CO No. 13-01 2013-07-19

Can Colorado district attorneys claim a priority cut of casino tax money to cover the cost of prosecuting gaming-related crimes, before the constitutional split goes to host counties and the state?

Short answer: No. The AG concluded that off-the-top Limited Gaming Fund payments under Article XVIII, Section 9(5)(b)(I) are reserved for state agencies that 'administer' Section 9 itself. District attorneys prosecute crimes; they do not administer the gaming statute. Their gaming-impact expenses must come from the host county constitutional distributions or the Local Government Limited Gaming Impact Fund.

Disclaimer: This is an official Colorado Attorney General opinion. AG opinions are persuasive authority but not binding precedent. This summary is for informational purposes only and is not legal advice. Consult a licensed Colorado attorney for advice on your specific situation.

Opinion 13-01: District attorneys cannot draw off-the-top Limited Gaming Fund money because they do not "administer" Section 9 of the Colorado Constitution

Plain-English summary

When voters approved limited casino gaming in Central City, Black Hawk, and Cripple Creek in 1990, they wrote a strict revenue-sharing formula directly into the Colorado Constitution. Forty percent of casino gross proceeds plus all licensing fees flow into the Limited Gaming Fund. Before any of that money is distributed under the constitutional formula, Article XVIII, § 9(5)(b)(I) takes "off the top" the ongoing expenses of the Limited Gaming Control Commission "and any other state agency, related to the administration of this section 9." After those off-the-top payments, the remainder is split: 50% to the state general fund, 28% to the State Historical Fund, 12% to Gilpin and Teller counties, and 10% to the three host cities.

District attorneys whose offices prosecute gaming-related crimes asked whether their costs qualified for off-the-top funding. The Division of Gaming asked the AG. The answer was no. Off-the-top payments are reserved for agencies that administer Section 9, not for prosecutors enforcing criminal law. Section 12-47.1-704, C.R.S., expressly provided off-the-top funding for the Attorney General's representation of the Division and Commission, but the immediately preceding § 12-47.1-703 directed district attorneys to "prosecute all violations of this article in the same manner as provided for other crimes and misdemeanors," with no off-the-top funding language attached. The contrast was deliberate.

District attorneys do receive funding for gaming impacts, just through different channels. Gilpin and Teller counties receive constitutional distributions that help fund their DA operations. Other affected DAs can apply for grants from the Local Government Limited Gaming Impact Fund, which receives a portion of the 50% constitutional distribution that would otherwise go to the state general fund.

Currency note

This opinion was issued in 2013. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

Article XVIII, Section 9 of the Colorado Constitution, adopted by voters in November 1990, authorized limited gaming in Central City, Black Hawk, and Cripple Creek and set up the Limited Gaming Fund. Two distinct categories of payment flow from the Fund:

Off-the-top distributions under § 9(5)(b)(I) cover ongoing expenses of the Commission and any other state agency related to administering Section 9. They are paid before the constitutional formula kicks in.
Constitutional distributions under § 9(5)(b)(II) follow the explicit 50/28/12/10 split among the state general fund, the State Historical Fund, Gilpin and Teller Counties, and the three gaming cities.

Amendment 50 (approved November 4, 2008) added § 9(7), authorizing expanded gaming hours, new games (roulette and craps), and a $100 bet limit. The Extended Limited Gaming Fund follows the same off-the-top-then-constitutional-distribution structure under § 9(7)(c)(I), (II), and (III), though Amendment 50's constitutional distributions go to different recipients in different proportions, including 10% to the host cities and 12% to Gilpin and Teller counties.

The Limited Gaming Act of 1991 (Title 12, Article 47.1, C.R.S.) implemented Section 9. Section 12-47.1-701(1)(a) provides that "[a]ll expenses of the division and the commission, including the expenses of investigation and prosecution related to limited gaming, shall be paid from the fund." Section 12-47.1-701(1)(b)(I) authorizes off-the-top payments to "the commission, the department, the division, and any other state agency from whom assistance related to the administration of [the Gaming Act] is requested by the commission, [division] director, or [department] executive director." Section 12-47.1-703 directs the state's district attorneys to prosecute all violations of the article. Section 12-47.1-704 directs the Attorney General to represent and advise the Division and Commission, with the AG's expenses "paid from the limited gaming fund."

