TEE ATTORNEY'GENERAL 

OF TEXAS 

October 24, 1988 

Honorable Bob Bullock Opinion No. JR-971 

Comptroller of Public Accounts 

L.B.J. State Office Building 

Austin, Texas 

Re: Authority of the Racing 

78774 Commission regarding the 

classification of a racing 

facility (RQ-15.67) 

Dear Mr. Bullock: 

You ask three questions concerning the authority of the 

Texas Racing Commission to license horse racing tracks in 

Texas. The Texas Racing Act, V.T.C.S. articles 179e through 

179e-4, creates three classifications for horse racing 

tracks, class 1, class 2, and class 3. V.T.C.S. art. 179e, 

5 6.02. You advise us that the commission is considering 

proposals to limit the number of class 2 and class 3 

licenses it will issue, to deny pari-mutuel wagering 

privileges to certain class 2 or class 3 racetracks, and to 

create a licensing category for horse racing tracks without 

wagering privileges. You ask whether the commission has the 

authority to take such actions. 

We begin by reviewing several established principles 

concerning the power of administrative agencies. An administrative agency is a creature of statute and has no inherent authority. SeXtOn v. Mount Olivet Cemeterv Association, 

720 S.W.2d 129 (Tex. App. - Austin 1986, writ ref'd n.r.e.). 

It may exercise only those powers granted by statute 

together with those necessarily implied from such statutory 

authority. See Citv of Shenn n Public Utilitv Commission 

of Texas, 643 S.W.2d 681 ($exy' 1983); Attorney General 

Opinion JM-903 (1988). An agency may not improvise upon its 

express powers so as to confer upon itself indirectly a 

power the legislature has not granted it expressly or by 

implication. Sexton v. Mount Olivet Cemetery Association, 

suvra . The power to grant, refuse, revoke, or cancel 

licenses regulating businesses and occupations is subject to 

these limitations. See Stauffer v. Citv of San Antonio, 344 

S.W.Zd 158 (Tex. 1961). 

p. 4941 
Honorable Bob Bullock - Page 2 (JM-971) 

Your first question is whether the commission may place 

a numerical limit on the number of horse racing licenses 

issued for class 2 and class 3 tracks. Section 6.02 of 

article 179e provides: 

(a) Horse-racing tracks are classified as 

class 1 racetracks, class 2 racetracks, and 

class 3 racetracks. 

(b) A class 1 racetrack is a racetrack on 

which racing is conducted for a minimum of 45 

days in a calendar year, the number of days 

and the actual dates to be determined by the 

commission under Article 8 of this Act. A 

class 1 racetrack may operate only in a 

county with a population of not less than 

750,000, according to the most recent federal 

census, or in a county adjacent to a county 

with such a population. pot more than four 

class 1 racetracks mav be licensed and 

overated in this stat e. 

(c) A class 2 racetrack is a racetrack on 

which racing is conducted for a number of 

days not to exceed 44 days in a calendar year 

except as otherwise provided by this section. 

. . . The commission may permit an 

association that holds a class 2 racetrack 

license and that is located in a national 

historic district to conduct horse races for 

more than 44 days in a calendar year. 

(d) A class 3 racetrack is a racetrack 

operated by a county or a nonprofit fair 

under Article 12 of this Act. An association 

that holds a class 3 racetrack license and 

that conducted horse races in I.986 may 

conduct races for a number of days not to 

exceed 16 days in a calendar year on the 

dates selected by the association. (Emphasis 

added.) 

Sections 6.04(d) and 6.14(b) both provide that the 

commission shall not issue licenses for more than three 

greyhound racetracks in the state. 

Those provisions make clear that when the legislature 

intends to place numerical limitations on the issuance of 

racetrack licenses, it does so expressly. Therefore, the 

statute must be construed as containing no implied numerical 

-\ 

P. 4942 
Honorable Bob Bullock - Page 3 (JM-971) 

,I 

limitations on class 2 and class 3 racetrack licenses. &g 

Attorney General Opinion JM-206 (1984). 

The racing commission argues, however, that various 

provisions of the Texas Racing Act grant the commission the 

discretion to impose reasonable ceilings on the number. of 

class 2 and class 3 licenses it issues. Section 6.04(a) of 

the act states in part that the commission "may issue a 

racetrack license to a qualified person if it finds that the 

conduct of race meetings at the proposed track and location 

will be in the public interest." Section 6.06(a) provides 

in part that the commission may refuse to issue a racetrack 

license if, after notice and hearing, it has reasonable 

grounds to believe and finds that, among other things, "the 

apppicant is engaged in activities or practices that the 

commission finds are detrimental to the best interests of 

the public and the sport of greyhound racing or horse 

racing.". V.T.C.S. art. 179e, 5 6.06(a)(16). Article 179e-3 

provides the following: 

The appropriate section of the commission 

shall require a complete personal, financial, 

and business background check of the applicant for a racetrack license, the partners, 

stockholders, concessionaires, management 

personnel, management firms, and creditors 

and shall refuse to issue or renew a license 

or approve a concession or management contract if, in the sole discretion of that 

section of the commission, the background 

checks reveal anything which might be detrimental to the public interest or the racing 

industry. 

