Delaware Steeplechase And Race Association v. Wise

• Decision Date: 13 July 1942
• Citation: 27 A.2d 357,41 Del. 587
• Court: United States State Supreme Court of Delaware
• Parties: THE DELAWARE STEEPLECHASE AND RACE ASSOCIATION, a Corporation of the State of Delaware, Defendant Below, Plaintiff in Error, v. WILLIAM ARTHUR WISE, Plaintiff Below, Defendant in Error

27 A.2d 357

41 Del. 587

THE DELAWARE STEEPLECHASE AND RACE ASSOCIATION, a Corporation of the State of Delaware, Defendant Below, Plaintiff in Error, v. WILLIAM ARTHUR WISE, Plaintiff Below, Defendant in Error

Supreme Court of Delaware

July 13, 1942

Supreme Court, No. 2, June Term, 1941.

Writ of Error on a judgment entered by the Superior Court for New Castle County, No. 177, September Term, 1940.

In 1940 The Delaware Steeplechase and Race Association was a licensee of the Delaware Racing Commission, and owned and operated a steeplechase and race course, for the racing of horses, near Stanton, New Castle County, Delaware, known as "Delaware Park".

On May 29th, 1940, William Arthur Wise, the plaintiff below, wagered $ 5.00 that a certain horse would "show" in the fifth race that day, and held a single winning ticket for that amount. The Steeplechase and Race Association offered to pay him $ 6.25 as his share of the winning pool, but he refused to accept it, claiming that $ 6.30 was due him. He thereupon brought suit in the Court Below and recovered judgment for that amount. The Race Association took a writ of error.

The numerous exceptions filed were to the effect:

1. That the Court erred in failing to hold that the Race Association's method of computing "breakage" was in strict accord with the customary pari-mutuel system of betting at horse races, and hence was the only method contemplated by the Delaware Constitution.

2. That the Court erred in holding that the language of the Delaware Racing Statute, prescribing the method of computing "breakage", was couched in such simple and non-technical language that the customary method of computing it, followed by the Race Association, should be disregarded.

The case was tried by the court on an agreed statement of facts without a jury.

Other facts will appear in the opinion of the Court.

The judgment is affirmed.

Clarence A. Southerland and George Gray Thouron for Defendant Below Plaintiff in Error.

David J. Reinhardt, Jr., for Plaintiff Below, Defendant in Error.

HARRINGTON Chancellor, RICHARDS and TERRY, J. J., sitting.

OPINION

HARRINGTON, Chancellor:

This case involves the construction of the Delaware Racing Statute.

Section 17 of Article 2 of the Constitution of the State originally provided:

"The sale of lottery tickets, pool selling and all other forms of gambling are prohibited in this State. The General Assembly shall enforce this Section by appropriate legislation."

By an amendment, which became effective in 1935, (Chapt. 2, Vol. 38, Laws of Delaware; Chapt. 1, Vol. 40, Laws of Delaware), the same section now provides:

"The sale of Lottery Tickets, pool selling and all other forms of gambling are prohibited in this State; except wagering or betting on races at race tracks by the use of pari-mutuel machines or totalizators in connection therewith.

"The General Assembly shall enforce this Section by appropriate legislation."

Under that Section "wagering or betting on races at race tracks by the use of pari-mutuel machines or totalizators in connection therewith" is, therefore, expressly excepted from the general constitutional prohibition against gambling, and may be provided for by appropriate legislative action.

Consequently, the General Assembly enacted Chapter 62, Volume 38, Laws of Delaware, usually known as the Racing Statute. That Act, as amended February 6th, 1935, by Chapter 112, Volume 40, Laws of Delaware, is incorporated in Chapter 163 of the Revised Code of 1935. It provides for the regulation, control and licensing of horse racing in the State of Delaware, for the creation of a Racing Commission, and prescribes its powers and duties. Section 5510 of the Revised Code, now Section 15 of the Racing Act, as amended by Chapter 112, Volume 40, Laws of Delaware, is the important section. It provides:

1. "Within the enclosure of any horse race meeting licensed and conducted under this Chapter, but not elsewhere, the wagering or betting on horse races by the use of pari mutuel machines or totalizators is hereby authorized and permitted."