The Local Government Limited Gaming Impact Fund (replacing the original Contiguous County Fund under Senate Bill 97-027) provides discretionary grants to thirteen specifically designated counties whose operations bear documented gaming impacts. District attorneys' offices routinely receive these grants.

What the AG concluded at the time

The AG worked through three lines of reasoning to conclude district attorneys are not entitled to off-the-top funding:

The phrase "expenses of investigation and prosecution related to limited gaming" in § 12-47.1-701(1)(a) modifies "expenses of the division and the commission." It does not extend to district attorneys. The Gaming Act uses the term "prosecution" in both criminal and civil contexts (see § 12-47.1-525(3)), so reading the phrase to mean "criminal prosecution" alone would distort the statute's structure. The investigation-and-prosecution language reaches Division and Commission proceedings, not district attorney criminal cases.

The next subsection, § 12-47.1-701(1)(b)(I), reaches "any other state agency from whom assistance related to the administration of this article is requested by" the Commission, Division Director, or Executive Director. Costs of prosecution are not mentioned. The legislature knew how to include prosecution costs when it wanted to, and the omission here was significant. Under Shelter Mut. Ins. Co. v. Mid-Century Ins. Co., 246 P.3d 651 (Colo. 2011), statutory silence carries weight when the General Assembly has shown it knew how to address the topic.

District attorneys do not "administer" Section 9 or the Gaming Act. They prosecute crimes. Prosecution and administration are different functions. The Commission contracts with agencies like the Colorado Bureau of Investigation and the Colorado State Patrol for administrative assistance under § 12-47.1-831(5); it does not contract with district attorneys.

The contrast between § 12-47.1-703 (DAs shall prosecute violations "in the same manner as provided for other crimes and misdemeanors," with no funding mechanism) and § 12-47.1-704 (Attorney General represents the Division and Commission, with expenses paid from the Limited Gaming Fund) was deliberate. The legislature knew how to put a state actor on Limited Gaming Fund off-the-top funding. It did so for the AG. It did not do so for district attorneys.

The AG concluded that the proper funding channel for DA gaming impacts already existed: Gilpin and Teller counties receive constitutional distributions that help cover DA operations in those counties (§ 9(5)(b)(II) and § 9(7)(c)(III)(C)), and the Local Government Limited Gaming Impact Fund is funded out of the state's 50% constitutional distribution under § 12-47.1-1601(4)(b)(I), with 13 counties (including Gilpin, Teller, and 11 others) eligible for grants.

Common questions

If a DA office actually spends money prosecuting a casino theft case, who pays?
Not the off-the-top distribution from the Limited Gaming Fund. The DA's host county pays in the first instance, with constitutional distributions to Gilpin and Teller counties helping defray those costs in the host counties. DAs in other affected counties can apply to the Local Government Limited Gaming Impact Fund for discretionary grants.

Why does the Attorney General get off-the-top funding but DAs don't?
The AG provides legal representation and advice to the Commission and Division on Section 9 administration. § 12-47.1-704 explicitly says so. District attorneys prosecute crimes, that is, they do enforcement, not administration. The constitutional text and the implementing statute draw the line at "administration."

Is this just an AG opinion, or does it bind the General Assembly?
The opinion interprets existing statutes and the constitutional text. The General Assembly could change the analysis by amending the Gaming Act to direct off-the-top funding to DAs, but that change would have to be tested against the constitutional language in § 9(5)(b)(I), which limits off-the-top payments to "ongoing expenses... related to the administration of this section 9."

What is the Local Government Limited Gaming Impact Fund?
A statutory fund under § 12-47.1-1601 that receives part of the 50% constitutional distribution. It awards discretionary grants to 13 specifically named counties (including Gilpin and Teller, plus eleven contiguous counties) whose operations are affected by limited gaming. DA offices routinely receive these grants.

