Dunn v. Nevada Tax Commission

• Citation: 216 P.2d 985,67 Nev. 173
• Decision Date: 15 March 1950
• Docket Number: No. 3591,3591
• Parties: DUNN v. NEVADA TAX COMMISSION.
• Court: Supreme Court of Nevada

Page 985

216 P.2d 985

67 Nev. 173

DUNN v. NEVADA TAX COMMISSION.

No. 3591.

Supreme Court of Nevada.

March 15, 1950.

Louis V. Skinner, of Reno, for appellant.

Alan Bible, Atty. Gen., W. T. Mathews, Sp. Asst. Atty. Gen., Geo. P. Annand and Robert L. McDonald, Deputy Attys. Gen., for respondent.

BADT, Justice.

This case and No. 3592, (Cohen v. Nevada Tax Comm., Nev., 216 P.2d 998), in which Frank Cohen doing business under the fictitious name of Oner Publishing Company appeals from an adverse judgment in favor of the same respondent, are in all respects identical with reference to the points of law raised. Accordingly the opinion and order in this case likewise dispose of the appeal in No. 3592.

The sole issue determined by the district court and the sole issue presented in this appeal is that of the constitutionality of Chapter 152 of the Nevada Statutes of 1949, page 326, entitled: 'An Act regulating and providing for the licensing of the supplying and dissemination of horse racing information; defining the powers and duties of the Nevada tax commission with reference thereto; authorizing and empowering the Nevada tax commission to fix the rates charged for the dissemination of such information; providing penalties for violation thereof; and other matters properly relating thereto.' ¹ This act was approved March 26, 1949. Chapter 93 added to the gambling games licensed by the gambling act of 1931. (faro, monte, roulette, keno, fan-tan, twenty-one, black jack, seven-and-a-half, big injun, klondyke, craps, etc.) the operation of 'any race horse book or sports pool; or * * * any information service the primary purpose of which is to aid the placing or making of wagers on events of any kind.'

Prior to this the legislature in 1945, Stats. 1945, Chap. 248, p. 492, had amended the gambling act of 1931 to require a state gambling license in addition to the former county gambling license, and also added to the fixed fee for each particular type of game a license fee amounting to 1% 'of all the gross revenue of such applicant exceeding three thousand dollars ($3,000) quarterly.' In 1947, Stats. 1947, Chap. 223, p. 734, further amendments were made including an increase in the license fee from 1% to 2% of the gross revenue. ²

We should mention at this time, although further discussion is reserved to a later part of this opinion, that the legislature of 1949 also passed an act to regulate horse racing in Nevada, establishing a racing commission etc. and repealing the prior act of 1915 covering this subject matter. Stats.1949, Chap. 195, p. 416. The same legislature passed an act regulating pari-mutuel betting and prohibiting certain other forms of betting and repealing former acts in conflict. Stats.1949, Chap. 231, p. 507. This parade of gambling legislation and additional gambling acts hereinafter referred to is necessary in order to understand and to dispose of the present attack on Chapter 152 of the 1949 session quoted in full in the margin.

Appellant, following a preliminary discussion of Chapter 152 as a penal statute subject to strict construction and a discussion of the nature of appellant's business as a disseminator in this state of horse racing information received from a source outside of this state to users in this state, including horse racing books, and as such coming clearly within the purview of the act, attacks the latter on the following grounds:

(1) That it is arbitrary, oppressive and capricious, beyond the power of the legislature to impose, and denies due process in violation of Section 1 of the Fourteenth Amendment to the Constitution of the United States.

(2) That it is a restraint of liberty of the press in violation of Article I of Section 9 of the state constitution.

(3) That it is a law of special and non-uniform operation in violation of Section 21 of Article IV of the state constitution.

(4) That it is a regulation of interstate commerce in violation of Section 8 of Article I of the federal Constitution.

