                            QBfficeof tije JZlttornepQBeneral
                                    &date of PCexae
DAN MORALES
 *TTORNEY
      GENERAL                               March29,1993       I

     Mr. David J. Freeman                            OpinionNo. 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 7871I-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-mutuelwagering in the state of Texas. See, e.g., V.T.C.S.
     art. 179e, 0 3.02. Your questions concern the authority of the cmnmissionunder 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 aUocatcsthe 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,
    ~VdOOSOthSi#didO&Orcntiticrin-                 with tie XL See V.T.C.S. art. 179~.05 6.08(b) - (i).
    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 depositin statetmsmy by ammisior~ of
    mDacysitCOllectJurdcrthC~).




                                               p.   1112
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.          [Emphasismd 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.




                                      p.   1113
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
to diGring inteqmtatioas.     You expLin that the commission intuprets the section as
~~~for~~n#sorarbjectingtow~~~~theentirr5Opercent
ofthe bredage allocatedby section 6.09(d), with one-half ofthat 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 commissionrqulation 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
4).N&hertheaaultcddmtcduriagthirdndingallicr~            ofsech6.O9(d),mrothcrcspcusaf
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 rrdcrriDgto 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 s361.55Oiu bmkagc tbal Ihe alrmdsh
lcceklfmm~mcLrnosintionrfolfircplyar1991.




                                       p.   1114
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 JUIL3d 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’s5liier      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
8UthOliZCthCW    ~ontolrdoptrulesreguLtiagtbeborsebretdngistrieS’uSe0fthat
breakage. See Debate on H.B. 2263 on the Floor of the Senate, 72d Leg. (uay 18, 1991)




                                         p.   1115
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
~mmission.“* ThishnguageisaentiAythesameasthtuIdedbyflooranwhmnt                       16
toseuion6.09(d). hatorChetBrooks,anotherc&sponsoroftheamaha&inkct
cxphinedtotkhouae~5oor-                             16auurcdthatthcsamebre&age
bitations appliedto horseracing 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 10.05that the TGA “shalladopt rules to provide




                                      p.   1116
Mr. David J. Fm-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 commissionapproval”appties to the TGA’s rules on breakage as
well as to its rules establishingquali5cationsfor 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 explainlater in this opinion, no other
conclusionwould 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 10.05that 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 firornddegating 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 WorthPhning 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




                                     p.   1117
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);
T-State       T&rsAshv.S&te.          711 S.W2d421,425 (Tex. App.-Austin 1986, writ
ref’dn.r.e.). Although a state’spoke power is broad, it may not exceed the state’s duty to
protect the welfhre of its citizws “as consistentlyas 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’spoke 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’djudgm’t cur.). The wutt wnchded thuthefketmnsferplwisionwas
animnlidaracire OfthCStU&pOliCCpOWWbCOWWCthCprivltellWWiUiWWlWWithK




                                      p.   1118
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
         brerloee,a teccivawderthe~butthoseNlesare8ubjectto
         rpprovrlbytheTgEyRZiQgCotllhioU.




                                                 DAN      MORALES
                                                 Attorney General of Texas




                                    p.   1119
    Mr. David J. Framm -Page9          (DM-211)




    WILL PRYOR
    FiiAMiuantAttomeyGweral

    MARYKELLBR
    Deputy AttomeyGenadforLitigation

    BENEAHlcKs
    state solicitor

    MADELEINEB. JOHNSON
    Chair, opinion Commbc




                                       p.   1120


L