Citations

Constitutional:

Colo. Const. art. XVIII, § 9 (limited gaming authorization, Limited Gaming Fund, off-the-top distributions, constitutional distributions)
Colo. Const. art. XVIII, § 9(7) (Amendment 50: extended gaming, Extended Limited Gaming Fund)

Statutes:

§ 12-47.1-701(1)(a), (b)(I), C.R.S. (off-the-top distribution rules)
§ 12-47.1-703, C.R.S. (district attorneys prosecute violations)
§ 12-47.1-704, C.R.S. (Attorney General representation; expenses paid from Fund)
§ 12-47.1-1601(4)(b)(I), C.R.S. (Local Government Limited Gaming Impact Fund)

Cases:

Shelter Mut. Ins. Co. v. Mid-Century Ins. Co., 246 P.3d 651 (Colo. 2011)

Source

Original opinion text

John W. Suthers, Attorney General
STATE OF COLORADO
DEPARTMENT OF LAW
Cynthia H. Coffman, Chief Deputy Attorney General
Office of the Attorney General
Daniel D. Domenico, Solicitor General

Ralph L. Carr Colorado Judicial Center
1300 Broadway, 10th Floor
Denver, Colorado 80203
Phone (720) 508-6000

FORMAL OPINION OF JOHN W. SUTHERS, Attorney General
No. 13-01
AG Alpha No. GA AD AGBDV
July 19, 2013

This opinion, requested by the Colorado Department of Revenue, Division of Gaming, concerns distribution of moneys from the Limited Gaming Fund to the state's district attorneys.

QUESTION PRESENTED AND ANSWER

Question: Are the state's district attorneys entitled to receive off-the-top, pre-distribution money from the Limited Gaming Fund pursuant to Article XVIII, section 9(5)(b)(I) of the Colorado Constitution and Section 12-47.1-701(1), C.R.S. (2012) of the Colorado Limited Gaming Act for the purpose of covering expenses associated with gaming-related criminal offenses?

Answer: No. Neither the constitution nor any Colorado statute authorizes the state's district attorneys to receive priority off-the-top, pre-distribution Limited Gaming Fund money because they do not administer Section 9 of the constitution or the Gaming Act. District attorney expenses incurred in the prosecution of illegal acts related to limited gaming operations may be paid either through the direct constitutional distributions to the host counties or reimbursement from the Local Government Limited Gaming Impact Fund.

BACKGROUND

I. Section 9 and Limited Gaming Fund distributions.

Article XVIII, Section 9 of the Colorado Constitution ("Section 9"), approved by the voters on November 6, 1990, authorizes limited gaming within Central City, Black Hawk and Cripple Creek, Colorado. Through Section 9, the voters explicitly prescribed the funding mechanism and the formula to be used in distributing limited gaming revenue.

First, Section 9 created in the state Treasury a Limited Gaming Fund ("Fund") into which all casino licensing fees and up to forty percent of the gross proceeds generated from limited gaming were to be paid. § 9(5)(a).

Section 9 then granted constitutional priority to "[a]ll ongoing expenses of the commission and any other state agency, related to the administration of this [Section 9]" and required payment of these expenses from the Fund prior to any distribution to named recipients under the constitutional formula. § 9(5)(b)(I). Such payments are referred to as "off-the-top" distributions or payments.

After subtracting the off-the-top payments, the Treasurer distributes the remaining Fund balance (less two months of ongoing administrative expenses) according to the following explicit formula set forth in the constitution:

[F]ifty percent shall be transferred to the state general fund or such other fund as the general assembly shall provide; twenty-eight percent shall be transferred to the state historical fund, which fund is hereby created in the state treasury; twelve percent shall be distributed to the governing bodies of Gilpin county and Teller county in proportion to the gaming revenues generated in each county; the remaining ten percent shall be distributed to the governing bodies of the cities of: the City of Central, the City of Black Hawk, and the City of Cripple Creek in proportion to the gaming revenues generated in each respective city. Section 9(5)(b)(II).

