Case Information

*1 QBffice of tije JZlttornep QBeneral

&date of PCexae

DAN MORALES *TTORNEY GENERAL March29,1993 I

Mr. David J. Freeman Opinion No. DM-211 Bxecutivesecrrtary

Texas Bating Commission Re: Authority of the Texas Racing P.O. Box 12080 Commission pursuant to sections 6.09 and Austin, Texas 7871 I-2080 10.05 of the Texas Racing Act, article 179e,

V.T.C.S., to receive and regulate the use of breakage generated by pari-mutuel wagering on greyhounds (RQ-230) Dear Mr. Free-man:

The Texas Racing Act (the “act”) authorizes the Texas Racing Commission (the %mnmision”) to regulate pari-mutuel wagering in the state of Texas. See, e.g., V.T.C.S. art. 179e, 0 3.02. Your questions concern the authority of the cmnmission under sections 6.09(d) and 10.05 of the act to rcseive and regulate the UK of breakage generated by pari- mutuelwageringongreyhoundmcesinTexas. “Br&age”mcans:

theoddMltsbywhichthtMlountpayableoneachdollarwagmd exceedsamultip~eof10~exceptintheeventaminuspool oczurs,inwhichcasethebRakageshaubeinmultiplcsof6vecents.

Id 8 1.03(20).’

Section 6.09(c) provides that 50 percent of the breakage gawrated by pari-mutuel wagesingon~raasisduethertllteudpclidtothe~~~whilesection

6.09(d) of the act aUocatcs the remaing 50 percent. Section 6.09(d) provides:

Fiftypercentofthe~eistobepaidtotheappropriate state greyhound breedhg registty. Ofthat portion of the breakage tForinrtana,a~‘ofS217wooldberolmdeddownto~u),udthcoddrcvcncmtrwould Mtbcpaidtothewiooiagkttw,bot-tothcEomminiosthc a?mptmkofFobkAEEounts, with tie XL See V.T.C.S. art. 179~. 05 6.08(b) - (i). ~VdOOSOthSi#didO&Orcntiticrin- 6.09(c)-(d), 9.04. 10.05; 16 TAX. 0 301.1 (defining ‘mirmr pod” as a pool with t!sufficient net minimum~cctowinaingktton);mETavnlAeovrHoasERACINoINTO(AS,at Empayh (l3mmgh Flh. co. 1978).

Tb d.50 V.T.C.S. an 179~. 0 3.09(a) @vision for deposit in state tmsmy by ammisior~ of mDacysitCOllectJurdcrthC~).

Mr.DavidJ.Freeman -Page2 ml-2 11)

25pacentofthatbreakageistobeu~in~~~’Md25 percmtofthatlotibmtiage#vtnaiiveprai-muruelpmlaa simu&arl pri-mutueI pool is to be pid to tk -won for lhe use by the state grqhomd breed registty, subject IO mks pramdgaied by the cmmhian. [Emphasis md footnote added.] WeuadastMdyouto~whatpartofthrtSOpacenthtobeprid~totbe Tacpp Grcyhmd Awxiation (the “TGA”). the only breed r&try for greyhounds in Texas. We- youalsotoask~partofthatbreakageistobe~for~~ racesmd~partissubj~torulesado~bythecommission. Weconcludethatallof thebrralcage~~by~on6.09(d)istobepclidfirsttothewMnissionratherthsn to the TGA. We also conclude that one-hsJfof the breakage allocated by section 6.09(d), or25pacent,istokusedfor~~ncesMdthrttheTGA’suseofthe25pacentsa asideforst&esracesaswellasitsuseofthe remaining 25 percent is subject to rules adoptedbythecommission.

In 1991. the legislature &led the langursc of section 6.09(d) italicized hove. Acts 1991.72d Leg.. ch. 386.5 30,8t 1456. Spe&caUy, the wadded the it&&cd languageduringthethirdrwdingofHouseBii2263 onMay 18.1991. S.J. ofTen, 72d Leg.. at 1717-18 (May 18. 1991) (5oor aawhent 16). Earlier that day, the senate added sections 10.04 ud 10.05 to the act during the second read@ of the bii. Id. at 1703 (500r Mlmdmmt 3). Those sections provide:

section 10.04. The state greyhod breed regiey shd nuke rrrconabletulestoestablishthcqua55cuionsof-Tcxas- bredgeyhmdstopro~deveiop,8lldimprovetbebnsdingof gmyhombintbisstate. Rulcsadoptedbythemgistryaresubjeotto wmmission approval.

