Does a Breeders' Cup-style horse race qualify for the Texas Racing Act's special tax reimbursement meant for the Breeders' Cup?

Plain-English summary

The Comptroller of Public Accounts asked whether a horse-racing event called "the Great State Challenge" qualified as the "Breeders' Cup races" under section 6.094 of the Texas Racing Act. That section sets up a funding mechanism: a Texas racing association officially designated to host the Breeders' Cup may recover certain costs by keeping money it would otherwise pay the state in pari-mutuel set-asides, with the money routed through a Breeders' Cup Developmental Account and capped at $2 million.

The Attorney General concluded the Great State Challenge did not qualify. Section 6.094 defines "Breeders' Cup races" specifically as "the Breeders' Cup Championship races conducted annually by Breeders' Cup Limited on a day known as Breeders' Cup Championship day." The Comptroller's facts showed the Great State Challenge, set for December 7, 2002 at Sam Houston Race Park, was a separate event modeled on the Breeders' Cup, while the actual championship (or its successor) was being held that year in Illinois. The opinion also leaned on the legislative history of the 2001 bill that created section 6.094, which described the funding as being for the single prestigious championship event (compared in committee to the Super Bowl or World Series) and assumed the earliest a Texas track could host it was 2004. So the statute reached one specific event, not other similar races.

Currency note

This opinion was issued in 2002. Subsequent statutory amendments, court decisions, or later Attorney General 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.

What the opinion meant for those who asked

The Comptroller (what the opinion held): The opinion answered the Comptroller's question directly: the Great State Challenge did not fall within the section 6.094 definition of "Breeders' Cup races," so the special set-aside and reimbursement scheme the Comptroller helps administer did not apply to it.

A Texas racing association hosting a Breeders'-Cup-style event (what the opinion held): The opinion treated section 6.094's benefit as tied to one designated event, the Breeders' Cup Championship races conducted by Breeders' Cup Limited. An event merely modeled on the Breeders' Cup did not trigger the reimbursement mechanism.

Common questions

What is the Texas Racing Act's Breeders' Cup funding mechanism?
Under section 6.094, a Texas racing association officially designated to host the Breeders' Cup can have the pari-mutuel amounts it would otherwise set aside for the state deposited into a Breeders' Cup Developmental Account, then drawn down to reimburse its Breeders' Cup costs, up to $2 million.

Why didn't the Great State Challenge qualify?
Because section 6.094 defines "Breeders' Cup races" as the Breeders' Cup Championship races conducted by Breeders' Cup Limited on Breeders' Cup Championship day. The opinion found the Great State Challenge was a different event modeled on the Breeders' Cup, while the actual championship that year was in Illinois.

Did legislative history matter to the conclusion?
Yes. The opinion noted the 2001 bill analysis and fiscal note treated the funding as aimed at one marquee event that could not be hosted in Texas until at least 2004, supporting the reading that section 6.094 covers only that event.

Background and statutory framework

Section 6.094 of the Texas Racing Act, article 179e of the Revised Civil Statutes, lets a racing association that conducts "Breeders' Cup races" apply to recover its costs from amounts it would otherwise owe the state under sections 6.091 and 6.093, which require associations to set aside percentages of pari-mutuel pools. Tex. Rev. Civ. Stat. Ann. art. 179e, § 6.094(b)-(c) (Vernon Supp. 2002); §§ 6.091, .093. The scheme operates only from January 1 of the year an association is "officially designated to host the Breeders' Cup races," when set-asides under sections 6.091(a)(1) and 6.093 go into the Breeders' Cup Developmental Account, an account in general revenue administered by the Texas Racing Commission, with the Comptroller prescribing deposit procedures. Id. § 6.094(b); § 6.091(a)(1); § 6.094(f)(2). The Commission reimburses "Breeders' Cup costs actually incurred and paid by the association," defined as capital improvements and extraordinary expenses for operating the races, with disbursements capped at $2 million. Id. § 6.094(c); § 6.094(a)(1). Critically, section 6.094 defines "Breeders' Cup races" as "a series of thoroughbred races known as the Breeders' Cup Championship races conducted annually by Breeders' Cup Limited on a day known as Breeders' Cup Championship day." Id. § 6.094(a)(2). Reading that definition together with the bill analysis and fiscal note for the 2001 enactment (Senate Bill 1096), the opinion concluded the Legislature intended the provision to reach only that one championship event.