Distributions under this formula are known as "constitutional distributions."

On November 4, 2008, Colorado voters approved Amendment 50, which authorized expanded gaming hours, new games, and a $100 bet limit and created the Extended Limited Gaming Fund ("Extended Fund"). See § 9(7). Section 9(7) continues the same Fund distribution principles. That is, gaming tax revenues attributable to Section 9(7) are to be distributed first for off-the-top payments covering expenses of "the commission and other state agencies that are related to the administration of" Section 9(7), and then for constitutional distributions. See § 9(7)(c)(I), (II) and (III).

II. Implementation of Section 9.

The Colorado Limited Gaming Control Commission ("Commission") is charged with "administration and regulation of" Section 9. § 9(2). The Limited Gaming Act of 1991 ("Gaming Act"), the implementing legislation adopted after the passage of Section 9, created the Colorado Division of Gaming ("Division") and placed it and the Commission under the Colorado Department of Revenue ("Department"). § 12-47.1-201, C.R.S. (2012); see also § 12-47.1-101, C.R.S. (2012).

To facilitate constitutional distributions, the original Gaming Act established a Contiguous County Limited Gaming Impact Fund ("Contiguous County Fund"). The Contiguous County Fund received a portion of the fifty percent constitutional distribution, not an off-the-top distribution, designated for "the state's general fund or such other fund as the General Assembly shall provide" under Section 9(5)(b)(II) (the "fifty percent constitutional distribution"). See § 12-47.1-1401, C.R.S. (1991); see also § 9(5)(b)(II). The purpose of the Contiguous County Fund was to address unreimbursed impacts resulting from limited gaming in those counties adjacent to the gaming host counties of Teller and Gilpin. At the time, authorized reimbursable impacts under the Contiguous County Fund specifically included:

A contiguous county's share of the cost of operating administering services, district court facilities, and district attorney operations which are shared by other contiguous[] counties and the counties of Gilpin or Teller. § 12-47.1-1401(9)(a), C.R.S. (1991) (emphasis added).

Senate Bill 97-027 replaced the Contiguous County Fund with the Local Government Limited Gaming Impact Fund ("Local Government Fund"). The Local Government Fund, which remains in the Gaming Act today, also receives funding from the fifty percent constitutional distribution and provides discretionary monetary grants to eligible entities, including thirteen specific counties, based upon their documented limited gaming impacts. See §§ 12-47.1-1601(1)(a) and (4)(b), C.R.S. (2012); see also § 12-47.1-701(2)(a)(II)(C), C.R.S. Various district attorneys' offices in the state routinely receive grants from this fund.

ANALYSIS

Section 9 authorizes priority, off-the-top payments only for "ongoing expenses of the [Gaming] commission and any other state agency, related to the administration of this section 9." § 9(5)(b)(I); see also § 9(7)(c)(I). That is, to be eligible for off-the-top payments, the state's district attorneys must incur expenses related to the "administration" of Section 9 and must constitute "state agencies." See also § 12-47.1-701(1)(a) and (b), C.R.S.

I. The expenses of the state's district attorneys are not incurred in the administration of Section 9 of the constitution or the Gaming Act.

Under Section 9, off-the-top payments are for "ongoing expenses of the commission and any other state agency, related to the administration of this section 9." Section 9(5)(b)(I) (emphasis added); see also Section 9(7)(c)(I). These constitutional provisions are clarified through Part 7 of the Gaming Act, governing the Limited Gaming Fund. As to off-the-top funds, the Gaming Act provides:

All expenses of the division and the commission, including the expenses of investigation and prosecution related to limited gaming, shall be paid from the fund. § 12-47.1-701(1)(a), C.R.S. ("Section 701(1)(a)") (emphasis added).

Next, the Gaming Act specifies that off-the-top payments are to cover:

[A]ll ongoing expenses of the commission, the department, the division, and any other state agency from whom assistance related to the administration of [the Gaming Act] is requested by the commission, [division] director, or [department] executive director. § 12-47.1-701(1)(b)(I), C.R.S. ("Section 701(1)(b)") (emphasis added).

