Could Maryland's Racing Commission let one track take telephone bets on a race running at a different track in 1987?

Plain-English summary

A legislative oversight committee asked the Attorney General whether the Maryland Racing Commission had legal authority to adopt a proposed emergency regulation letting one licensed race track (Laurel) accept bets on races run live at a different licensed track (Pimlico), with all the wagered money folded into Pimlico's mutuel pools and transmitted to Pimlico by telephone wire. The question turned on how broadly to read Article 78B, §11A, which let the Commission "establish a system of betting by telephone."

The Attorney General concluded, while acknowledging the question was close, that the statute did authorize the Commission's proposed regulation. The opinion reasoned that the statutory phrase "system of betting by telephone" gave the Commission discretion in designing the mechanics of telephone wagering, rather than locking it into the specific call-in model used in some other states, and that courts elsewhere had interpreted "telephone" broadly to include wire-based communication between institutions, not just individual phone calls. Because the proposed system still required a licensed track, inclusion of the wagered money in the pari-mutuel pool where the race was run, and the same take-out and breakage calculations as in-person betting, the opinion found it satisfied every element the 1984 enabling statute required.

Currency note

This opinion was issued in 1987. 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.

Common questions

Did Maryland's 1984 telephone-betting law require each individual bettor to personally place a call to the track where the race was being run?
No, according to this opinion. The Attorney General read the statute's reference to a "system of betting by telephone" broadly enough to cover a system where all wagering information from one track was transmitted by telephone wire to the track running the race, without requiring a call from each individual patron.

What ultimately happened to the specific 1987 regulation this opinion analyzed?
The opinion's own editor's note explains that the proposed regulation itself was never approved. The legislative oversight committee's initial vote in favor was undone after the Attorney General advised that a member's proxy vote was not legally permitted, though the General Assembly later enacted separate legislation in 1988 authorizing a system of intertrack wagering under specified conditions.

Did the underlying task force study that led to Maryland's telephone-betting law endorse broader ideas like off-track betting parlors?
No. The 1982 Task Force to Study Off-Track Wagering specifically considered and rejected authorizing off-track betting or "teletrack" facilities, recommending only that the General Assembly enact legislation to allow telephone wagering, which the opinion found supported reading the statute for what it actually authorized rather than any broader wagering scheme.

Background and statutory framework

Article 78B, §11A, enacted as Chapter 753 of the 1984 Laws of Maryland following the report of a state Task Force to Study Off-Track Wagering, lets the Racing Commission "establish a system of betting by telephone on any races at any track licensed under this article," requires that take-out and breakage calculations for telephone wagers match those normally used for in-person wagering, and lets licensed tracks implement whatever telephone system the Commission establishes. The Task Force's 1982 report had examined several forms of "wagering in absence," including a Kentucky call-in account system, but firmly rejected recommending off-track betting parlors or teletrack, endorsing only telephone wagering in general terms.

The opinion explained that a regulation is only valid if the enabling statute authorizes it, and analyzed whether Laurel's proposed system, receiving telephone-transmitted wagering information from patrons at its own track for a race running live at Pimlico, fit within "a system of betting by telephone." The opinion found the statutory language did not mandate any single model of telephone betting, and that courts in other states had defined "telephone" broadly enough to include institution-to-institution wire transmission of wagering data, not merely direct patron phone calls, citing Colorado, New York, and Illinois decisions construing "telephone" and "telephone wire" broadly in other regulatory contexts. Because Pennsylvania's telephone-wagering law had been drafted far more narrowly, restricting telephone bets to patrons calling directly into the track enclosure against a pre-established credit line, and Maryland's General Assembly had not adopted comparably restrictive language, the opinion concluded the Commission's broader reading was a permissible exercise of its rulemaking discretion, so long as the other statutory elements, a licensed track, inclusion in the correct mutuel pool, and matching take-out and breakage, were satisfied.

Citations

Statutes:

• Article 78B, §11A of the Maryland Code (Racing Commission's authority to establish telephone betting systems)
• Article 78B, §11(a) of the Maryland Code (Commission's general rulemaking authority over betting on races at a particular track)
• Article 78B, §31 of the Maryland Code (separate provision for wagering on races run outside Maryland, not applicable here)
• §10-106 of the State Government Article (requirement that a regulation be authorized by law to have effect)
• Chapter 753, Laws of Maryland 1984 (enactment of the telephone-betting statute)

Cases:

• U.S. Transmission Sys. v. Bd. of Assessment, 715 P.2d 1249 (Colo. 1986)
• Digital Paging, Etc. v. Public Service Comm'n, 360 N.Y.S.2d 931, 934-35 (N.Y. App. 1974)
• Radio Relay Corp. v. Illinois Commerce Comm'n, 370 N.E.2d 528, 531 (Ill. 1977)
• Kaczorowski v. Mayor & City Council of Baltimore, 309 Md. 505, 516 n.4 (1987)

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1987/Volume72_1987.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

RACING

Racing Commission—Telephone Betting—Authority To Adopt Regulation Permitting Race Track To Accept Bets On Race Being Run At Different Track.