Citations

Statutes:

• Tex. Rev. Civ. Stat. Ann. art. 179e, § 6.094(a)(1) (Vernon Supp. 2002)
• Tex. Rev. Civ. Stat. Ann. art. 179e, § 6.094(a)(2) (Vernon Supp. 2002)
• Tex. Rev. Civ. Stat. Ann. art. 179e, § 6.094(b)-(c) (Vernon Supp. 2002)
• Tex. Rev. Civ. Stat. Ann. art. 179e, § 6.094(b)
• Tex. Rev. Civ. Stat. Ann. art. 179e, § 6.094(c)
• Tex. Rev. Civ. Stat. Ann. art. 179e, § 6.094(f)(2)
• Tex. Rev. Civ. Stat. Ann. art. 179e, §§ 6.091, .093
• Tex. Rev. Civ. Stat. Ann. art. 179e, § 6.091(a)(1)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/john-cornyn/jc-0581
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2002/jc0581.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

OFFICE OF THE ATTORNEY GENERAL . STATE OF TEXAS
JOHN CORNYN

November 20, 2002

The Honorable Carole Keeton Rylander Opinion No. JC-0581
Comptroller of Public Accounts
Lyndon B. Johnson Building Re: Whether "the Great State Challenge" qualifies
P.O. Box 13528 as "Breeders' Cup races" under section 6.094 of the
Austin, Texas 78711-3528 Texas Racing Act, article 179e, Revised Civil
Statutes (RQ-0567-JC)

Dear Comptroller Rylander:

You ask whether "the Great State Challenge" qualifies as "Breeders' Cup races" under section 6.094 of the Texas Racing Act, article 179e of the Revised Civil Statutes (the "Act"). We conclude that it does not.

Before turning to your question, we briefly review the statute at issue. Section 6.094 of the Texas Racing Act authorizes a racing association that conducts "Breeders' Cup races" to apply for the reimbursement of costs associated with holding the races from amounts that the association would otherwise pay the state under sections 6.091 and 6.093 of the Act. See TEX. REV. CIV. STAT. ANN. art. 179e, § 6.094(b)-(c) (Vernon Supp. 2002). Under those provisions, a racing association must set aside for the state a certain percentage of various types of pari-mutuel pools. See id. §§ 6.091, .093. The section 6.094 scheme applies only if a Texas racing association has been officially designated to host the Breeders' Cup races:

Beginning on January 1 of the year for which the association has been officially designated to host the Breeders' Cup races, amounts that would otherwise be set aside by the association for the state during that year under Sections 6.091(a)(1) and 6.093 of this Act shall be set aside . . . for deposit into the Breeders' Cup Developmental Account.

Id. § 6.094(b) (emphasis added). Section 6.094 establishes the Breeders' Cup Developmental Account as an account in the general revenue fund, administered by the Texas Racing Commission. See id. The Comptroller is charged with prescribing procedures regarding the deposit of funds into the Breeders' Cup Developmental Account. See id. § 6.094(b), (f)(2).

The Racing Commission "shall make disbursements from the Breeders' Cup Developmental Account to reimburse Breeders' Cup costs actually incurred and paid by the association, after the association files a request for reimbursement." Id. § 6.094(c). Section 6.094 defines "Breeders' Cup costs" as "all costs for capital improvements and extraordinary expenses reasonably incurred for the operation of the Breeders' Cup races, including purses offered on other days in excess of the purses that the host association is required to pay by this Act." Id. § 6.094(a)(1). Disbursements from the account may not exceed $2 million. See id. § 6.094(b)-(c).