In Section 701(1)(a), the phrase "including the expenses of investigation and prosecution relating to limited gaming" modifies the phrase "expenses of the division and the commission." Other agencies are not included in this subsection.

By contrast, the very next subsection, Section 701(1)(b) governs off-the-top distributions not only to the Division and Commission, but also to "any other state agency from whom assistance related to the administration of this article is requested by" the Commission, the Division Director or the Department Executive Director. In this subsection, costs of prosecution are not mentioned. Had the General Assembly wished to include "costs of prosecution" as a permissible off-the-fund distribution to agencies outside the Division and Commission, it would have done so. See Shelter Mut. Ins. Co. v. Mid-Century Ins. Co., 246 P.3d 651, 662 (Colo. 2011) (finding "statutory silence" to be significant where the General Assembly demonstrated it "knew how" to include provisions on topic).

Nor are a district attorney's activities within the scope of Section 701(1)(b). A district attorney's law enforcement duties are not incurred in the "administration" of Section 9 or the Gaming Act. While the state's district attorneys play an important role in enforcing and prosecuting crimes, including those crimes codified through the Gaming Act, enforcement and prosecution do not constitute "administration." Instead, district attorneys are required by law to prosecute criminal violations, regardless of their type or under what statutes the violations arise. Further, the Commission does not contract with district attorneys for services as it does with the Colorado Bureau of Investigations or the Colorado State Patrol. See 12-47.1-831(5), C.R.S. (2012).

Also supporting this conclusion is the contrast between sections 12-47.1-703 and 704, C.R.S. ("Section 703" and "Section 704"). Section 703 declares that the district attorneys of the respective judicial districts of the state "shall prosecute all violations of this article in the same manner as provided for other crimes and misdemeanors." Next, Section 704 clarifies that the Colorado Attorney General shall represent and advise the Division and Commission. § 12-47.1-704, C.R.S. Section 704 expressly provides that the expenses of the Attorney General incurred in these responsibilities "shall be paid from the limited gaming fund." The contrast between these consecutive provisions again indicates that the district attorneys are not entitled to off-the-top funding.

Finally, it is significant that the Gaming Act has always provided an alternative remedy for unmet gaming-related fiscal impacts on district attorneys' offices. Initially, the General Assembly established the Contiguous County Fund, which expressly provided for reimbursement out of the constitutional distributions for district attorney operations. See § 12-47.1-1401(9)(a), C.R.S. (1991) (emphasis added). Later, the Contiguous County Fund was replaced with the Local Government Fund, from which the state's district attorneys are eligible to receive, and in fact do receive, funds to compensate them for their documented gaming impacts. See § 12-47.1-1601, C.R.S. (2012).

While several of the state's district attorneys are clearly impacted by and face expenses associated with limited gaming, these impacts are not incurred through the "administration" of the Gaming Act or Section 9 of the state constitution. Rather, these enforcement expenses are precisely the type of impact addressed by the Local Government Fund and other constitutional distributions.

II. The State's District Attorneys are entitled to constitutional distributions.

The fact that the state's district attorneys are not entitled to off-the-top funding under the Section 9 does not leave them without recourse. Gilpin and Teller Counties receive a constitutional distribution to help fund district attorney operations in those counties. See Sections 9(5)(b)(II) and 9(7)(c)(III)(C). In addition, the Local Government Fund annually receives a percentage of the state's fifty percent constitutional distribution, and Gilpin, Teller, and eleven other counties are eligible recipients. § 12-47.1-1601(4)(b)(I), C.R.S. (2012).

CONCLUSION

The state's district attorneys incur expenses related to the indirect impact of gaming, but these expenses are not related to the "administration" of limited gaming in Colorado. I therefore conclude that the state's district attorneys' offices are not entitled to off-the-top payments under Section 9. Instead, district attorneys may seek reimbursement for expenses related to the impact of limited gaming through the specifically delineated constitutional distributions, including the Local Government Fund.

Issued this 19th day of July, 2013.

JOHN W. SUTHERS
Colorado Attorney General