Request By:
George S. Wilson, III, Esq.
Wilson, Wilson and Plain
414 Masonic Building
Owensboro, Kentucky 42301
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Joseph L. Famularo, Deputy Attorney General
On behalf of Dade Park Jockey Club, Inc., which operates a thoroughbred race course called "Ellis Park" in Henderson County, Kentucky, you have requested an expansion and clarification of our previous opinion OAG 81-375, as to the power and propriety of the Kentucky Racing Commission awarding concurrent racing dates to Churchill Downs for 1983, and the responsibility of the Commission to recognize the vested interest of affected licensees.
You have supplied us with the following information for our consideration:
1. Ellis Race Track and its corporate predecessor have held what is commonly referred to as the summer racing days for fifty-nine years.
2. In the last few years Ellis Park has expended approximately three million dollars on improvements to its facility.
3. The state has recently expended over $350,000 at Ellis through the Back Side Improvement Fund.
4. Previous experience with overlapping days strongly suggests serious losses of patrons by Ellis.
5. More than sixty percent of Ellis' patrons are from out of state, and their economic contribution would probably be lost to Kentucky racing.
6. To grant overlapping days would jeopardize the financial survival of Ellis Park.
The first part of the Opinion will discuss the applicable state laws. The Commission has, by statute, KRS 230.215, "plenary power" to regulate thoroughbred racing in Kentucky. That power includes the authority to grant or deny racing dates. However, there are criteria that the Commission must follow:
KRS 230.215(1) states, inter alia:
It is the policy of the Commonwealth of Kentucky, in furtherance of its responsibility to foster and to encourage legitimate occupations and industries in the Commonwealth and to promote and to conserve the public health, safety and welfare . . . . (emphasis added)
Also KRS 230.300(2) addresses the issue:
(2) The Commission shall as soon as practicable, but in no event later than March 1 in any calendar year award dates for racing in the Commonwealth during the year. In the event scheduled racing is canceled by reason of flood, fire, or inclement weather, the commission may award after March 1 additional racing dates to make up for those dates canceled by such flood, fire, or inclement weather. The commission may issue such license to conduct a Thoroughbred race meeting to any association making the aforesaid application if the commission finds that the proposed conduct of racing by such association would be in the best interest of the public health, safety, and welfare of the immediate community as well as to the Commonwealth, and if by reason of financial stability, track location, traffic flow, facilities for the public, facilities for racing participants and horses, character and reputation for honesty of all persons identified with the association, competence of proposed racing officials and association employees, absence of conflict with other race meetings in time and patronage area, sentiment of the community in which such association proposes to conduct a race meeting, and capability to comply with the rules and rulings of the commission, the licensing of such association would serve to nurture, promote, develop, or improve the Thoroughbred industry in the Commonwealth . . . . (emphasis added)
Thus, before the Commission can issue racing dates, it has to take into consideration the provisions of both statutes.
We are aware that for years there have been little substantial changes in the issuance of racing dates. As a general rule, with minor exceptions, the Commission has issued dates to the four tracks operating in Kentucky so as to avoid any overlap in the days. Thus, when a track is conducting a race meet it is not in competition with any other Kentucky licensee.
It is our understanding that Churchill Downs has now applied for dates that would conflict with those racing days that have historically been given to Ellis Park.
It is our opinion that the Commission could grant such conflicting dates only if it could support a finding that such a conflict "would be in the best interest of the . . . welfare of the immediate vicinity as well as to the Commonwealth". The Commission would further have to show that such a conflict "would serve to nurture, promote, develop or improve the Thoroughbred industry in the Commonwealth".
If, as you state, such a conflict would create a "probability" that Ellis would not survive as a financially stable entity, then it would appear that such a conflict would not comply with the statutory intent of the Legislature.
The General Assembly's most recent statements pertaining to thoroughbred racing indicate its strong position that the existing tracks should continue to operate as they have in the past. We are referring, of course, to the tax credits which would accrue to Ellis under HB 143 passed by the 1982 General Assembly.
Theoretically, of course, the Commission could make a finding that what you envision to be the result of conflicting dates, would not occur. Naturally, the facts would have to support such a finding. (We note, parenthetically, that the letter from Lynn Stone to the Commission on September 22, 1981, appears to mitigate against such a finding.) (Copy attached.)
We next turn to the issue you have raised concerning your "property interest" in exclusive summer racing dates.
The Supreme Court has held on numerous occasions that in order to have a constitutional claim which would entitle one to procedural due process, one must have a "property interest" that "stems from an independent source such as state law". Board of Regents v. Roth, 408 U.S. 564, 577, 33 L. Ed. 2d 548, (1972); Goss v. Lopez, 419 U.S. 593, 572-74, 42 L. Ed. 2d 725 (1975) and Perry v. Sindermann, 408 U.S. 593, 602 n. 7, 33 L. Ed. 2d 570 (1972).
The Court also stated in Roth, supra 408 U.S. at 577,
To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it.
Based on the facts that you have supplied us, outlined previously, it is our opinion that since the state has allowed you to rely on its consistent scheduling of race days for 59 years, and based on the fact that both you and the state have expended funds in reliance on that consistency, the state cannot now without strong justification, deprive you of your property interest in those dates. Thus, it is our opinion that if the Commission were to contemplate the issuance of conflicting dates, then Ellis Park would be entitled to full procedural due process.
In summary, it is our opinion that before the state can issue conflicting racing dates, affected licensees are entitled to a full due process hearing, and any decision by the Commission to grant conflicting dates must be based upon established facts showing that conflicting dates would not violate the provisions of KRS 230.215(1) and KRS 230.300(2). Failing such determination, any request for conflicting dates must be denied.