Opinion ID: 1852076
Heading Depth: 1
Heading Rank: 7

Heading: constitutionality of l.b. 718

Text: This court has previously been asked to consider the constitutionality of portions of L.B. 718. In 1994, upon an original action filed by the relator, we held that the provisions of L.B. 718 which authorized teleracing facilities to conduct telewagering were unconstitutional in violation of article III, § 24. See State ex rel. Stenberg v. Douglas Racing Corp., 246 Neb. 901, 524 N.W.2d 61 (1994). Douglas Racing Corp. was licensed to operate a teleracing facility in Bennington, Nebraska, at which terminals were electronically linked to its totalizator located in Omaha. The bets were entered by either the bettor or the parimutuel clerk and then sent to the totalizator at the racetrack. The bettors received tickets as evidence of their wagers. We held that the relator had met the burden to establish that certain statutes were unconstitutional to the extent they authorized telewagering. In Douglas Racing Corp., the relator argued that telewagering at a teleracing facility was unconstitutional because parimutuel wagering on horseraces must be conducted within a licensed racetrack enclosure and that telewagering was equivalent to offtrack betting, which was not constitutionally authorized. The respondent unsuccessfully asserted that because the licensee conducted his end of the wagering within the confines of the licensed racetrack, telewagering was constitutional. We concluded that article III, § 24, was unambiguous and required no construction. State ex rel. Stenberg v.Douglas Racing Corp., supra , citing State ex rel. Spire v. Conway, 238 Neb. 766, 472 N.W.2d 403 (1991). The Constitution's provision that parimutuel wagering is authorized only when conducted within a licensed racetrack enclosure plainly requires that (1) the wagering must be conducted by an entity licensed to do so and (2) the wagering must be conducted by licensees at a racetrack enclosure which is licensed to operate horseraces. Douglas Racing Corp., 246 Neb. at 906, 524 N.W.2d at 64. Wagering which takes place outside a licensed racetrack enclosure or a detached facility cannot logically occur within a licensed racetrack enclosure as required by our Constitution. Id. We determined that telewagering at teleracing facilities was the functional equivalent of offtrack betting, which was not conducted within a licensed racetrack enclosure and which violated the state Constitution. Id. We held that Douglas Racing Corp.'s license for the operation of the Bennington facility was void because it was licensed pursuant to an unconstitutional statute. We enjoined the respondent from acting pursuant to the license issued by the Commission. While we held that Neb.Rev. Stat. §§ 2-1203, 2-1203.01, 2-1207, 2-1208, 2-1216, 2-1221, 2-1222, and 2-1230 through 2-1242 (Cum.Supp.1994) were all unconstitutional to the extent they authorized telewagering at teleracing facilities, we did not address any other portions of L.B. 718. Here, we are asked to consider the remainder of L.B. 718 as it purports to authorize telephonic wagering. We first address whether the remainder of L.B. 718 is severable from the provisions previously held to be unconstitutional. Several factors must be considered in determining whether an unconstitutional provision is severable from the remainder of a statute: (1) whether, absent the invalid portion, a workable plan remains; (2) whether the valid portions are independently enforceable; (3) whether the invalid portion was such an inducement to the valid parts that the valid parts would not have passed without the invalid part; (4) whether severance will do violence to the intent of the Legislature; and (5) whether a declaration of separability indicating that the Legislature would have enacted the bill absent the invalid portion is included in the act. Duggan v. Beermann, 249 Neb. 411, 427-28, 544 N.W.2d 68, 78 (1996), quoting Jaksha v. State, 241 Neb. 106, 486 N.W.2d 858 (1992). There is no dispute between the parties concerning the severability of L.B. 718. The relator suggests that although L.B. 718 did not include a severability clause, the provisions relating to telephonic wagering are severable because a workable plan remains even if telewagering is prohibited. The provisions related to telephonic wagering are independently enforceable, and it does not appear that passage of telewagering was contingent upon or an inducement to enact the telephonic wagering portions. Experimentation with parimutuel wagering through both teleracing facilities and telephonic wagering was authorized in § 2-1230(2). The relator asserts that the holding in State ex