Opinion of the Justices

• Decision Date: 27 March 1978
• Parties: OPINION OF THE JUSTICES.
• Court: United States State Supreme Court of Delaware

Page 695

385 A.2d 695

OPINION OF THE JUSTICES.

Supreme Court of Delaware.

March 27, 1978.

To His Excellency

Pierre S. duPont, IV

Governor of Delaware:

Reference is made to your letters dated November 21 and December 2, 1977, containing a request for the opinions of the Justices of the Supreme Court, under 10 Del.C. § 141, ¹ upon the constitutionality of Senate Bill No. 379, as amended by Senate Amendment No. 1.

Your request contains the following background information:

"On August 9, 1977 the General Assembly passed Senate Bill Number 379, as amended by Senate Amendment Number 1, which authorizes the performance of the Spanish game of jai-alai and wagering thereon, and provides for a Delaware Jai-Alai Commission to regulate the game. I had previously vetoed House Substitute Number 1 for House Bill Number 417, as amended, which also permitted the playing of jai-alai in Delaware, because of my concern that the bill did not contain adequate regulatory procedures.

"As you are undoubtedly aware, this legislation has provoked great discussion among citizens of the State about whether wagering on jai-alai exhibitions is permitted in light of the provisions of Article II, Section 17 of the Delaware Constitution of 1897 which prohibits all forms of gambling in the State except for lotteries under State control, horse racing and bingo. Additional concern has been voiced about whether the legislation required the concurrence of two-thirds of all members elected to each House of the General Assembly pursuant to Article IX, Section 1 of the Constitution, because it may have the effect of amending the Wilmington City Charter.

"Although many comments on the effect of these constitutional provisions on Senate Bill Number 379 were presented to me during the time I was considering the bill, I felt that, as the ultimate test of constitutionality must be decided in the courts, it would not be appropriate for me to make such a determination.

"I signed Senate Bill Number 379 on August 12, 1977 (Chapter 189, Volume 61, Laws of Delaware) and on October 12, 1977 I appointed members of a Delaware Jai-Alai Commission, as I am directed to do by Section 4822 of the Act.

"However, public speculation over the constitutionality of the Act has continued. In addition, the newly designated members of the Jai-Alai Commission have expressed to me their concern that the constitutional issue be resolved before they proceed to embark on any of their activities or even formally convene. To underscore their concern, the membership has chosen to postpone taking their oaths of office and recordation of their commissions until the probability of final resolution of the subject constitutional questions is assured.

"As head of the Executive Branch, it is incumbent upon me, in order that I might faithfully discharge the duties of my office, to resolve these fundamental, constitutional concerns before the Executive Department must commit funds and hire personnel and before private individuals make substantial personal and financial commitments as Commissioners. Under Senate Bill Number 379, the Delaware Jai-Alai Commission is not placed within any executive department of State government; and therefore, is necessarily directly responsible to, and part of the Office of the Governor. I recognize, therefore, a special legal responsibility for assuring that the new Commission, whose regulatory and supervisory functions are crucial to protect the citizens of Delaware from potential abuse, begins its operations and activities free of any cloud about its authority."

Upon the basis of the foregoing, we find the request within the purview of 10 Del.C. § 141.

The questions presented are as follows:

"In summary, then the three questions relating to the constitutionality of Senate Bill 379 upon which I have requested your opinion are as follows:

"1. Is pool or pari-mutuel wagering on jai-alai exhibitions a lottery for purposes of Article II, Section 17 of the Delaware Constitution of 1897?

"2. Does Senate Bill No. 379, as amended by Senate Amendment No. 1, amend the Charter of the City of Wilmington and is thus required to be enacted by the concurrence of two-thirds of all the members elected to each House of the General Assembly pursuant to Article IX, Section 1 of the Delaware Constitution of 1897?

"3. Is Senate Bill 379 in violation of Article VIII, Section 2 of the Delaware Constitution of 1897 which requires that all bills for raising revenue shall originate in the House of Representatives?"

Clearly, Question No. 1 was intended to be related directly to Senate Bill No. 379 as amended (hereinafter "the Act"), and was not intended to be stated in the abstract. Also, in our view, the word "lottery", as used in Art. II, § 17, ² may not be isolated for scrutiny as to its constitutional meaning, but must be read in the context of the phrase in which it is used. It was so briefed and argued by counsel. Accordingly, we take Question No. 1 as reading:

Would pool or pari-mutuel wagering on jai-alai exhibitions under Senate Bill No. 379 be a permissible lottery under State control under Article II, Section 17 of the Delaware Constitution of 1897?