section 10.05. The 05cially d&hated state .grqkmd breed regiay ‘for accrehd Tcxasked gwyhmds is the Tsar GteyhoundAawcktion. Tbest8tebrc&registqshUadoptndato provide for the use of brehgc ruxived by it under Section 6.09(d) OfthiSAct. Anasso&ionskdlpaytbe~duethebrced registry to the appropriate state greyhound registry at least every 30 days.

h4r.DavidJ.F recmm-Page3 (DM-2 11)

V.T.C.S. ut. 179e, 00 10.04- .05; Acts 1991, 72d Leg.. ch. 386, 548, at 1460.4 The referenw to “aswciui0n” in the last sentenw in section 10.05 is not to the TGA, but to theiadividualorentitylicenssdtoconductnca,ita~~tracl. V.T.C.S.ut. 179e, 3 1.03(2) (defhing “usociatim” as person licawd to conduct race meet@ with pari- mutuel -8=w.

You note in your reqtte~ letter that section 6.09(d) as amcntly worded is subject inteqmtatioas. You expLin that the commission intuprets the section as to diGring ~~~for~~n#sorarbjectingtow~~~~theentirr5Opercent

ofthe bredage allocated by section 6.09(d), with one-half of that amount or 25 percent to kusedin~~cesudtheothaonahlfor25pacenttokusedbytheTGAin

acwrdanw with wmmission rules.’ You further explain, however, that the section wuld be read to set aside for stakes races or subject to commission rqulation only one-half of the5Opementofthebrcakage,or25penmt,witb 12 1/2percmtsetasidefixusein ~es~~12l~pacmttobe~bytheTGAhr~~withw~ssion

ndea. Underthtxtintcrpremion,tbcTGAwould~the mnainiq 25 percent f&e of eithastatutoryorrqulatorycontrol. Youstate,however,thatthisint~raationwuld nsultinthe~ofbreabgeiaconsistentwitbthe~~ofthe~~chindudesthe ~1~,69LhLeg,zdC.S..&19,~1,~61. Tbisi8n@mgcmas&kddur&tkUdrdrmdingd SamkBUlSiatk+nrtc. SJ.dTa,6~Icg.IdC.S.w166(~26,1986)(~PncaQlvnt ofsech6.O9(d),mrothcrcspcusaf 4).N&hertheaaultcddmtcduriagthirdndingallicr~ tkle&laiwhinaydSantcBiu15duifytbemmlill8dtk~~. srr,e.g..Same comm~~s~.1s,BillF~69LhLcg,zdcs.~HollrRcrasb~FbaRcpmoll

C.S.S.B. 15, at 6 (AqaU 28. 19S6) (irmmcdy rrdcrriDg to rctioa 6.09(d) uul (e) in the Samtc commiarc 8obWitulc rc@aced by mztioo 6.09(d) duriq third madi@. We u&m& that the - didnmcd to tk TtiA SlS2.275. OI me-iuuoftk s361.55O iu bmkagc tbal Ihe alrmdsh lcceklfmm~mcLrnosintionrfolfircplyar1991.

Mr. David J. Frecmw - Page 4 (DM-211)

promotion of the gqhnmd brecdhg indusby in Texas. &e id. 5 1.02 (stat@ act’s -l.6

We note also several other ambiguities in section 6.09(d). First, the phrase “subject to rules promulgated by the commission” could be wnst~ed to apply to both perwntages mentioned in the second sentence; or to apply to only the latter of the two puwdaga Sewnd,tbere@awntthat25perwntbcpaidtothewmmissionappcars toconfliawiththerequirrmmtthatthe~5Opacmtoftheb~irtobeplidtothe TGA,thestategrqhmdbreedreghy Furkmo~, the requiremwt in section 6.09(d) that25pacaabe~dtothewmmi~wrrppeMltowntliawithtberequiranentin section10.05thatthegreyhmdassohtionspaytotheTGA brehgedueitatleast evwy 30 days.

Tacrurcourtssutethrttheprimaryplrpo~ofstatutoryw~wirto ztscedn the intent ofthe kgishturc and that ambiguous statutes should be interpreted to ~~shthelegislrrtunsintenteMIifthatintentis~~stentwitha~cttit~or grmmatiwl reading of the statute. See Green v. i&x@, 773 S.W.2xl 816, 818 (Tex. App.-San Antonio 1989, no writ); 67 TEX JUIL 3d Sturutes 85 91, 113 (and authorities cited therein). Acwrdingly, we turn to the legislative history of the phrase “is to be paid to the commission for the use by the state greyhound registry, subject to rules promulgatedbythewmmission.”

