19, 2005, and the week ending April 1, 2006, HCP realized $3,737,159 in income. (Id.). The court is unable to make a finding as to how much money HCP would make before March of 2010 absent the enactment of Senate File 2330. See An-drus v. Allard, 444 U.S. 51, 66, 100 S.Ct. 318, 62 L.Ed.2d 210 (1979) (stating that “[p]rediction of profitability is essentially a matter of reasoned speculation that courts are not especially competent to perform”). If the court were to speculate, it would find that HCP would likely lose approximately $30 million in profits as a result of the ban on TouchPlay Machines. E. The Ban On January 6, 2006, Dr. Stanek appeared before the Administrative Rules Review Committee of the Iowa House of Representatives (“the Committee”) to propose new rules pertaining to the placement of TouchPlay Machines. At that meeting, some Representatives expressed concern over the State’s reliance on the revenue from TouchPlay Machines. It was the consensus of the Committee that the Legislature should review the legislative intent regarding the TouchPlay Program. On January 9, 2006, Governor Vilsack and Lt. Governor Sally Pederson announced the appointment of a six-member TouchPlay Task Force. (Pi’s Ex. 6). Members of the Task Force included: the Poweshiek County Attorney, a representative from the Ameristar Casino, a representative from the Riverboat Development Authority, a representative from Moss Distributing, Dr. Stanek and Commissioner Techau. (Id.). The Task Force was charged with answering the following three questions: 1. Is a TouchPlay Machine a slot machine or an Iowa Lottery product? 2. Are there adequate safeguards to prevent minors, addicted gamblers, and intoxicated persons from playing TouchPlay? 3.If there are not adequate safeguards, what additional safeguards does the Task Force recommend? (Id.). In a letter to Dr. Stanek dated January 9, 2006, Governor Vilsack requested a sixty-day moratorium on the licensing of new TouchPlay Machines. (Defs Ex. G). The Lottery agreed to impose such a moratorium. (Affidavit of Mary Neubauer). On March 8, 2006, the Task Force issued its report. (Pi’s Ex. 6). The Task Force members reached a consensus regarding the first question. (Id.). They determined that TouchPlay Machines are a Lottery product. (Id.). As to the second question, the report reads: “A majority of the Task Force agreed that there are not adequate safeguards. All agreed that there is need for improvement, and additional safeguards would be beneficial.” (Id.). As to the third question, the Task Force recommended several additional safeguards to protect addicted gamblers and minors, but it did not recommend banning the TouchPlay Machines or curtailing the TouchPlay Program. (Id.). In a letter to Dr. Stanek dated March 9, 2006, Governor Vilsack requested that the Lottery extend the 60-day moratorium until the end of the “current legislative session or upon the effective date of any legislation regarding TouchPlay, whichever is later.” (Defs Ex. H). On March 13, 2006, the Iowa Senate passed Senate File 2330 by a margin of forty to ten, and the Senate immediately sent it to the Iowa House of Representatives. On March 14, 2006, Senate File 2330 passed the Iowa House of Representatives by a margin of eighty to eighteen. On March 20, 2006, Governor Vilsack signed Senate File 2330 into law. Section 4 provides, in part: Monitor Vending Machines---- [A] retailer that has acquired a monitor vending machine prior to the effective date of this Act shall be allowed to offer the machine to the public for only forty-five days following the effective date of this Act. On or after forty-five days following the effective date of this Act, a retailer shall not make a monitor vending machine available to the public. (Pi’s Ex. 7). The effective date and time is, therefore, May 3, 2006 at 11:59 p.m. Due to Senate File 2330, HCP has kept its remaining 152 TouchPlay Machines in storage and out of active use. V. COUNT III — IMPAIRMENT OF CONTRACT In its Second Amended Complaint, HCP alleges that Defendants violated Article I, Section 10 of the United States Constitution by impairing its right to contract in two respects. HCP argues that, if Senate File 2330 is applied to it, the ban impairs (1) HCP’s contract with the Lottery and (2) HCP’s approximately 200 Location Contracts with business premises owners. The United States Constitution provides: “No state shall ... pass any ... Law impairing the Obligation of Contracts .... ” U.S. Const, art. I, § 10. “Read literally, this constitutional prohibition bans any interference with contracts, but cases interpreting the clause clearly indicate that this prohibition ‘is not an absolute one and is not to be read with literal exactness like a mathematical formula.’ ” Honeywell, Inc. v. Minn. Life & Health Ins. Guar. Ass’n, 110 F.3d 547, 551 (8th Cir.1997) (quoting Home Bldg. & Loan Ass’n v. Blaisdell, 290 U.S. 398, 428, 54 S.Ct. 231, 78 L.Ed. 413 (1934)). “Instead, when a litigant contends that a legislative amendment has impermissibly impaired contractual obligations, [the Supreme Court’s] inquiry initially focused on whether the change in state law has operated as a substantial impairment of a contractual relationship.” Id. (internal quotations omitted). “The Contract Clause does not deprive the States of their ‘broad power to adopt general regulatory measures without being concerned that private contracts will be impaired, or even destroyed, as a result.’ ” Exxon Corp. v. Eagerton, 462 U.S. 176, 190, 103 S.Ct. 2296, 76 L.Ed.2d 497 (1988) (quoting U.S. Trust Co. v. New Jersey, 431 U.S. 1, 22, 97 S.Ct. 1505, 52 L.Ed.2d 92 (1977)). “A serious alteration of the terms of a contract resulting from state legislation is permissible if, but only if, the legislation is necessary to meet a broad and pressing social or economic need, if the legislation is reasonably adapted to the solution of the problem involved, and if it is not over-broad or over harsh.” White Motor Corp. v. Malone, 599 F.2d 283, 287 (8th Cir.), aff'd, 444 U.S. 911, 100 S.Ct. 223, 62 L.Ed.2d 166 (1979). The Contract Clause prohibits laws impairing contracts, regardless of whether a state is a party to the contract or the contract is between private parties. Minn. Gas Co. v. Pub. Serv. Comm’n, 523 F.2d 581, 585 (8th Cir. 1975) (citing City of El Paso v. Simmons, 379 U.S. 497, 506-09, 85 S.Ct. 577, 13 L.Ed.2d 446 (1965)). The Eighth Circuit Court of Appeals has set forth a three-part test for determining whether a statute violates the Contract Clause: (1) The first inquiry is whether the state law has, in fact, operated as a substantial impairment on pre-existing contractual relationships. If there is no substantial impairment of contractual relationships, the law does not violate the Contract Clause. If, however, the law does constitute a substantial impairment, the second part of the test is addressed: (2) The State must have a significant and legitimate public purpose behind the regulation. If there is no significant and legitimate public purpose, the state law is unconstitutional under the Contract Clause. If a significant and legitimate public purpose has been identified, the third part of the test is applied: (3) [A court] must determine whether the adjustment of the rights and responsibilities of contracting parties is based upon reasonable conditions and is of a character appropriate to the public purpose justifying the legislation’s adoption. Equip. Mfrs. Inst. v. Janklow, 300 F.3d 842, 850 (8th Cir.2002) (internal citations and quotations omitted); see also In re Workers’ Compensation Refund W. Nat'l Mut. Ins. Co., 46 F.3d 813, 817 (8th Cir. 1995) (“In practical terms, state legislation violates the Contract Clause if: (1) the state law operates as a substantial impairment upon a contractual relationship, and (2) the state cannot demonstrate a significant and legitimate public purpose behind the regulation.”). The court will first analyze HCP’s alleged contract with the Lottery and then analyze its alleged Location Contracts utilizing the three-part test. A. The Contract Between HCP and the Lottery At trial, HCP conceded that there was no single, fully integrated written document in this matter between HCP and the Lottery. HCP’s counsel stated: What I think we have here is an implied, in fact, contract [sic] which is partly written and partly oral.... The Court is certainly correct in indicating that there is not a single integrated written document which is the contract between HCP and the [Lottery], It is the position of the plaintiff, rather, that what we have is the nature of a partnership or a joint venture with the Lottery Authority.... April 12, 2006 Trial