In connection with your duties under the Act, you ask whether "the Great State Challenge" qualifies as "Breeders' Cup races" under section 6.094. In your letter, you explain that the National Thoroughbred Racing Association (NTRA) has designated the Sam Houston Race Park to host the inaugural "Great State Challenge" on December 7, 2002. See Request Letter, supra note 1. The race will be funded by the NTRA, Breeders' Cup Limited, state breeders, and the race park. See id. It will be modeled on the Breeders' World Cup Thoroughbred Championships, an event that was formerly called the Breeders' Cup. See id. You also inform us that the Breeders' World Cup Thoroughbred Championships are now conducted by the NTRA and Breeders' Cup Limited. See id. This year, the Breeders' World Cup Thoroughbred Championships will be held in Illinois. See id.

We conclude that "the Great State Challenge" does not qualify as "Breeders' Cup races" under section 6.094. Section 6.094 expressly defines "Breeders' Cup races" to mean "a series of thoroughbred races known as the Breeders' Cup Championship races conducted annually by Breeders' Cup Limited on a day known as Breeders' Cup Championship day." TEX. REV. CIV. STAT. ANN. art. 179e, § 6.094(a)(2) (Vernon Supp. 2002). On its face, section 6.094 applies only to the Breeders' Cup Championship races. Based on the facts asserted in your letter, it appears that this year the Breeders' Cup Championship, or at least the successor to that event, will take place in Illinois and that the "Great State Challenge" is not the Breeders' Cup Championship races (or a successor thereto) but rather another event modeled after the Breeders' Cup races.

Our conclusion that the legislature intended section 6.094 to apply only to one racing event is supported by the legislative history. The legislature added section 6.094 to the Act in 2001 in Senate Bill 1096. A bill analysis states that its purpose is to provide "a funding mechanism for the track that conducts the Breeders' Cup races," which the bill analysis compares to the "Olympic or Pan American games." BILL ANALYSIS, HOUSE COMM. ON LICENSING & ADMINISTRATIVE PROCEDURES, Tex. S.B. 1096, 77th Leg., R.S. (2001); see also Hearings Before the Senate Bus. & Commerce Comm., 77th Leg., R.S. (Apr. 3, 2001) ("The Breeders' Cup is a prestigious, internationally recognized event that offers possibly $13 million dollars in purses for one day of horse-racing. Simply put, this day of racing is to the pari-mutuel industry what the Super Bowl is to football, the Final Four is to college basketball, what the World Series is to baseball.") (testimony of Senator Cain, author of S.B. 1096) (tape available from Senate Staff Services Office). The fiscal note for Senate Bill 1096 is based on the following assumption:

The first year that a racing association in Texas could host the Breeders' Cup is 2004. The venues for Breeders' Cup races through 2003 have already been selected. If a Texas race track were chosen for the Breeders' cup race in 2004, a Texas race track could not host the Breeders' Cup for approximately another five years because the race currently rotates among five race tracks nationally.

FISCAL NOTE, Tex. S.B. 1096, 77th Leg., R.S. (2001). On the basis of this assumption, the fiscal note concludes that Senate Bill 1096 would have no fiscal impact on the state budget until at least 2004:

It is estimated that up to a $2,000,000 loss to the General Revenue Fund would occur in fiscal year 2004, or any fiscal year thereafter in which a Texas race track were chosen to host the Breeders' Cup, due to the diversion of pari-mutuel taxes from the General Revenue Fund to the new General Revenue-Dedicated Account.

Id. Clearly, the legislature intended section 6.094 to apply to one particular event, the Breeders' Cup Championship races, which could not be held in Texas until at least 2004, and did not intend for section 6.094 to apply to other similar events.

SUMMARY

"The Great State Challenge" does not qualify as "Breeders' Cup races" under section 6.094 of the Texas Racing Act.

JOHN CORNYN
Attorney General of Texas

HOWARD G. BALDWIN, JR.
First Assistant Attorney General

NANCY FULLER
Deputy Attorney General - General Counsel

SUSAN DENMON GUSKY
Chair, Opinion Committee

Mary R. Crouter
Assistant Attorney General, Opinion Committee