Asmartionedearlia,therenate~thatp~duringthethirdreadingof House Bill 2263 on adoption of floor amemhnt 16. S.J. of Tcx.. 72d Leg.. at 1717-18 (May 18,199l). Adoption of floor amwdmwt 16 resulted in termhtion of Senator John Leedom’s 5liier on the floor against passage of House Bii 2263. During the filii, thesenatorr&red armaoustimesto~w6.O~)ofthebin,aprovisiwrlloutinga partofthebreaLageg~bypui-~wrgaingonhonerclcesto~o~hone

breedregistries,ud,statedhisdesireto~~lddedthatwouldbothrequire~of thebrralrage~ocatedtothebonebreed~~tobepaidfirsttothewmmissionud ~ontolrdoptrulesreguLtiagtbeborsebretdngistrieS’uSe0fthat 8UthOliZCthCW breakage. See Debate on H.B. 2263 on the Floor of the Senate, 72d Leg. (uay 18, 1991) *5 Mr.DavidJ.Freunan -Page5 (DM-2 11)

(tape available 5xnn Swude Staff Sesviw3).7 Floor amwdmwt 16. w-sponsored by Swwtor Lcedom added to saxion 6.08(i) the proviso that the bre&ge allocated by ~~a.~)tothehonebned~~wrs”tobe~dtothecommissionforuseby tkappropriatestatehorsebreedEgistry,alQecttoNlespromulgatedbythe 16 ~mmission.“* ThishnguageisaentiAythesameasthtuIdedbyflooranwhmnt toseuion6.09(d). hatorChetBrooks,anotherc&sponsoroftheamaha&inkct 16auurcdthatthcsamebre&age cxphinedtotkhouae~5oor- bitations applied to horse racing and dog aiog. See Debate on H.B. 2263 on the Floor of the !knate, 72d Leg. (May 18.1991) (tape available from Senate StaE Services). Given~~o~,wewncludethelegidatureintadedtouaho~thewnrmissionto ~~rul~reguktiagthe~of~brsrlrrge~~byredion6.09(d),indudingthe pawntage ret aside 5x stakes races. Furthnore, we conclude that the legislature intended by the addition of the phrase “is to be paid to the wmmission for the use by the atate gmyhomd breed regktry, subjecl to rules promulgated by the commission” 8lso to rsquirethtrll~rllocatedbyKaion6.09(d)bepaidfirsttothew~~.

oUrwnstructionof~~6.09(d)unbeharmwizedwiththeraquirrmentinthe 5nt swtence of section 6.09(d) that 50 percent of the breakage “is to be paid to the ~~~brredingregirtry”dnceeM1if950pacentisfintpaidto

thewmmission,itwillbeultimatcJypaidtotheregistry.9 Thiswnstructioncanalsobe hamonbd with the statement in se&m 10.05 that the TGA “shall adopt rules to provide *6 Mr. David J. F m-Page6 (DM-2 11)

for the use of breakage rewived by it under Section 6.09(d) of this Act.” While this statrmentbyitstennsdoesnotprovidefor wmmisaion review and adoption of the TGA’s rules, we conclude that the provision in section 10.04 that “[r]ules adopted by the m&try [the TGA] arc subject to commission approval” appties to the TGA’s rules on breakage as well as to its rules establishing quali5cations for gryhwnds. The section 10.04 provision is not expressly limited to the TGA’s rules establishing quaiikations for Texas-bred ~~~the~eaddedittothe~ctatthcMmetimerCthestatanentinsection 10.05. SJ. of Tex.. 72d Leg.. at 1703 (May 18, 1991). In addition, we found no indication ia the kgisMve history of the floor amwdment adding section 10.04 and 10.05 tothe~thrtthelegiduureintendedtheTGA’snrleswbreakageto~eeffectwithout prior wmmission approval. More importantly, as we explain later in this opinion, no other conclusion would render the tioa 10.05 statemwt wnstkutional.~O

We are not able, however, to harmonhe our wnstnztion of section 6.09(d) with the requirwnwt in section 10.05 that the greyhound asocktions pay to the TGA breakage due it at least every 30 days. As mentioned above, the senate amended section 6.09(d) during the third reading on May 18. 1991. while s&ons 10.04 and 10.05 were added dtningthewwndreadingearliathRtday. This&ctalongwiththelegislativehistoryof 5oor amendmwtt 16 lead us to wncbde that the wntlicting payment requkement in section 10.05 is iwlktive.