Transcript at 8. The court finds that HCP conceded that it has no single, fully integrated written contract with the State. Therefore, the court will not analyze whether HCP’s License, by itself, constitutes the contractual relationship allegedly at issue here. Although a single written contract does not exist, HCP claims that an implied-in-fact contract is established by five documents. Those five documents include the following: 1. the 2004 Memorandum (Pi’s Ex. 8); 2. the January 2005 Packet (Pi’s Ex. 9); 8. HCP’s License (Defs Ex. D); 4. the June 2005 Letter (Pi’s Ex. 9); and 5. the June 2005 Licensing Terms and Conditions (Defs Ex. F and Pi’s Ex. 20). (collectively referred to as “the Five Contractual Documents”). Defendants respond that there can be no impairment of contract because HCP’s License is not a contract and the alleged “partnership” HCP has with the Lottery cannot be classified as an implied-in-fact contract. 2. Whether there is a substantial impairment on a pre-existing contractual relationship? To determine whether the first inquiry of the Janklow Contract Clause test is met, the court must inquire as to: “ ‘[1] whether there is a contractual relationship, [2] whether a change in law impairs that contractual relationship, and [3] whether the impairment is substantial.’ ” Janklow, 300 F.3d at 850 (quoting General Motors Corp. v. Romein, 503 U.S. 181, 186, 112 S.Ct. 1105, 117 L.Ed.2d 328 (1992)). The court turns to consider these three factors. a. Whether a contractual . relationship exists? HCP argues that its contract with the State consists of the Five Contractual Documents. “In Iowa, a contract will be implied where there has been a mutual manifestation of assent by acts and deeds (rather than words) to the same terms of an agreement.” McBride v. City of Sioux City, 444 N.W.2d 85, 90 (Iowa 1989); see also Nichols v. City of Evansdale, 687 N.W.2d 562, 574 (Iowa 2004) (“An implied-in-fact contract requires mutual manifestation of assent.”). “The substance of such a contract must be determined from the acts of the parties in light of the subject matter and the surrounding circumstances.” McBride, 444 N.W.2d at 90. The “traditional rules of contract law” apply to implied-in-fact contracts. Hunter v. Union State Bank, 505 N.W.2d 172, 177 (Iowa 1993). Therefore, the doctrines of offer and acceptance, consideration and breach all apply. Id. The Iowa Supreme Court has also recognized “unilateral contracts.” See McBride, 444 N.W.2d at 90 (discussing unilateral contracts in employment context). “A unilateral contract consists of an offeror making a promise and an offeree rendering some performance as acceptance.” Anderson v. Douglas & Lomason Co., 540 N.W.2d 277, 282 (Iowa 1995). HCP carries the burden to prove the existence of any unilateral contract. See Anderson, 540 N.W.2d at 281. All contracts, including unilateral contracts, must contain mutual assent. Magnusson Agency v. Pub. Entity Nat'l Co. -Midwest, 560 N.W.2d 20, 26 (Iowa 1997). This assent is usually given through an offer and acceptance. An offer is a “manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his [or her] assent to that bargain is invited and will conclude it.” [The Iowa Supreme Court] look[s] for the existence of an offer objectively, not subjectively. The test for an offer is whether it induces a reasonable belief in the recipient that he or she can, by accepting, bind the sender. If an offer is not definite, there is no intent to be bound. In other words, when dealing with a unilateral contract, the offeree’s performance “must have been induced by the promise made.” Id. at 26 (citations omitted). “In addition to the requirement that there be a definite intent to be bound, an offer must also be certain as to its terms and requirements.” Id. i. Offer The first question here is whether the compilation of letters and memos by the Lottery constitute a contractual offer. The court finds that the Five Contractual Documents manifest a willingness on the part of the Lottery to enter into a bargain. The Lottery solicited “MVM Retailers,” like HCP, and induced a reasonable belief in the MVM Retailers that the Lottery would be bound to perform certain tasks, including: marketing the TouchPlay Machines, monitoring TouchPlay licenses, paying prizes in excess of $600, maintaining the four manufacturers’ central