Centennial Turf Club v. Colorado Racing Com'n, 17232

• Decision Date: 21 June 1954
• Docket Number: No. 17232,17232
• Citation: 129 Colo. 529,271 P.2d 1046
• Parties: CENTENNIAL TURF CLUB, Inc. et al. v. COLORADO RACING COMMISSION et al.
• Court: Colorado Supreme Court

Page 1046

271 P.2d 1046

129 Colo. 529

CENTENNIAL TURF CLUB, Inc. et al. v. COLORADO RACING COMMISSION et al.

No. 17232.

Supreme Court of Colorado, En Banc.

June 21, 1954.

Rehearing Denied July 12, 1954.

Richard H. Simon, Englewood, William B. Paynter, Brush, for plaintiffs in error.

Duke W. Dunbar, Frank A. Wachob and Jack E. Kennedy, Denver, for defendants in error.

HOLLAND, Justice.

Pursuant to a favorable vote of the people on a referred Act submitted to the people in 1948, the legislature in 1949 adopted 'An Act Authorizing, Regulating and Providing for Licensing the Racing of Horses and Other Animals with Pari Mutuel Wagering', known as chapter 207, p. 581, Session Laws of 1949. The provisions of this Act that are involved in the present consideration are section 7 and section 11, which are as follows:

'Section 7. License Fees. For the privilege of conducting racing under a license issued under this Act, the licensee shall pay to the commission, five per cent (5%) of the gross receipts of the pari mutuel wagering at any such race meet. For the purpose of encouraging the breeding, within the State, of valuable thoroughbred race horses, at least one race of each day's meet shall consist exclusively of Colorado bred horses, providing Colorado bred horses are available.'

'Section 11. It shall be unlawful to conduct pool selling, bookmaking or to circulate handbooks or to bet or wager on any race meet licensed under the provisions of this Act, other than by the pari mutuel method, or for any licensee to take more than fifteen per cent (5%) of the gross receipts of any pari mutuel wagering conducted hereunder; it shall be unlawful for any licensee to compute breaks in the parimutuel system otherwise than at ten cents (10c). If, during any race meet conducted under this law, there shall be underpayments of the amount actually due to the wagerers, the amount of the excess of such underpayments over and above overpayments to wagerers shall, at the expiration of thirty (30) days from the end of said meet, revert and belong to the State of Colorado and be paid to the commission and become a part of its fund, and shall not be retained by the licensee under whose license such race meet was held.

'To secure collection of the income tax due to the State of Colorado on the winnings received by any participant in pari mutuel wagering, there shall be deducted by the operator of any race meet as defined in this Act an amount equal to one per cent (1%) of each winning wager, and the total amount so withheld shall be remitted by the operator of said race meet to the Department of Revenue within ten (10%) days after the conclusion of said meet.

'In the event any government or governmental agency imposes a levy on said licensee by a tax on the money so wagered and upon and against its receipts, the said licensee may collect, in addition to the percentage and breaks herein allowed, the amount of the tax so levied. The tax and breaks and license fee herein provided for shall be in lieu of all other licenses and privilege taxes or charges by the State of Colorado or any county, city, town or other municipality or taxing body for the privilege of conducting any race meet provided for herein and licensed by authority hereof.'

Prior to the first racing meet, uncertainty in the minds of the Colorado Racing Commissioners arose as to whom the 'breaks,' as provided for in the statute, should be paid. That is, whether the money received from the 'breaks,' as provided in the statute, should be retained by the race track associations or whether they belong to the state. Thereupon the Racing Commission requested an advisory opinion on this question from the Attorney General in 1949. In response to this request, the Attorney General delivered his opinion to the commission which was to the effect that the licensees, or the race track associations, could take no more than 15% of the gross receipts, that the 'breaks' accrued to the state and not to the licensees. Upon this opinion the commission adopted the rule requiring all of the 'breaks' up to ten cents on the dollar to be paid to the State of Colorado; and the three dogtrack licensees and the horse track at Brush, Colorado, paid the breakage to the Colorado Racing Commission under protest. Beginning in 1950 and each year since, the Centennial Turf Club, Inc., plaintiff in error, the horse track licensee at Littleton, Colorado, has paid the breakage under protest. During the racing season of 1951 representatives of the Centennial Turf Club appeared before the commission, and it was agreed that the commission would call a meeting of the representatives of all the tracks after the close of the racing season. This was done, with the result than on October 26, 1951 representatives of the five licensees signed a complaint for declaratory judgment which was filed November 5, 1951 and amended December 12, 1951.

The Attorney General filed an answer admitting the formal allegations of the complaint and denied that it was to the best interests of plaintiffs and defendants that section 11 of the Act be construed and judicially determined; alleging that plaintiffs were not entitled to the relief prayed for; and, finally, praying that the complaint be dismissed. After substitution of parties due to change of state officers on account of election, the case finally was set for trial on May 26, 1953. Before trial, each of the plaintiffs representing dog tracks, stipulated with the Attorney General for dismissal with prejudice. The remaining parties to the action stipulated at the commencement of the trial that the only issues to be determined were the construction of section 11, supra; a determination as to the rights of the parties to the breakage; and the question of whether or not the breakage that had been paid under protest would be received back from the State Treasurer in the event of a determination favorable to the race track operators was deferred.

Counsel for plaintiff Centennial Turf Club called the Executive Secretary of the Colorado Racing Commission as a witness, one Alfred P. Kelley, Special Assistant Attorney General for the Oregon Racing Commission, and John C. Abbett, Secretary and General Manager of the Oregon Racing Commission, the latter two witnesses testifying as to the interpretation of the Oregon Racing Act--which is almost identical with the Colorado Act--and in connection therewith introduced statistical reports on horse racing in the United States and the American Racing Manual and the laws of twenty-five states, all of which were admitted in evidence. The defendant Colorado Racing Commission called no witnesses, and the matter thus was submitted to the court which found that the 'breaks' are overpayments and were included in the 15% of the gross receipts as mentioned in the Act and, further, that the third paragraph of section 11, supra, was inserted by the General Assembly to become effective only upon the happening of a future event, and also determined that the breakage was underpayments and rightfully belonged to the wagerers. On this finding the court entered judgment to the effect that the 'breaks' accrued and were payable to the State of Colorado.

In asking for a review of this finding, counsel for the Turf Club contend that each of the above mentioned findings of the trial court was error, and in addition thereto contend that the statute in part is a revenue statute and must be strictly construed against the state; also that the statute is ambiguous and uncertain as to the beneficiary of the 'breaks;' and that the custom and usage shown to the court presented a proper guide...