We turn now to the relevant wnwitu5otud principles.*l State regdatory statutes must~~cleII,~onl~article~sedionloftheTarasCo~~which

prohii the legkkure firorn ddegating legi&ive powers Yo the unwntrolkd dkretion of a private individual or entity.” See Attorney General opinion JIM-509 (1986) at 3. S~with~dentwntrolsto~the~~~~ofpublicRthathanprivue

purpom however, will not violate these wnstitutional provisions. Compare Minlan v. Ci@ of Fart Worth Phning Can&n, 786 S.W.2d 563 (Tex App.-Fort Worth 1990. no writ)(replattiagstatuteitwalidbeauseit~egatedtonarroweegmentofwmmunity kgidatk power ldthout controls on exercise of power) wifh Llt&ng v. Auramatic Gas Co., 193 S.W.2d 517 (Tar. 1946) (holding valid statute that inwm by refuwcc aristiagregulationsofa~e~o~aw~ofwhichwasonfilewithstatc

Mr.DavidJ.F reeman-Page7 @M-211)

wy39.” Thwwhiiethckgislatureorstateagenciesmayrequesttbeticeaad aruutrnaofprivllteindividrulsmdesltitiesinthebaftiagofreguLtorynrles,theymust ~~udapprovethefhalrukstobeahccdagainsthdustrymembersorother manbars of the public.1’ our wnchlsion that seuions 10.04 and 10.05, whal mad ~getba,arbjecttbeTGA’rrukson~to~w;Ipprovllisw~with

this gmed principle, and thuq we need wt iiad that section 10.05 vioiates article I& swtion 1 or article III, seotion 1 of the Texas Constitution.

~conclusionmdourcoadusionthat~6.09(d)~theconrmission touloptfinrlnrl~fortheTG~s~ofrllbrerloeeit rE!c&esunderthusectionrrealso wnaiwwtwithgweraldueproceMpfinciples. AdoptionofregulatoryshbJtessochasthe lWillgEUWCWithillthCStUdSpoliWpowertOpKdCUthepeece,lKWlthOr~ welfkre of the public. ~IIiams v. State, 176 S.W.2d 177, 182 (Tex. Grim. App. 1943); 711 S.W2d421,425 (Tex. App.-Austin 1986, writ T-State T&rsAshv.S&te. ref’d n.r.e.). Although a state’s poke power is broad, it may not exceed the state’s duty to protect the welfhre of its citizws “as consistently as may be with private property rights.” Brawn v. Humbk Oil&Refining Co., 83 S.W.2d 935,943 (Tat. 1935). Due process of lawthusrrquiresthatthestateexerciseitspoliwpoweronlyforpublicprrposesandina malulerthw ensures the acwmplishmwt of those public purposes. Id.; hte Stur Gus Co. v. Kelly, 165 S.W.2d 446.449 (Rx. 1942) (the state’s poke power may not be acercised ~easitmultshabu&tothepublic). InTrrpPhmaucehcalA&nv.&wley,a ~~owrtrpptiedthae~prindplesudimnlidateda~requiringastlte

rg~tohunovertoaprintephnnaceutiallrsociatiwlwrtofthe~liceasing fees imposed by the statute on phmacisu. 146 S.W.2d 206 (Tex. Cii. App.-Austin 1936, writ dism’d judgm’t cur.). The wutt wnchded thuthefketmnsferplwisionwas animnlidaracire OfthCStU&pOliCCpOWWbCOWWCthCprivltellWWiUiWWlWWithK *8 Mr. David J. Freeman -Page8 (DM-211)

SUMMARY Section 6.09(d) oftbe Texas Racing Act, V.T.C.S. article 179e. mpiresall0ftbebrcakqeaatedbythatsecti0l&thfItiqthe50 perceat0ftbcbrakgegeneratedbypari-mutuel~elingoa greyhmdracu,tobeprid~totheTexu~conrmiarion. ThtKctionrlrodedicdmonahlf0fthe50pacent,or25perant tostakesraces. TheTcxasRacingComissionis~by aection6.090toldopt~k1sreeuLtiagaUbreJEllgeaUocatedby ~mtion6.09(d),incMingtbe25pacsatset~&fwstelrer~.

Howcvq in awordancc with seuions 10.04 and 10.05 of the act,.the TexasGreyhmdAsso&timnuypropwendesfortheuseof teccivawderthe~butthoseNlesare8ubjectto brerloee,a rpprovrlbytheTgEyRZiQgCotllhioU.

DAN MORALES Attorney General of Texas *9 Mr. David J. Framm -Page9 (DM-211)

WILL PRYOR

FiiAMiuantAttomeyGweral

MARYKELLBR

Deputy AttomeyGenadforLitigation

BENEAHlcKs

state solicitor

MADELEINE B. JOHNSON

Chair, opinion Commbc

L