computer systems, billing the retailers for weekly TouchPlay sales and inspecting MVM Retailers. The court finds that the Five Contractual Documents induced a reasonable belief in HCP that it could, by accepting the Lottery’s terms, bind the Lottery. See id. The court finds that the Lottery’s offer was definite and that it intended to be bound. Id. The Lottery manifested a willingness to enter into a bargain in which it would receive a certain percentage of net revenues from HCP. Id. The court finds that the offer by the Lottery was “certain as to its terms and requirements.” Id. The court need not set forth each term and requirement involved in the offer. For present purposes, the court need only discuss the term that is relevant to this dispute, namely, the duration of the contract. The court finds that the Lottery made an offer to HCP to enter into a contract that could be terminated by either party at any time, i.e., the contract was for an indefinite duration. Contracts of indefinite duration are not unknown under Iowa law. See, e.g., Smidt v. Porter, 695 N.W.2d 9, 20 (Iowa 2005) (discussing an employment contract in which either party could terminate at any time). A finding that the contract here was of an indefinite duration is warranted because there are numerous provisions in the Five Contractual Documents which give HCP notice that the Lottery reserved the right to end the contractual relationship at any time. For example, the June 2005 Licensing Terms and Conditions, in part, provide: “A license is valid until it ... is terminated by a change in circumstances.... ” (Def s Ex. F and Pi’s Ex. 20 at ¶ 3); see also Iowa Admin. Code r. 531-14.7 (providing nearly identical language). Likewise, the June 2005 Licensing Terms and Conditions contain a catch-all provision: “A retailer’s license may be revoked, suspended, terminated or limited by the Lottery if a retailer fails to comply with any applicable law or administrative rule, these terms and conditions, or instructions given to the retailer.” (Defs Ex. F and Pi’s Ex. 20 at ¶ 7). Further, HCP could remove its TouchPlay Machines from business premises at any time and terminate its relationship with the Lottery. Nothing in the Five Contractual Documents forbids such action. HCP claims that the contract was for a five-year period. The court finds that the Five Contractual Documents certainly contain references to payments of net revenues over a period of five years. Unlike the Location Contracts, however, the contractual terms offered by the Lottery do not include a five-year commitment or any renewal clauses. Therefore, the court finds that the offer by the Lottery was for an indefinite period which gave either party the ability to terminate the relationship at will. ii. Acceptance If an offer is found, the court must examine whether there is acceptance. Magnusson Agency, 560 N.W.2d at 26. “An offer that invites an acceptance by performance is deemed accepted by such performance unless there is a manifestation of intention to the contrary.” Id. The court finds that HCP performed between about January 2005 and April 12, 2006, under the terms and conditions established by the Lottery. HCP performed, in part, as follows: it obtained HCP’s License in January 2005; it invested $4.7 million in TouchPlay Machines; it entered into Location Contracts with business premise owners; it entered into employment contracts; it placed TouchPlay Machines in various business premises; it began operating the TouchPlay Machines in March 2005 in accordance with the parameters established by the statutes, the rules, and the Lottery; and it maintained and serviced the active TouchPlay Machines. Here there was mutual assent, which is best evidenced by the ongoing nature of the relationship between HCP and the Lottery and the fact that the Lottery accepted approximately $2.5 million from HCP since HCP began operating TouchPlay Machines in March 2005. The court, therefore, finds HCP accepted the Lottery’s offer by performing. iii. Consideration In addition to offer and acceptance, “[a]nother essential element of any binding contract is consideration.” Id. The party challenging the existence of a contract has the burden to prove a lack of consideration. Kristerin Dev. Co. v. Granson Inv., 394 N.W.2d 325, 331 (Iowa 1986). Lack of consideration is generally a defense to contract formation. Hubbard Milling Co. v. Citizens State Bank, 385 N.W.2d 255, 258 (Iowa 1986). Defendants do not challenge the existence of consideration. Even if Defendants raised a consideration challenge,, the court' would find consideration existed.: The court must only find that there was either a benefit to the promisor or a detriment to the promisee. Id. Moreover, “ *[a]ny performance which is bargained for is consideration.’ ” Magnusson Agency, 560 N.W.2d at 27 (citing Restatement (Second) of Contracts § 72 (1981)). “A performance is bargained for if it is sought by the promisor in exchange for his or her promise and is given by the promisee in exchange for that promise.” Id. (citing Restatement (Second) of Contracts § 71(2)). The court finds that there is consideration in the instant case. Put quite simply, the Lottery agreed to provide HCP with “entertaining games for [its] customers” in order to make HCP’s business “more profitable” (Pi’s Ex. 9 at p. 5), and HCP, in turn, agreed to expend personal and financial resources to maintain a TouchPlay business that remitted a percentage of net revenues to the Lottery. iv. Conclusion Because the Lottery extended an offer which included definite terms and requirements, HCP accepted that offer and consideration exists, the court finds the Lottery and HCP entered into a binding implied-in-fact contract. b. Whether the change in the law impairs that contractual relationship? In assessing the second component of the inquiry, that is, whether there is a substantial impairment of a contractual relationship, the court “must first identify what contractual rights, if any, have been impaired.” Janklow, 300 F.3d at 851. The court finds that the terms of the parties’ implied-in-fact contract have not been impaired. The court finds that Iowa Administrative Rules 531-14.1 through 531-14.20 are. terms of this implied-in-fact contract. See Defs Ex. F and Pi’s Ex. 20. Rule 531-14.7 provides that HCP’s License could be terminated “by a change of circumstances.” Therefore, by its very terms, the Lottery has the right to terminate the implied-in-fact contract at any time. The court finds that, if the Lottery were to unplug the manufacturer’s central computers on May 3, 2006 at 11:59 p.m., it would be merely exercising its rights under the contract, that is, under Iowa Administration Rule 531-14.7 and paragraph three of the June 2005 Licensing Terms and Conditions. It would be invalidating HCP’s License based on a change of circumstances. Because HCP’s License is part and parcel of the implied-in-fact contract, the Lottery will effectively terminate the contract. Therefore, the court finds that the implied-in-fact contract between HCP and the Lottery will terminate due to its own terms on May 3, 2006 at 11:59 p.m. If the parties had contracted for a finite term of years, the court’s conclusion with respect to whether the law impairs the parties’ contractual relationship or rights could not stand. However, there is no impairment of contract because the parties bargained for the right to terminate the contract at any time if circumstances changed, c. Whether the contractual impairment is substantial ? Step three of the first inquiry requires the court to determine whether the impairment of the parties’ pre-existing contractual relationship is substantial. Janklow, 300 F.3d at 853-54. To determine whether the parties’ contractual relationship is substantially impaired, the court must look to the parties’ reasonable expectations. See In re Workers’ Compen sation Refund, 46 F.3d at 819 (considering “the extent to which the [parties’] reasonable contract expectations have been disrupted”). The Supreme Court has placed great weight on contractual expectations because “[Contracts enable individuals to order their personal and business affairs according to their particular needs and interests!, and,] [o]nee arranged, those rights and obligations are binding under the law, and the parties are entitled to rely on them.” Allied Structural Steel, 438 U.S. at 245, 98 S.Ct. 2716. “Reasonable expectations ■ are affected by the regulated nature of an industry in which a party is contracting.” In re Workers’ Compensation Refund, 46 F.3d at 819 (citing Energy Reserves Group, Inc. v. Kan. Power & Light Co., 459 U.S. 400, 411, 103 S.Ct. 697, 74 L.Ed.2d 569 (1983)). “Heavy regulation of an industry may reduce reasonable expectations.” Id. at 820. The Eighth Circuit Court of Appeals' has instructed that “the more severe the impairment, the closer scrutiny the statute will receive.” Janklow, 300 F.3d at 854. “Total destruction of contractual expectations is not necessary for a finding of substantial impairment. ...” U.S. Trust Co., 431 U.S. at 26-27, 97 S.Ct. 1505. The court should, first, set forth the nature of the impairment and, second, “consider how previous regulation affects the extent of the impairment.” Id. i. Nature of the impairment “Total destruction of a contract is a substantial impairment.” Honeywell, 110 F.3d at 558. Senate File 2330 effectively eliminates the entirety of the contractual relationship between HCP and the Lottery. It destroys the purpose of the contract because it makes it unlawful for HCP and the Lottery to provide Touch-Play Machines to the consumer for profit. Senate File 2330 was enacted to impair the use of TouchPlay Machines. See id. (“[T]he impairment was not merely incidental to another legislative purpose; the statute was enacted to impair.”). Therefore, the court finds that the nature of the impairment is a total impairment. ii. Previous regulation “In general, when an industry is heavily regulated, parties are considered to have less reasonable expectation that legislation will not alter their contractual arrangements.” Honeywell, 110 F.3d at 558 (citing Energy Reserves, 459 U.S. at 411, 103 S.Ct. 697). The court must determine whether the impairment resulting from the ban was foreseeable. See Janklow, 300 F.3d at 857 (explaining that the second step in analyzing the nature of the legislation’s impairment on the pre-existing contracts “is to ascertain whether previous regulation affects the nature of the impairment, i.e., - whether the impairment was foreseeable”). “Parties’ expectations of future regulation are important in determining whether contractual rights are substantially impaired....” Id. The court can think of few businesses that are as regulated, or more regulated, than gambling and gaming. These industries are heavily regulated pursuant to a comprehensive statutory and regulatory scheme. See, e.g. Iowa Code chs. 99, 99A, 99B, 99C, 99D, 99F and 99G; Iowa Admin. Code chs. 491 and 531; see also Corner Pocket of Sioux Falls, Inc. v. Video Lottery Techs., Inc., 123 F.3d 1107, 1110 n. 2 (8th Cir.1997) (noting the “heavily regulated nature” of the video lottery machine business). Given the general nature of lotteries and the Iowa statutes and regulations, HCP was duly warned that its investments in the TouchPlay Machines was risky in the long term. HCP’s expectations should have been guided by rule 531-14.7 of the Iowa Administrative Code which, in part, provides that an MVM Retailer license is valid “until it expires, is terminated by a change of circumstances, is surrendered by the licensee, or is revoked by the lottery.” Iowa Admin. Code. r. 531-14.7 (emphasis added). The Iowa Code also contains a provision which states that a “lottery retail license issued by [the Lottery] pursuant to [Iowa Code chapter 99G] may be canceled, suspended, revoked, or terminated by [the Lottery] for reasons including, but not limited to, any of the following: ...” Iowa Code § 99G.27(1) (emphasis added). Moreover, the highly regulated nature of the business is apparent in the material sent from the Lottery to HCP and other MVM Retailers. For example, the June 2005 Licensing Terms and Conditions provide: The provisions of Iowa Code chapter 99G, 531 Iowa Administrative Code, and any other applicable statutory or regulatory provisions are herein incorporated by reference. If a provision in this document conflicts with an applicable statutory or regulatory provision, the statutory or regulatory provision preempts the conflicting provision in this document. All retailers should familiarize themselves with applicable statutes and regulations. (Def s Ex. F and Pi’s Ex. 20 (emphasis in original)). The regulations provide that the MVM license is a “privilege personal to” the license-holder and not a vested right. Iowa Admin. Code r. 531-14.12. Paragraph 2 of the June 2005 Licensing Terms and Conditions provide: “These terms and conditions may be unilaterally amended by the Lottery by providing the retailer with 14 days written