2. "The Delaware Racing Commission shall have power in its discretion, to grant a license or licenses to any person, firm or corporation, to make, conduct and sell pools by the use of pari mutuel machines or totalizators, for the purpose of receiving wagers or bets on horse races within the enclosure of any race meeting licensed and conducted under this Chapter, but not otherwise, under such regulations as the Commission shall prescribe."

3. "The Commission shall have power to prescribe regulations governing the granting of applications for licenses, the granting of licenses, and the conditions under which any licensee may conduct, sell or make any such pool."

4. "The Delaware Racing Commission may authorize commissions on pari-mutuel or totalizator pools to the person, firm, or corporation operating the race meet, provided, however, that in no event and at no track licensed under this Chapter shall said commissions, when added to the amount payable to the Delaware Racing Commission from such pools, for the use of the State of Delaware, exceed six per cent of the total contributions to all pari mutuel or totalizator pools conducted or made upon any track, plus the odd cents of all redistributions to be made on all pari mutuel or totalizator pool contributions exceeding a sum equal to the next lowest multiple of five".

The real controversy relates to the precise meaning of that part of the statute which authorizes the Racing Commission to permit the deduction of commissions "on pari mutuel or totalizator pools", not exceeding 6% "of the total contributions to all pari mutuel or totalizator pools conducted or made upon any track, plus the odd cents of all redistributions to be made on all pari mutuel or totalizator pool contributions exceeding a sum equal to the next lowest multiple of five".

The Delaware Steeplechase and Race Association, the plaintiff in error, is a licensee of the State Racing Commission; but does not use pari mutuel machines at Delaware Park. It receives wagers and conducts pools on the various races run by means of a totalizator. The mechanism used is somewhat different from that of the pari mutuel machines, but the basic principle of the system is the same, namely: "through the method of placing all wagers on a particular event in a common pool, the net proceeds of which, after deducting certain authorized expenses and charges, are divided among the successful bettors on an equal basis, i. e., in proportion to the amount of their respective bets". In theory, therefore, whether a pari mutuel machine or a totalizator is used, all money "staked by backers is pooled, and, when the result of a race is shown shared by those who have backed the winners". A totalizator is nothing more than a machine of a particular kind, designed for the operation of pari mutuel betting. It is a mechanical device which automatically and instantaneously records and adds the sums of money wagered on the various horses, and prior to each race an electric display board, operated in connection therewith, disseminates that information. At the end of each race, information, as to the result and the amount due the winner on each $ 2.00 wager, is likewise given on that board. Naturally, changes in the mechanical operation of the totalizator have been made from time to time, and an improved machine is used at Delaware Park, but the basic principle of the pari mutuel system of betting remains unchanged. The sole material effect of the use of a totalizator is to substitute an electric adding machine in making calculations, formerly made by individuals. Wagers are only accepted by the Race Association in the amounts of $ 2, $ 5, $ 10 and $ 50, and tickets are issued accordingly. They are delivered at the respective windows receiving such bets by an automatic vending machine, which, also, forms a part of the totalizator. A bet can be made in one of three ways: that the horse will win, "straight"; that he will finish either first or second, "place"; or that he will finish either first, second or third, "show". The three pools are kept entirely separate. No holder of a winning "place" or "show" ticket shares in the net proceeds of the "straight" pool. Pursuant to the express provisions of the Racing Statute, every winning pool contributed to by the public is first subject to certain deductions for taxes, payable to the State, and to commissions, due the Race Association. The correctness of the deductions made pursuant to this provision is not questioned. While $ 1.00 bets or wagers cannot be made at Delaware Park, the calculations, with respect to the shares of the holders of such tickets, are first made on that basis. In order to ascertain the amount due, that precise amount would naturally be multiplied by the number of dollars wagered, as shown by a particular winning ticket. In many cases, the amount appearing to be due on the basis of $ 1.00 is not divisible by five. In administering the pari-mutuel system of betting in this country, it has been the universal custom for upwards of thirty years for the promoters of the race to deduct the odd cents, exceeding an amount equal to the next lowest multiple of five, before any multiplication is made, in order to ascertain the amount due on a particular winning ticket. The Race Association, the plaintiff in error, followed that custom at Delaware Park, claiming that the real meaning of the statutory provision could only be ascertained by reading it in connection with that established custom. That practice was known to the Racing Commission and to Wise, the plaintiff below, when he placed his bet. It is agreed that "such a deduction is an invariable...