§ 11-65-1 — Legislative Declarations and Findings

The Legislature hereby finds and declares as follows:
(1) As the basis for enacting Act No. 84-131, the Legislature found and determined that the conduct within Class 1 municipalities in the state of horse racing events and pari-mutuel wagering thereon will generate additional revenues for governmental and charitable purposes, provide additional jobs for the residents of the state and benefit the businesses related to tourism and recreation within any such municipality and throughout the surrounding areas of the state; it is desirable to permit the qualified voters of any Class 1 municipality to determine through referendum whether horse racing and pari-mutuel wagering thereon will be permitted in such municipality; and for each Class 1 municipality in which horse racing is approved by the voters thereof, it is necessary and desirable to provide for the establishment of a racing commission to regulate horse racing and pari-mutuel wagering thereon within such municipality and to administer and enforce the provisions of said Act No. 84-131.
(2) In the course of enacting Act No. 84-131, the Legislature added a requirement that horse racing and pari-mutuel wagering thereon in any Class 1 municipality (the “sponsoring municipality”) must be authorized by an election conducted in such municipality and in the county or counties in which such municipality, or any part thereof, is located and that in such election the authorization of horse racing and pari-mutuel wagering thereon must be approved by both (i) a majority of all the voters casting votes in such election and (ii) a majority of the voters casting votes in such election who reside in the sponsoring municipality. Act No. 84-131 provided that the county in which any sponsoring municipality is located would be the “host county”, and in the event that a sponsoring municipality is located in more than one county, the host county would be the county in which the largest number of residents of the sponsoring municipality reside. At the time of the enactment of Act No. 84-131, the City of Birmingham was the only Class 1 municipality in the state and, as of the date of these legislative findings, it continues to be the only Class 1 municipality in the state.
(3) As the result of a favorable election held in the City of Birmingham and Jefferson County in 1984, the Birmingham Racing Commission was incorporated in that year pursuant to Act No. 84-131 for the City of Birmingham. At the time of such election, the City of Birmingham was located solely within the boundaries of Jefferson County, and the authorizing election for horse racing and pari-mutuel wagering thereon was held only in Jefferson County. Subsequent to such election and the incorporation of the Birmingham Racing Commission, the City of Birmingham annexed territory located in a county other than Jefferson County, but no election has ever been held in such county authorizing the Birmingham Racing Commission to license and regulate horse racing and pari-mutuel wagering thereon in that part of the City of Birmingham located in such county, and no provision was made in Act No. 84-131 for holding such an election after the incorporation of the Birmingham Racing Commission. As a consequence of these circumstances, horse racing and pari-mutuel wagering thereon is legal only for that part of the City of Birmingham located in Jefferson County, which is the host county of the city for purposes of Act No. 84-131 because, among the counties in which any part of the city is located, it is the county in which the largest number of the residents of the city reside, as determined by the most recent federal decennial census. Although this chapter and amendments thereto constitute general laws applicable to Class 1 municipalities, as of the date of these legislative findings, this chapter applies only to the City of Birmingham, as the sole Class 1 municipality, and notice of the intention to apply for the enactment of this chapter or amendments thereto must be published in accordance with Section 106 of the Constitution of Alabama, as amended, in the county or counties where the matter or thing to be affected may be situated. As of the date of these legislative findings, the matters or things to be affected by this chapter, as amended, are horse racing and pari-mutuel wagering thereon and greyhound racing and pari-mutuel wagering thereon under the jurisdiction of the Birmingham Racing Commission, which activities, and the elections to authorize the same, shall be confined to the single host county of the Class 1 municipality to which this chapter applies. As of the date of these legislative findings, said host county is the only county in which notice of the intention to apply for enactment of amendments to this chapter is required to be published in accordance with Section 106 of the Constitution of Alabama.
(4) Pursuant to Act No. 84-131, the Birmingham Racing Commission issued an owner’s license for the ownership of a horse racing facility located in both the City of Birmingham and Jefferson County, and an operator’s license to conduct horse racing and pari-mutuel wagering thereon at such racing facility. The holders of such licenses, together with related business entities, made a capital investment of more than $60,000,000 in order to provide a facility for horse racing, and the City of Birmingham and other local governmental entities additionally expended more than $10,000,000 to provide roads, sewers, and other public improvements necessary for the use of such facility.