Those provisions, however, are addressed to the denial of 

individual applications, which must be done 

case-by-case basis. They give the commission no autE:ritG 

to set numerical limits on the number of licenses issued for 

a particular class of racetrack. Accordingly, we conclude 

that the Texas Racing Commission has no authority to place 

limits on the number of class 2 or class 3 racetrack licenses it will issue. 

You next ask whether the commission may grant a class 2 

or class 3 racetrack license but deny pari-mutuel wagering 

privileges to an association operating a racetrack in a 

jurisdiction where the voters have approved pari-mutuel 

wagering on horse racing by local option election. We 

conclude that the commission has no such authority. 

p. 4943 
Honorable Bob Bullock - Page 4 (JM-971) 

Section 3.02 of the Texas Racing Act describes the 

scope of the commission's power to regulate horse and 

greyhound racing under the act: 

In accordance with Section 3.01 of this 

Act, the commission shall regulate and 

supervise every race meeting involving 

wagering on the result of greyhound or horse 

racing. All persons and things relating to 

the operation of those meetings are subject 

to regulation and supervision. The commission shall adopt rules for conducting racing 

involving wagering and shall adopt other 

rules to administer this Act that are consistent with this Act. 

V.T.C.S. art. 179e, S 3.02. Section 1.03(25) defines 

"racetrack" to mean "a facility that is licensed under this 

Act for the conduct of pari-mutuel wagering on greyhound 

racing or horse racing." An "association" is '*a person 

licensed under this Act to conduct a horse race meeting or a 

greyhound race meeting with pari-mutuel wagering." Id. 

5 1.03(2). Thus, when subsections (c) and (d) of section 

.6.02 speak of "associations" licensed to conduct horse races 

on class 2 or class 3 "racetracks," such licensees are by 

definition authorized to conduct horse races with 

pari-mutuel wagering privileges. See also id. 55 6.01 (a 

person may not conduct race meetings with wagering on the 

results without a racetrack license): 6.08 (a horse racing 

association shall make certain deductions from each 

pari-mutuel pool); 11.01 (pari-mutuel wagering may be 

conducted only by an association within its enclosure); 

16.01(a) (commission shall not issue racetrack license until 

voters have approved legalization of pari-mutuel wagering on 

horse or greyhound races in the county at local option 

election). The commission therefore may not issue class 2 

or class 3 racetrack licenses that deny the holders of those 

licenses the privilege of conducting races with pari-mutuel 

wagering on the outcome of the races. Bexar County Bail 

Bond Board v. Deckard, 604 S.W.Zd 214 (Tex. Civ. App. - San 

Antonio 1980, no writ). 

Your third question is whether the commission may 

create a new licensing category for racetracks without 

pari-mutuel privileges. "Licensing" is the issuance of a 

permit confirming the licensee's right to do that which 

would otherwise be unlawful. &iDsev v. Texas DeDartment of 

r;l:h; 727 S.W.2d 61 (Tex. App. - Austin 1987, writ ref'd 

. . . . The Texas Racing Act does not make it unlawful for 

persons to conduct horse races without pari-mutuel wagering 

P. 4944 
: Honorable Bob Bullock - Page 5 (JM-971) 

,,- 

on the results, and it is readily acknowledged that the act 

does not expressly grant the commission the power to require 

such persons to obtain a license from the commission. 

However, it is suggested that V.T.C..S. article 179e-4 

implicitly supplies such authority: 

Any provision in this Act to the contrary 

notwithstanding, the Texas Racing Commission 

shall regulate all aspects of greyhound 

racing and horse racing in this state, 

whether not 

pari-mutueyrwagering. 

that racing involves 

This provision plainly extends the commission's power 

to peculate horse racing to include racetracks on which 

races are conducted without pari-mutuel wagering. The power 

to regulate a business, however, does not embrace the power 

to require licenses from persons subject to regulation 

unless the legislature so provides. State Board of 

Morticians v. Corteq 333 S.W.2d 839 (Tex. 

third question, thereiore, 

1960). Your 

is answered in the negative. 

SUMMARY 

The Texas Racing Commission is not 

authorized to set arbitrary limits on the 

number of class 2 or class 3 racetrack 

licenses that may be issued in this state. 

The commission is not authorized to grant a 

class 2 racetrack license with the condition 

that the license holder shall not conduct 

horse races with pari-mutuel wagering on the 

results. The commission is not authorized to 

license racetracks that do not conduct horse 

races with pari-mutuel wagering on the 

results of the races. 

,-, 

JIM MATTOX 

Attorney General of Texas 

MARYEELLER 

First Assistant Attorney General 

LCU'MCCREARY 

Executive Assistant Attorney General 

P. 4945 
Honorable Bob Bullock - Page 6 (JM-971) 

JUDGE ZOLLIE STEWLEY 

Special Assistant Attorney General 

RICK GILPIN 

Chairman, Opinion Committee 

Prepared by Steve Aragon 

Assistant Attorney General 

P. 4946