August 4, 1987

The Honorable James C. Simpson
The Honorable Larry Young
Joint Committee on Administrative, Executive, and Legislative Review

The Committee has requested our opinion on the authority of the Maryland Racing Commission (the "Commission") to adopt a proposed emergency regulation on telephone betting.

This inquiry raises difficult, and interrelated, legal and policy concerns. In this opinion, we necessarily address only the legal question of statutory construction.

For the reasons stated below, we conclude that the proposed regulation is within the Commission's rulemaking authority under Article 78B, §11A of the Maryland Code.

I
Proposed Regulation

The Commission has submitted a proposed emergency regulation entitled "Telephone Betting," to be codified at COMAR 09.10.01.78. In essence, the regulation would permit one licensed race track to accept bets on a race taking place at another track in Maryland.1 Initially, the betting system would be used to allow wagering at Laurel Race Course on races run at Pimlico.2 The proposed regulation would require that all money wagered at Laurel be included in the mutuel pools at Pimlico and that all pari-mutuel information regarding the money wagered at Laurel be transmitted by telephone wire directly to Pimlico. Proposed COMAR 09.10.01.78C.

II
The Telephone Betting Statute

Article 78B, §11A reads as follows:

"(a) The Commission may establish a system of betting by telephone on any races at any track licensed under this article.

(b) Each track licensed under this article may implement the system of betting by telephone on any race as established by the Commission.

(c) Computation of the take-out and breakage for wagering made under this section shall be the same as that normally applicable to racing conducted by the licensee."

This provision was enacted as Chapter 753, Laws of Maryland 1984.3 The legislation grew out of the report of the Task Force to Study Off-Track Wagering, submitted to the Governor in February, 1982 ("Task Force Report"). The Task Force examined several types of "Wagering in Absence," telephone wagering, off-track betting, and teletrack. The Task Force clearly rejected any notion of authorizing off-track betting or teletrack, recommending only that "enabling legislation be enacted to allow telephone wagering." Task Force Report at 15.4 The report was not definitive in the kind of telephone wagering proposed, although it did include a description of the system at a race track in Kentucky:

"At Louisville Downs, bettors may establish a phone account with a minimum deposit of $100. Bettors with an account may then place bets on any Louisville Downs race up to starting time and any winnings are automatically credited to the appropriate account." Task Force Report at 13-14.5

By comparison, testimony at the committee hearing in the Senate by one of the sponsors of the enabling legislation indicated that there is a variety of forms of "telephone betting" including "call-ins," the use of cable television, or a combination.6

III
Authority for Proposed Regulation

The proposed regulation may not be given effect unless it is authorized by Article 78B, §11A. See §10-106 of the State Government Article.7 Although the question is very close, we think that the statute does authorize the regulation.

Under the statute, the Commission "may establish a system of betting by telephone." While the use of a "telephone" must be involved, the words "may establish" and "system" suggest that the Commission was not mandated to put in place a specific kind of telephone betting, such as the kind employed in Kentucky, but was given some discretion in its rulemaking activity. However, in addition to the involvement of a telephone, any system established by the Commission would have to include certain elements to constitute lawful betting by a patron not physically present at the track where the race bet on is conducted. These include:

1) The system must be implemented by a licensed track;

2) The money bet must become part of the pari-mutuel pool at the track where the race is run; and

3) Computation of the take-out and breakage for wagering must be the same as if the wagering were done in person at the track where the race is run.

As we understand the regulation, all the above elements would be present, leaving only the question whether the proposed regulation sufficiently involves the use of a "telephone." In its narrowest meaning, the term "telephone" could be construed as including only an individual call from a patron to the track at which the race is conducted. In its broader sense, it could describe a kind of "wagering in absence" wherein a patron not in attendance would communicate a bet to the track through the use of telephone equipment.8 The Commission, in exercising the authority granted to it by the General Assembly, used the broader definition, requiring only that "[a]ll pari-mutuel information regarding the money wagered at the 'Receiving Track' [shall] be transmitted by telephone wire directly to the Sending Track . . . ." The Commission would not require individual telephone calls by each individual bettor to the track where the race is being run.