Before discussing these four grounds of attack the nature of the business regulated must be understood. Respondent's brief contains 'an outline of furnishing wire service.' Appellant does not appear to question the accuracy of this outline, but recites the legislative history of Chapter 152 from its first introduction on March 14, 1949 to its approval by the governor March 26, 1949 as disclosed by the legislative journals, and insists that the record is thus 'devoid of any evidence, in the form of investigation, committee hearings, committee reports or otherwise that material such as that presented' in respondent's brief was presented to or considered by the legislature in enacting the legislation. It would however be folly for this court to plead judicial ignorance of the situation. We might go further and even recognize the nomenclature used in the business. Thus we have the 'run-down' or 'work sheet,' the 'scratch sheet,' the 'call,' the 'bookies,' the 'morning line,' 'hang on,' 'lay-off,' 'off-time,' 'post-time,' 'service spot,' 'drops' etc. If these expressions seem strange ³ outside of a state that permits all types of gambling, including the placing of bets through the 'horse race books' on race meets in all the big tracks of the country, they are perhaps no more strange than terms used by the psychiatrists in insanity-defense murder cases that come before us for review, nor than the nomenclature used by those circles who are reframing for the nation the purposes and methods of public school education. Yet what person of general knowledge and reading may plead ignorance of the latter? And so we feel entirely justified in accepting respondent's outline of the industry which this legislation seeks to regulate and control. It is as follows:

For a number of years certain firms and associations have engaged in a business within the State of Nevada known as 'furnishing wire service's to those engaged in horse race book-making in gambling establishments. The method of carrying on such business is substantially as follows:

'One large association or corporation is the source of all racing news furnished to gambling establishments within the United States. This organization maintains at all the principal tracks of the country, representatives who gather the necessary news regarding the races. The representative, prior to the race, secures such information as the names of the horses entered, their jockeys, owners, trainers, weights carried, and any horses that have been 'scratched' or withdrawn from the race. This information is then sent over a teletype service of the Western Union to franchise holders at various points throughout the United States. In Las Vegas and in Reno, certain parties hold franchises, which confer upon such parties the right to receive such news. This teletype news is received by each of the persons or associations holding a franchise in a central news dispensing room. At this central point is maintained a receiving teletype machine and a microphone connected with wires to all gambling establishments within the particular city receiving the so-called wire service. The information received by teletype is by the franchise holder then broadcast over the wires to the various gambling halls receiving such service. The information broadcast through the microphone can be supplied to all the gambling establishments in a particular city at one time or one or more can be cut off from the source of news by the man operating the microphone at any particular time. A gambling establishment desiring to receive the service applies to the person holding the franchise within the city and this person or association either grants or refuses such services. If he agrees to furnish the services, he enters into an agreement by which the franchise holder will receive a flat weekly sum as rental or in some instances, a percentage of the gross or net returns from the horse racing book of the particular gambling establishment. The franchise holder in some gambling establishments operates the book itself. If service is granted to a particular establishment there is installed either by or at the direction of the franchise holder a wire to the particular gambling house and a loud speaker therein. This wire is in turn hooked in with the central news distribution room of the franchise holder and to the microphone that has been heretofore mentioned. The representative of the news gatherer at the track, in addition to transmitting the information heretofore mentioned, gives almost instantaneous news of the race itself and the events leading up to and following it, which are of interest to bettors. Just prior to the race he gives the estimated odds as shown at the track, the condition of the track, etc. At the beginning of the race he transmits a description of the race as the horses reach the post, their progress during the race, the final winners and the odds payable on the parimutuel machines at the track on the particular winner or winners. All this information is sent out in a series of teletype messages. It is received in the central rooms of the various franchise holders as mentioned above. A man is there maintained who speaks into the microphone and relays the same information received over the teletype to the various gambling establishments, who have contracted for the service. The gambling establishments maintain boards in their gambling rooms, which show the races being held at the various tracks throughout the United States and part of the information received over the microphone. The patrons of the gambling house bet on particular horses the same as they would at the tracks and ordinarily receive the tracks' odds if they win. The news that comes into the gambling establishment from over the microphone gives the patrons of the gambling house, almost instantly, information of the beginning of the race, the progress thereof, the winners and the odds payable. The...