In connection with your request, we have had the valuable assistance of Assistant Attorney General Charles M. Gruver, III, who upheld the validity of the Act, as is customary; and of Joseph A. Rosenthal, Esq., and Ira L. Conrad, Esq. who accepted appointment to present arguments in opposition to the Act. Leave to file briefs as amici curiae, in support of the Act, was granted to O. Francis Biondi, Esq., and John E. Babiarz, Jr., Esq., attorneys for Bridgeport Jai-Alai, Inc., and George C. Hering, III, Esq. and Daniel H. Krapf, Esq., attorneys for Jai-Alai Corporation of America.

I.

A brief outline of the Act ³ is desirable for clarity:

The purpose of the Act is set forth as follows (§ 4820):

"It is the purpose of this subchapter to permit wagering or betting upon exhibitions of the Spanish game of jai-alai, which exhibitions are to be conducted only by those licensed under this subchapter and in accordance with the provisions hereof. This gambling activity is deemed by the General Assembly to be a lottery and permissible under the Constitution of this State. It is the opinion of the General Assembly that permitting such gambling activity is in the best interest of the citizens of this State. It will raise funds for the State and the City of Wilmington, provide a recreational activity, create numerous job opportunities and will provide the State and political subdivisions thereof with other economic benefits. It is also the purpose of this subchapter to exercise state control over all aspects of the operation of a jai-alai meeting in this State including but not limited to control over the conduct of the game of jai-alai, control over the conduct of the wagering or betting thereon and control over the conduct of any concessionaires providing food, beverages, parking or other goods and services on the premises where any such meeting is conducted."

The Act creates the Delaware Jai-Alai Commission; gives it broad regulatory powers; makes provision for licensing and licensing requirements, the conduct of licensees, and the operation by licensees of jai-alai games and pari-mutuel wagering thereon; and provides for payments to the State and the City of Wilmington from the monies generated by the jai-alai operation. The Commission has three members and they are appointed and removable by the Governor (§§ 4822, 4831). The Commission appoints a Director, experienced in the administration of jai-alai, to be its chief administrator (§ 4824).

The Commission is granted broad powers to enforce the provisions of the Act, including the power to create and enforce regulations for "insuring proper, safe and orderly conduct of jai-alai meetings and for protecting the public against fraud or overcharge" (§ 4827). The Commission has subpoena power (§ 4828), power to compel inspection or production of all books and records of a licensee ⁴ (§ 4873), and power to require fingerprint submissions of all applicants, licensees and employees of licensees (§ 4829). The Commission is empowered to remove employees, officials and management personnel of licensees (§§ 4852, 4873); and to levy fines and to suspend or revoke licenses (§§ 4857, 4873). Any license granted by the Commission is subject to suspension or revocation by the Commission for "good cause" and any aggrieved licensee may appeal the action of the Commission to the Superior Court (§ 4873).

Potential licensees must submit detailed financial and character information and references (§§ 4829, 4836). Application and annual license fees are required (§ 4870). The Act disqualifies from licensing all persons convicted of felonies or other crimes of moral turpitude, and also any corporation (except a publicly traded corporation) with an officer, director, or stockholder who has been so convicted (§ 4865). Corporate licensees are strictly regulated to prevent hidden interests and to subject the principals of the corporation to the various requirements of the Act (§§ 4838-4863). Licenses are not assignable (§ 4872), and all licensees must furnish annual operating reports (§ 4876). Licensed jai-alai meetings must be held in the City of Wilmington (§ 4835(b)).

Betting or wagering on jai-alai is authorized only within the confines of a licensed fronton and only under "a pari-mutuel system, so called, including standard pari-mutuel, daily double, exacta, quiniela, trifecta, and superfecta betting and such other forms of multiple betting or wagering as the Commission may determine" (§ 4883). From the gross amounts contributed to "all pari-mutuel and totalizator pools", the licensee must pay to the State 5% of the pool, plus one-half of the breakage (the odd cents in excess of 10 as calculated on the basis of each dollar wagered); and the City of Wilmington must receive 3/4% of the pool. The...