### 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 ofa 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, 56.02. You advise us that the commission is considering proposals to limit the number ofclass 2 and class 3 licenses it will issue, to deny pari-mutuel wagering privileges to certain class 2orclass 3racetracks, and to create alicensing category 

### for horse racing tracks without wagering privileges. You askwhether the commission has the authority to take such actions.

We begin by reviewing several established principles concerning the power ofadministrative agencies. An administrative agency isacreature 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 ofTexas, 643 S.W.2d 681 ($exy' 1983); Attorney General Opinion JM-903 (1988). An agency may not improvise upon its express powers soas toconfer 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 issubject to these limitations. See Stauffer v.Citv of San Antonio, 344 S.W.Zd 158 (Tex. 1961).

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

Your first question iswhether the commission may place
anumerical limit onthe number of horse racing licenses issued for class 2 and class 3tracks. Section 6.02 of article 179e provides:

(a)Horse-racing tracks are classified as class 1racetracks, class 2racetracks, and class 3racetracks.
(b)Aclass 1racetrack isaracetrack on which racing isconducted for aminimum of 45 days inacalendar year, the number of days and the actual dates tobedetermined by the commission under Article 8of this Act. A class 1 racetrack may operate only in a county with apopulation ofnot less than 750,000, according to themost recent federal census, or ina county adjacent to a county with such apopulation. pot more than four class 1 racetracks mav be licensed and overated inthis state.
(c)Aclass 2racetrack isaracetrack on which racing isconducted for a number of days not to exceed 44days inacalendar year except asotherwise 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 toconduct horse races for
more than 44days inacalendar year.
(d)A class 3 racetrack is a racetrack operated by a county or a nonprofit fair under Article 12ofthis 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 formore than three greyhound racetracks inthe state.

Those provisions make clear that when the legislature intends toplace numerical limitations on the issuance of racetrack licenses, it does so expressly. Therefore, the statute must be construed ascontaining no implied numerical -\

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

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

Attorney General Opinion JM-206 (1984).

The racing commission argues, however, that various provisions ofthe Texas Racing Act grant the commission the discretion to impose reasonable ceilings on the number. of class 2and class 3licenses it issues. Section 6.04(a) of the act states in part that the commission "may issue a racetrack license toaqualified person if it finds that the conduct ofrace meetings atthe proposed track and location will be inthe public interest." Section 6.06(a) provides inpart that the commission may refuse to issue a racetrack license if, after notice and hearing, it has reasonable grounds tobelieve 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, 56.06(a)(16). Article 179e-3 provides the following:

The appropriate section of the commission shall require acomplete personal, financial, and business background check ofthe applicant for a racetrack license, the partners, stockholders, concessionaires, management personnel, management firms, and creditors and shall refuse to issue orrenew a license
or approve aconcession ormanagement 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 orthe 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 onthe number of licenses issued for
aparticular class of racetrack. Accordingly, we conclude that the Texas Racing Commission has noauthority to place limits onthe number of class 2orclass 3racetrack licenses itwill issue.

You next ask whether the commission may grant aclass 2
or class 3racetrack license but deny pari-mutuel wagering privileges to an association operating aracetrack 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. 4943Honorable Bob Bullock -Page 4 (JM-971)

Section 3.02 ofthe Texas Racing Act describes the scope of the commission's power to regulate horse and greyhound racing under the act:

Inaccordance with Section 3.01 of this Act, the commission shall regulate and supervise every race meeting involving wagering onthe result ofgreyhound 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, S3.02. Section 1.03(25) defines "racetrack" tomean "afacility that is licensed under this Act for the conduct ofpari-mutuel wagering on greyhound racing or horse racing." An "association" is '*aperson licensed under this Act toconduct ahorse race meeting or a greyhound race meeting with pari-mutuel wagering." Id. 51.03(2). Thus, when subsections (c)and (d)of section .6.02 speak of "associations" licensed to conduct horse races onclass 2or 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 aracetrack license): 6.08 (ahorse racing association shall make certain deductions from each pari-mutuel pool); 11.01 (pari-mutuel wagering may be conducted only by anassociation within its enclosure); 16.01(a) (commission shall not issue racetrack license until voters have approved legalization ofpari-mutuel wagering on horse or greyhound races in the county at local option election). The commission therefore may not issue class 2
orclass 3racetrack licenses that deny the holders of those licenses the privilege ofconducting 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, nowrit).

Your third question is whether the commission may create a new licensing category for racetracks without pari-mutuel privileges. "Licensing" isthe issuance of a permit confirming the licensee's right todo that which would otherwise beunlawful. &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 notmake itunlawful for persons to conduct horse races without pari-mutuel wagering

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

,,-

on the results, and it isreadily 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 inthis 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 topeculate horse racing to include racetracks on which
races are conducted without pari-mutuel wagering. The power to regulate abusiness, 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 isanswered inthe 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 inthis state. The commission isnot authorized togrant a class 2racetrack license with the condition that the license holder shall not conduct horse races with pari-mutuel wagering on the results. The commission isnot authorized to license racetracks that donot conduct horse races with pari-mutuel wagering on the results ofthe races.

,-, JIM MATTOX Attorney General ofTexas

MARYEELLER First Assistant Attorney General

LCU'MCCREARY Executive Assistant Attorney General

P. 4945Honorable 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