rel. Stenberg v. Douglas Racing Corp., 246 Neb. 901, 524 N.W.2d 61 (1994), does not preclude severing the invalid provisions concerning telewagering from the provisions concerning telephonic wagering. Thus, we conclude that it is possible to sever the telewagering provisions from the telephonic wagering provisions. We next examine whether telephonic wagering is unconstitutional. The burden of establishing the unconstitutionality of a statute is on the one attacking its validity. Bergan Mercy Health Sys. v. Haven, 260 Neb. 846, 620 N.W.2d 339 (2000). Statutes are afforded a presumption of constitutionality, and the unconstitutionality of a statute must be clearly established before it will be declared void. Id. Constitutional provisions, like statutes, are not open to construction as a matter of course; construction of a constitutional provision is appropriate only when it has been demonstrated that the meaning of the provision is not clear and that construction is necessary. State ex rel. Stenberg v. Douglas Racing Corp., supra . As noted earlier, article III, § 24, does not prohibit wagering on horseracing by the parimutuel method when such wagering is conducted by licensees within a licensed racetrack enclosure. (Emphasis supplied.) The key issue here is whether telephonic wagering occurs within a licensed racetrack enclosure. Section 2-1231(5) defines telephonic wagering as the placing of parimutuel wagers by telephone to a telephone deposit center at a licensed racetrack as authorized by the Commission. For purposes of this opinion, the person placing the wager is not at the racetrack, but is calling from a telephone away from the facility. The parties stipulated that a person located outside the confines of a racetrack will be allowed to place a call to a licensed racetrack enclosure to give instructions to an employee of the racetrack concerning the wager of money that the individual has on deposit at a telephone deposit center. In attempting to allow different forms of parimutuel wagering, the Legislature stated that [w]agers placed... by approved telephonic wagering as authorized by sections 2-1230 to 2-1242 shall be deemed to be wagers placed and accepted within the enclosure of any racetrack. See § 2-1207 (Reissue 1997). However, as the relator notes, the Legislature may not circumvent or nullify the constitution by defining terms in statutes. In MAPCO Ammonia Pipeline v. State Bd. of Equal., 238 Neb. 565, 571, 471 N.W.2d 734, 739 (1991), cert. denied 508 U.S. 960, 113 S.Ct. 2930, 124 L.Ed.2d 681 (1993), we held that the Legislature's power to define [terms] is limited, since (1) the Legislature cannot abrogate or contradict an express constitutional provision and (2) the legislative definition must be reasonable, and cannot be arbitrary or unfounded. Pursuant to stipulation, under telephonic wagering, the person making the wager calls the licensed racetrack directly to instruct an employee on the placing of a wager. Thus, it is undisputed that the person placing the call is outside the licensed racetrack enclosure. Nebraska's Constitution is not a grant, but, rather, is a restriction on legislative power, and the Legislature is free to act on any subject not inhibited by the constitution. State ex rel. Stenberg v. Douglas Racing Corp., 246 Neb. 901, 524 N.W.2d 61 (1994). The question is whether the wager is placed within the licensed racetrack enclosure when the telephone call is initiated outside the racetrack enclosure. Simply stated, does the constitution require that the person making the call to the licensee also be located within the licensed racetrack enclosure? The respondents argue that the constitution requires only that the licensee's activity in conducting wagering on horseraces occur within a licensed racetrack enclosure. This is distinguished from wagers made at a teleracing facility, where at least a part of the licensee's activity occurs outside the racetrack enclosure. They assert that the wager occurs within the confines of the racetrack enclosure because the wager is placed by a racetrack employee pursuant to instructions from a person outside the enclosure. They conclude that it is only the actions of the licensee's employee that constitute the placing of the wager. The respondents argue that telephonic wagering is substantially different from telewagering. They assert that the only action taken by a person who is outside the racetrack enclosure is to give instructions to an employee of the licensed racetrack, who then places the wager from within the enclosure. In their brief, they claim that telephonic wagering is conducted every day by persons who go to the racetrack with a cellular telephone