notice of amendment.” (Def s Ex. F and Pi’s Ex. 20 at ¶ 2). The court finds that the implied-in-fact contract between HCP and the Lottery was highly regulated prior to the passage of Senate File 2330. Therefore, it should have been foreseeable to the parties that new statutory or regulatory provisions could be passed regarding TouchPlay Machines. Iowa Administrative Rule 531.14.7, which provides that the MVM licenses could be terminated based on a “change of circumstances,” certainly put HCP on notice that the law could change. The court rejects HCP’s argument that the ban was unforeseeable. Over a century ago, the Supreme Court rejected a constitutional impairment of contract claim when the State of Mississippi contracted to create a lottery and then passed laws making the lottery illegal a few years later. See generally Stone v. Mississippi, 101 U.S. 814, 25 L.Ed. 1079 (1879). In that case, the Supreme Court spoke about the regulated nature of the lottery industry: Certainly the right to suppress [the lotteries] is governmental, to be exercised at all times by those in power, at their discretion. Any one, therefore, who accepts a lottery charter does so with the implied understanding that the people, in their sovereign capacity, and through their properly constituted agencies, may resume it at any time when the public good shall require, whether it be paid for or not. All that one can get by such a charter is a suspension of certain governmental rights in his favor, subject to withdrawal at will. He has in legal ef-feet nothing more than a license to enjoy the privilege on the terms named for the specified time, unless it be sooner abrogated by the sovereign power of the State. It is a permit, good as against existing laws, but subject to future legislative and constitutional control or withdrawal. Id. at 821. The court concludes that, even if it had found there was an impairment in step two, HCP’s claim of constitutional contract impairment would not survive step three. HCP’s claim fails the third step of the first inquiry of the Contract Clause impairment test because the impairment was foreseeable to the parties, that is, it was not substantial. 2. Conclusion In summary, the first inquiry of the Contract Clause test is answered in the negative. That is: Senate File 2330 does not substantially impair the pre-existing implied-in-fact contract between HCP and the Lottery. Given this conclusion, the court need not consider whether the public purpose is significant and legitimate or whether the adjustment of the rights and responsibilities is based upon reasonable conditions. See Janklow, 300 F.3d at 850. Accordingly, with respect to the implied-in-fact contract between HCP and the Lottery, the court concludes that Senate File 2330 does not violate the Contract Clause of the United States Constitution. B. The Location Contracts [43] HCP also contends in its brief that, because HCP’s contract with the State is “completely destroyed,” HCP’s “contractual relationships with the loea-tions where its machines are operated” is “simultaneously devastated.” (docket no. 4 at.p. 16). It further argued at trial that its contracts with “retail establishments” will be impaired by Senate File 2330. The court must first analyze whether there is a substantial impairment of a preexisting contractual relationship and ask whether a contractual relationship exists. The court finds HCP has approximately 200 contractual relationships with various business premises owners through its Location Contracts. Next, the court must determine whether the change in the law impairs those contractual relationships. The court finds that Senate Bill 2330 does not impair the contractual relationships HCP has with several business premises owners because, again, there is a clause in the Location Contracts which allows for termination due to a legislative ban. The Location Contracts, in part, provide: In consideration for the sum of $10.00, ' Proprietor hereby grants unto HCP the exclusive right for five (5) years to in.stall and maintain all [TouchPlay Machines] as may be allowed by law or promulgated regulation ... upon the Proprietor’s business premises.... (emphasis added). . The court, finds that the phrase “as may be allowed by law or promulgated regulation” allows for termination of the contract in a situation like