Request By:
Sen. Johnny Ray Turner
Senate Democratic Caucus Chair
Opinion
Opinion By: Gregory D. Stumbo, Attorney General; James M. Herrick, Assistant Attorney General
Opinion of the Attorney General
Johnny Ray Turner, Senate Democratic Caucus Chair, has requested an opinion as to the legality of the activities of a corporation known as TVG, which enables individuals to place bets on horse races from their home telephones or personal computers. Senator Turner further inquires whether any specific legislation has been enacted to permit this form of gambling in Kentucky.
Legality of off-track pari-mutuel wagering in Kentucky
Since 1977, "messenger betting" has been prohibited by Kentucky law. KRS 528.110(1) defines this offense as follows:
Any person who, either for himself or as agent or employee of another, wagers money or anything of value on a horse race ? at any race track in or out of this state, or who engages in the occupation of receiving, making, transmitting or negotiating, either in person or by messenger, telephone or telegraph, wagers on horse races ? at any race track in or out of the state, shall, except in the case of wagers made within the enclosure of a race track licensed by the state racing commission during an authorized race meeting at that track, or an enclosure during regular meetings in which running, trotting or pacing races are being conducted by associations regularly organized for that purpose, be guilty of a Class A misdemeanor.
In general, therefore, wagering on horse races, as well as the receiving and transmitting of those wagers, is unlawful unless the wager is made within the enclosure of a licensed race track.
In OAG 82-4, we had occasion to consider the state of the law regarding pari-mutuel wagering conducted outside the premises of a licensed race track. At that time, we observed that the law had recently been changed in response to the decision in
Thomas v. Commonwealth, Ky. App., 563 S.W.2d 491 (1978). In Thomas, the Court of Appeals had held that a messenger betting service, which charged a fee to transport money to race tracks and wager it on horse races, did not violate KRS 528.110's prohibition on messenger betting because the actual wagers were "made within the enclosure of a race track" as permitted by that statute. Within days of the court's decision, legislation was introduced which ultimately became KRS 528.120. That section provided, in part:
No person, as a business or for any compensation, shall, directly or indirectly, accept any thing of value to be wagered or to be transmitted or delivered for wager to any pari-mutuel wagering enterprise, or participate in any such transmission.
We therefore concluded that pari-mutuel wagering could only be conducted within the enclosure of a race track or on its "licensed premises" (citing KRS 230.361(1)). We noted, however, that "any change in the current law is, of course, within the province of the Kentucky General Assembly."
Such a change was undertaken in the 1988 legislative session with the enactment of various statutes authorizing telephone account wagering, as well as intra- and interstate simulcasting of races and intertrack wagering. Telephone account wagering is defined as follows in KRS 230.210(17) as follows:
"Telephone account wagering" means a form of pari-mutuel wagering where an individual may deposit money in an account at a track and may place a wager by direct telephone call or by communication through other electronic media owned by the holder of the account to the track.
The primary section dealing with telephone account wagering is KRS 230.379. As originally enacted, this statute read in part:
(1) A track may engage in telephone account wagering, provided that all telephone calls to place wagers be made to a location within the track enclosure, and provided that all moneys used to place telephone account wagers be on deposit in an amount sufficient to cover the wagers at the track where the account is opened. All moneys wagered by telephone account wagering shall be subject to the applicable pari-mutuel tax levied in KRS 138.510 and shall form a common pool with other pari-mutuel pools at the track for each posted race ?
(2) A track shall accept and tabulate a telephone account wager only from the holder of a telephone wagering account. No person shall directly or indirectly act as an intermediary, transmitter or agent in the placing of wagers for a holder of a telephone wagering account. No person shall in any manner place a wager through telephone account wagering, on behalf of a holder of a telephone wagering account. Only the holder of a telephone wagering account shall place a telephone wager. Any person violating this subsection shall be guilty of a Class A misdemeanor.
(3) Telephone account wagering conducted in accordance with the provisions of this section shall not be considered a violation of KRS 528.110.
(Emphasis added.) This section permitted the practice of wagering by telephone or other means of electronic communication, provided that all wagered funds were already deposited in an account at the track, that the account holder was the person placing the wager, that all wagers were subject to applicable taxes and formed a common pool, and that the recipients of the communicated wagers were located on the track premises.
In 1992, however, KRS 230.379 was amended to delete the requirement in subsection (1) "that all telephone calls to place wagers be made to a location within the track enclosure. " The first sentence now provides:
A track may engage in telephone account wagering, if all moneys used to place telephone account wagers are on deposit in an amount sufficient to cover the wagers at the track where the account is opened.
The 1992 amendment, in effect, authorizes telephone account wagering to be conducted in situations where neither party to the electronic communication is physically present on the track premises. The only restrictions in KRS 230.379 are the requirement that sufficient funds be on account at the track to cover the wagers, that the wagers be subject to applicable taxes and form a common pool, and that the person placing the wager be the actual account holder. KRS 230.210(17) further requires that if electronic media other than the telephone are used to place the wager, the account holder must be the owner of the media.
It is true that KRS 230.361(1), one of the statutes we cited in OAG 82-4, states that pari-mutuel wagering "shall be conducted ? only on the licensed [track] premises." Moreover, KRS 230.379 does not explicitly state that telephone account wagering is an exception to KRS 230.361(1). Nevertheless, KRS 230.361(1) should not be considered as nullifying the express authorization for telephone account wagering in KRS 230.379. Two statutes in apparent conflict should be read, where possible, to effectuate the purposes of both.
Allen v. McClendon, Ky., 967 S.W.2d 1, 3 (1998). Furthermore, a specific statutory provision prevails over a general one.
Land v. Newsome, Ky., 614 S.W.2d 948, 949 (1981). As such, despite the general language in KRS 230.361(1) restricting pari-mutuel wagering to the track premises, KRS 230.379 must be given effect as a specific exception permitting telephone account wagering according to its terms.
Compliance of TVG's activities with Kentucky law
TVG Corporation, according to information provided to this office, offers account wagering via telephone and internet on behalf of various race tracks in Kentucky. Pursuant to agreements with the tracks, TVG acts as their authorized agent for accepting wagers and televising their races. Wagers placed with TVG are sent into combined pools at the tracks hosting TVG's services, where they are subject to all applicable rules and restrictions of a host track.
TVG states that it requires all wagers to be covered by sufficient account funds already on deposit, and that the wagers are subject to applicable pari-mutuel taxes. To assure that the account holder is the person placing a telephone wager, and is the owner of the computer in the case of internet wagers, TVG restricts account access to the registered account holder and requires the use of both the account number and a Personal Identification Number. These procedures place TVG's activities within the boundaries of permissible telephone account wagering in Kentucky.
Conclusion
Based on TVG's representations, we therefore conclude that the account wagering services it provides are authorized by KRS 230.379 as amended in 1992. Since TVG's operations comply with the requirements of KRS 230.379 and 230.210(17), they do not contravene the prohibition on "messenger betting" contained in KRS 528.110. Also, KRS 230.361(1) should not be construed as prohibiting activities permitted by KRS 230.379 .