Request By:
Mr. Carl B. Larsen
Deputy Commissioner
Kentucky Harness Racing
Commission
361 Waller Avenue
Lexington, Kentucky 40504
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Rodney V. Tapp, Assistant Attorney General
This is in response to your letter requesting another opinion of the Attorney General about a wagering problem which had occurred at the Midwest Harness Raceway in May, 1977. In Opinion of the Attorney General No. 77-364, we dealt with a question about the payoff on double perfecta wagering on the aforesaid date.
That opinion concerned the following situation:
The track announcer informed the patrons at the track that tickets combining horses designated by number 7 (winner) and by number 2 (place) in the eighth race with horses designated by all numbers (winner) and by number 1 (place) in the ninth and final race of the day would constitute winning tickets for payments from the double perfecta wagering pool. Before any patron presented a ticket with the announced combinations for payment, the totalizator manager discovered an error in the determination of the winning ticket combinations. The error had obscured the fact that one ticket had been exchanged combining the proper finishers in the two races in question. Therefore, the winning ticket would combine the number 7 and the number 2 horses in the eighth race with the number 2 and number 1 horses in the ninth race. The track immediately announced the existence of the error and that it would pay the sums due to the lone ticket holder. On the following day, another track patron attempted to present for payment, a ticket with an erroneous combination. The track refused payment then and continues to refuse payment.
It was our opinion that the harness racing track had acted properly in making the payoff according to the official placing of the horses in the eighth and ninth races.
In your present opinion request, you have provided the following facts for our further consideration:
1. The public address system at the harness racing track is the only method by which the official results of the Big "M" (double perfecta) wagering are announced. The official results are not posted on the racing track board.
2. The announcement at the racing track regarding the error and identifying the correct winning tickets was not made over the public address system while any patrons were still present at the track.
3. The ticket holder who sought payment on the following race day had asked a ticket seller on race day whether he would have to pay state and/or federal taxes on his winnings.
4. The erroneous designation of the winning ticket combinations was repeated in a subsequent track program and in the area newspapers.
We have considered the additional information and have concluded that the Midwest Harness Raceway acted properly in paying the holder of the single ticket combining the proper placement of the first two horses in each of the double perfecta races.
We would first point out that we have been unable to locate a racing rule or case law which would govern the payoff question. However, our review of racing rules and court decisions would lead us to conclude that the payoff question was handled properly. According to subsection 5 of rule 811 Kentucky Administrative Regulations (KAR) 1:125 (1977) of the harness racing rules, "payments due on all wagers shall be made in conformity with well established practice of the pari-mutuel system." This rule itself states the well established rule of the pari-mutuel system that "money wagered on winning tickets is returned in full plus the profits."
In Aliano v. Westchester Racing Association, 265 App. Div. 225, 38 N.Y.S.2d 741 (1942), the Court discussed the role of the racing track in the pari-mutuel system as follows:
Pari-mutuel betting differs from the personal transaction between a bookmaker and a bettor, in which the agreement to pay winnings is made on the personal responsibility of the bookmaker. Under the pari-mutuel system every bettor contributing to the mutuel pool becomes in effect a bookmaker for every other bettor and the pool so constituted is responsible for payment of winnings. The racing association is the administrative agent for the collection and distribution of the pool and presentation to it of a ticket for payment from the sum deposited in the pool is essential to the proper conduct of that system of betting. Id. at 745.
Similarily, the Court in Finlay v. Eastern Racing Association, Inc., 30 N.E.2d 859 (Mass. 1941), observed as follows:
It is common knowledge that at formal horse races there are persons in attendance who are charged with the duty of determining which horses are the winners under the terms and conditions under which a race is being conducted, much as at football or baseball games or other public contests persons are provided to act as referees or umpires. Purchasers of race tickets must be held to know this and to consent to be bound by the judgment of those regularly charged with the duty of decision. Id. at 861.
This language compares favorably with the Kentucky harness racing rules that authorize the judges as race officials to "determine all questions of fact relating to the race" under 811 KAR 1:015 (12) (3) (1977) and to decide "questions about pools and bets" under 811 KAR 1:015 (12) (4) (1977). Finally, the judges are authorized to make such decisions "in the public interest required by extraordinary circumstances not covered by rules and regulations of the commission" pursuant to 181 KAR 1:015 (12) (8) (1977).
The above-mentioned decisions and rules recognize the obligation of the racing track to pay winning ticket holders according to the rules. The racing officials are responsible for determining the placing of the horses after a completed race. Also, they are responsible for ascertaining the existence of winning tickets in each of the various pools and for distributing the sums in the various pools to the winning ticket holders upon presentation. Under 181 KAR 1:015 (12) (4) 1977, the payoff is fixed by the decision of the judges as regards the official placing so that the distribution of the betting pools is not affected by any subsequent changes in or reversals of the placing. Such a rule does not obtain with regard to the determination of the existence of winning tickets for the reason that it may create an obligation to pay holders of non-winning tickets. Clearly, the duty to pay winning tickets is the duty to pay only winning tickets. We do not feel this duty is changed by the fact that the Midwest Harness Raceway put erroneous information about the payoff in a subsequent racing program.
In conclusion, we are of the opinion that the Midwest Harness Raceway was required to make payment on the winning ticket as determined by the official placing of the horses in the double perfecta The Midwest Harness Raceway was and is not under any duty to pay other than winning tickets. We do not deal in this opinion with the question of the rights of any party when the track does make a payment on other than a winning ticket.