the one presented by Senate File 2330. Because the Location Contracts allow for an “out” when the law no longer allows TouchPlay Machines to be offered to the public, the court cannot find that the State impaired the Location Contracts by passing Senate File 2330. The Location Contracts are terminated by their own terms, which HCP and various business owners— not HCP and the Lottery — set or established. Because the court finds there is no impairment of the Location Contracts, it will not determine the third step of the substantial impairment inquiry, nor will it consider whether the public purpose is significant and legitimate. See Janklow, 300 F.3d at 850 (“If there is no substantial impairment of contractual relationship, the law does not violate the Contract Clause.”). The court finds that Senate File 2330 does not violate the Contract Clause as applied to HCP’s Location Contracts. VI. COUNT I — THE TAKINGS CLAUSE In the Second Amended Complaint, HCP makes an as-applied challenge to Senate File 2330 under the Takings Clause. Defendants deny that HCP has a property interest protected by the Takings Clause and deny that Senate File 2330 constitutes a taking. The Takings Clause of the Fifth Amendment provides that private property shall not “be taken for public use, without just compensation.” U.S. Const, amend. V. The Takings Clause is made applicable to the states through the Fourteenth Amendment. See Lingle v. Chevron USA Inc., 544 U.S. 528, 535-37, 125 S.Ct. 2074, 2080, 161 L.Ed.2d 876 (2005) (citing Chi., Burlington & Quincy R.R. v. Chicago, 166 U.S. 226, 17 S.Ct. 581, 41 L.Ed. 979 (1897)). While [the Supreme Court] has recognized that the “Fifth Amendment’s guarantee ... [is] designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole,” Armstrong v. United States, [364 U.S. 40, 49, 80 S.Ct. 1563, 4 L.Ed.2d 1554 (1960) ], [the Supreme Court], quite simply, has been unable to develop any “set formula” for determining when “justice and fairness” require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons. See Goldblatt v. Hempstead, 369 U.S. 590, 594, 82 S.Ct. 987, 8 L.Ed.2d 130 (1962). Penn Cent. Transp. Co. v. City of N.Y., 438 U.S. 104, 123-24, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978). “ ‘The inquiry into whether a taking has occurred is essentially an “ad hoc, factual inquiry.” ’ ” Glosemeyer v. Mo. -Kan.-Tex.R.R., 879 F.2d 316, 324 n. 8 (8th Cir.1989) (quoting Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005, 104 S.Ct. 2862, 81 L.Ed.2d 815 (1984)). A. Property Rights To bring a claim under the Takings Clause, a claimant “must identify a property interest cognizable under the Fifth Amendment....” Tex. State Bank v. United States, 423 F.3d 1370, 1378 (Fed. Cir.2005); accord C & E Servs., Inc. of Wash. v. D.C. Water & Sewer Auth., 310 F.3d 197, 200 (D.C.Cir.2002); Parella v. Ret. Bd. of R.I. Employees’ Ret. Sys., 173 F.3d 46, 58 (1st Cir.1999). In Eastern Enterprises v. Apfel, 524 U.S. 498, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998), a majority of the Supreme Court held that a claimant must have a specific property interest to be within the purview of the Takings Clause. E. Enters., 524 U.S. at 541, 118 S.Ct. 2131 (Kennedy, J., concurring in the judgment and dissenting in part) (“Until today, however, one constant limitation has been that in all of the cases where the regulatory taking analysis has been employed, a specific property right or interest has been at stake.”); id. at 554, 118 S.Ct. 2131 (Breyer, J., dissenting) (“The ‘private property’ upon which the Clause traditionally has focused is a specific interest in physical or intellectual property.”). “Property interests, of course, are not created by the Constitution.” Bd. of Regents of State Colleges v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). “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, 118 S.Ct. 1925, 141 L.Ed.2d 174 (1998) (quoting Roth, 408 U.S. at 577, 92 S.Ct. 2701). HCP alleges that banning TouchPlay Machines will violate the Taking Clause by (1) taking its TouchPlay Machines, (2) destroying its business and (3) taking its contracts. HCP never alleges that the State will physically take its TouchPlay Machines nor alleges that, after May 3, 2006, it will not be in possession of its TouchPlay Machines. Additionally, HCP never alleges that the State will