In today's society, the use of the telephone encompasses considerably more than picking up the phone and communicating with a person on the other end. Telephones can be used to get information from or relay information to computers, and other terminals, and two or more people can communicate by computer, with the information traveling by telephone lines. In keeping with these advances in telephone technology, courts have interpreted the term "telephone" broadly. Thus, "telephone company" has been defined as a company "that directly facilitates two-way communication between a significant number of persons or businesses." U.S. Transmission Sys. v. Bd. of Assessment, 715 P.2d 1249 (Colo. 1986). And the equipment necessary for radio transmission of beeper signals has been classified as a "telephone wire." Digital Paging, Etc. v. Public Service Comm'n, 360 N.Y.S.2d 931, 934-35 (N.Y. App. 1974) ("That Radio Relay's transmission of the 'beep' sound, by use of its company owned and/or operated . . . equipment . . . represents 'telephonic communication' is amply demonstrated in the record."). See also Radio Relay Corp. v. Illinois Commerce Comm'n, 370 N.E.2d 528, 531 (Ill. 1977).

Given the great diversity of uses of the telephone common to our society, we do not think that legislative authorization for the Commission to "establish a system of betting by telephone" is inherently limited to one particular system. We could conclude that the Commission lacked authority to adopt the proposed regulation only if we read into the statute an unarticulated restriction: that the General Assembly intended only a specific form of telephone betting. In view of the limited legislative history and the broad language of the statute, we cannot do so. See Kaczorowski v. Mayor & City Council of Baltimore, 309 Md. 505, 516 n.4 (1987).

Indeed, the Task Force Report contained an account of a Pennsylvania law that authorized telephone betting expressly restricted to bets against a preestablished line of credit at a track. Task Force Report at 35a. See Race Horse Industry Reform Act §218(b), P.L. 435, No. 135, Acts of 1981 ("[A]ll telephone messages to place wagers must be to a place within the track enclosure; [a]nd . . . all moneys used to place telephone wagers be on deposit in an amount sufficient to cover the wager at the race track where the account is opened."). But the General Assembly did not enact legislation as restrictive as Pennsylvania's.

IV
Conclusion

In summary, it is our opinion that the Maryland Racing Commission has the statutory authority to adopt the particular system of telephone betting embodied in the proposed regulation.

J. Joseph Curran, Jr., Attorney General

Jack Schwartz
Chief Counsel
Opinions and Advice

Editor's Note: The proposed emergency regulation discussed in this opinion failed to received approval from the Joint Committee on Administrative, Executive, and Legislative Review. The committee's initial vote to approve the regulation was negated after the Attorney General advised that a proxy vote was legally impermissible. See letter from Chief Counsel for Opinions and Advice Jack Schwartz to Senator Howard A. Denis (October 2, 1987). Later in Chapter 7 (Senate Bill 88) of the Laws of Maryland 1988, the General Assembly authorized the Racing Commission to establish a system of intertrack wagering under certain conditions.

1 COMAR 09.10.01.78A would provide: "[The system of betting] is limited to betting at the racetrack of an Association which is not itself conducting a race on which betting is being taken (the 'Receiving Track') on a race which is being conducted live or by simulcast on a licensed racing day at the racetrack of another association (the 'Sending Track'). All betting under this regulation must take place within the confines of the racetrack of the Receiving Track."

2 For ease of reference, we shall refer in this opinion to Pimlico and Laurel, although the proposed regulation itself is drafted in general terms.

3 An amendment to §11A not pertinent to this discussion was contained in Chapter 7, Laws of Maryland 1985.

4 The purpose of this recommendation was to "expand racing's fan base and increase the industry's total handle without excessive new costs to the industry, while possibly resulting in new revenues to the state." Task Force Report at page 7.

5 At least one Task Force document, but not the Task Force Report itself, differentiated between telephone betting and "other track wagering," which was not further described. Memorandum from Rafael L. Cortada, Chairman, to Task Force Members (December 3, 1981).

6 Like the Task Force, neither the sponsors nor the Legislature indicated any support for off-track betting or teletrack.

7 The Commission does not assert that the proposed regulation is within the Commission's power under Article 78B, §11(a) to "make rules governing, restricting or regulating betting on [horse] races . . . ." The Commission has evidently historically viewed this grant of authority as limited to the betting on races at a particular race track. The proposed regulation is also not authorized by Article 78B, §31, which deals with the special situation of wagering on races conducted outside Maryland.

8 Either interpretation would appear to carry out the legislative purposes. See note 5 above.