and place wagers for friends who are located outside the racetrack enclosure. They argue that the wager occurs only when the person inside the racetrack enclosure places the wager with the licensee. The relator argues that both telephonic wagering and telewagering involve the same conductplacing wagers on horseraces from an offtrack location. The relator claims that it is the caller who directs the racetrack employee to follow his instructions and that, therefore, it is the offtrack caller who is engaged in wagering on the horserace. Minnesota has faced a similar challenge to its constitution, which was amended in 1982 to provide that  `[t]he legislature may authorize on-track parimutuel betting on horseracing in a manner prescribed by law.'  Rice v. Connolly, 488 N.W.2d 241, 244 (Minn.1992). In 1985, the Minnesota Racing Commission adopted rules implementing a telephone account wagering system, in which account holders maintained a minimum balance against which wagers were debited and winnings were credited. The account holder telephoned a licensed employee at a racetrack to place and record wagers on behalf of the account holder. [T]he wagerer need not be present at the racetrack or a teleracing facilityall that is required is access to a telephone. Id. at 246. When asked whether the constitution contemplate[d] other than on-track, i.e., on the racetrack premises, parimutuel betting, the Minnesota Supreme Court found that it did not. See id. The court found that [i]n its literal sense, the word `on' as a part of the phrase `on-track' is more precisely defined as `at' to denote a location for the placement of a parimutuel bet. Id. at 247. The state's voters had specifically approved  `on-track parimutuel betting on horseracing,'  and the court found, as a practical matter, that bets not physically placed at the racetrack cannot be, by definition, `on-track,' no matter how they are transmitted to the track, electronically recorded or accepted into the pool of funds. Id. The Minnesota court noted, as the respondents had pointed out, that advances in technology facilitated remote wagering. However, the court found that its own mandate required it to refrain from expansive interpretation by looking beyond the clear, unambiguous and ordinary meaning of the language of the constitutional provision. Id. at 248. It held: Wagering at facilities remote from the racetrack or by telephonic means are beyond the scope of the activities authorized by the voters and are therefore impermissible. Id. Following the rationale of the Minnesota Supreme Court, resolution of the case at bar is relatively simple. In the context of telephonic wagering, wagers are not placed by a licensee until the licensee has been instructed to do so by a caller, and the instructions do not originate from within a licensed racetrack enclosure. We conclude the constitution requires that the instructions to place the wager must originate from within the licensed racetrack enclosure. Nebraska voters have previously rejected an attempt by the Legislature to change the constitutional provisions concerning parimutuel betting. In 1995, the Legislature adopted L.R. 24CA, which placed before the voters a constitutional amendment proposing the elimination of the location requirement in article III, § 24. The amendment provided that parimutuel wagering on racehorses could be conducted by licensees at such locations and by such means as are authorized by the Legislature. The introducer's statement of intent noted this court's decision in State ex rel. Stenberg v. Douglas Racing Corp., 246 Neb. 901, 524 N.W.2d 61 (1994), and stated that L.R. 24CA would delete the location provision and provide the Legislature with the authority to determine the location and means of wagering on horseraces. See Statement of Intent, L.R. 24CA, General Affairs Committee, 93d Leg., 2d Sess. (Jan. 23, 1995). At the general election in November 1996, the constitutional amendment was defeated by a vote of 388,462 against and 236,600 in favor. Nebraska's Constitution permits wagers on horseracing when the wagering is conducted by licensees within a licensed racetrack enclosure. See Neb. Const. art.Ill, § 24. As this court held in Douglas Racing Corp., the constitutional language allows wagering only by those who are within a racetrack enclosure. Telephonic wagering differs from telewagering only as to the form used to transmit the wager. It is a distinction without a difference. Telephonic wagering violates the constitution because it does not occur within a licensed racetrack enclosure. The relator has met the burden of establishing that the telephonic wagering statutes are unconstitutional.