(5) Although Act No. 84-131, as initially enacted, provided that a commission could grant an owner’s or operator’s license for horse racing only to an entity which was entirely owned, either directly or indirectly, by natural persons who had been residents of the state for a period of five years next preceding the date of application for such licenses, the Legislature in 1987, the first year that horse racing was conducted under licenses from the Birmingham Racing Commission, enacted Act No. 87-615 to liberalize the Alabama residence requirements and thereby permit the horse racing licensees to obtain additional investment capital from out-of-state sources. The economic failure of horse racing in the City of Birmingham, together with the consequent need of the horse racing licensees for additional capital, became readily apparent soon after the commencement of horse racing. The enactment of Act No. 87-615 constituted a remedial response of the Legislature to that problem.
(6) The horse racing licensees of the Birmingham Racing Commission were unsuccessful in their efforts to obtain additional financing in the needed amount, and, after reporting operating losses of more than $16,000,000 in 1987, these licensees were unable to continue horse racing in 1988. On August 29, 1988, the horse racing licensees filed petitions for relief under the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Alabama (the “bankruptcy court”), which court, as of the date of these legislative findings, retains jurisdiction over their affairs.
(7) Despite the effort of the Birmingham Racing Commission to revoke the operator’s license for horse racing originally granted by that commission, the bankruptcy court has determined such license to be property of the bankruptcy estate of the horse racing licensees and has enjoined the revocation of such license. In 1989, the bankruptcy court approved a plan of reorganization which provided for the management of the Birmingham racing facility by a company having national experience in the management of pari-mutuel racing facilities and for the funding by such company of operating expenses necessary to conduct horse racing. As part of the plan of such reorganization and pursuant to order by the bankruptcy court, the Birmingham Racing Commission permitted such company to conduct horse racing through an arrangement making use of the original horse racing licenses granted by the commission. Horse racing was conducted in Birmingham during 1989 and 1990 pursuant to the aforesaid plan of reorganization, but the management company has reported that its efforts to continue horse racing under that plan have resulted in losses of more than $6,500,000. As a consequence of such losses and the demonstrated lack of financial viability for horse racing in Birmingham, said management company has declined to make additional payments under the plan of reorganization, thereby allowing the banks that hold the first mortgage on the racing facility to foreclose such mortgage and to terminate further operation under the plan of reorganization.
(8) As a consequence of the original plan of reorganization being no longer viable, the horse racing licensees of the Birmingham Racing Commission have filed with the bankruptcy court, and the bankruptcy court has confirmed, a modified plan of reorganization which is based on the premise that horse racing alone cannot be conducted with economic success at the Birmingham racing facility and that the relatively lower operating costs of greyhound racing, together with the greater interest of the public in pari-mutuel wagering on greyhound racing, will enable the Birmingham racing facility to be reopened and successfully operated as a greyhound racing facility. The implementation of the modified plan is subject to the condition, among others, that all actions will be successfully completed that are necessary for greyhound racing and pari-mutuel wagering thereon to become lawful under the jurisdiction of the Birmingham Racing Commission, including (i) the enactment into law of authorizing legislation and (ii) the approval of greyhound racing and pari-mutuel wagering thereon by the voters in any referendum required by such legislation. In anticipation of legislative authorization to license and regulate greyhound racing and as a consequence of the outstanding horse racing licenses being subject to the jurisdiction of the bankruptcy court, the Birmingham Racing Commission has entered into an agreement with the participants in the modified plan of reorganization to issue licenses for both horse racing and greyhound racing to the company which, under the modified plan of reorganization, will have the right to conduct both horse racing and greyhound racing and pari-mutuel wagering thereon at the Birmingham racing facility, subject, however, to the conditions that (i) the award to such company of a license to conduct greyhound racing and pari-mutuel wagering thereon shall comply with all conditions prescribed by the authorizing legislation and (ii) the agreement to award such license shall be enforceable only if and to the extent that the Legislature, in the authorizing legislation, shall have retroactively authorized the Birmingham Racing Commission to enter into such agreement.
(9) Gambling in general and the promotion thereof are prohibited in the state by provisions of the Alabama Criminal Code, Article 2, Chapter 12, Title 13A, but the Legislature has reserved in Section 13A-12-31 the right to enact local statutes, or general statutes applying to one or more municipalities in a class less than the whole of the state, that exempt pari-mutuel wagering at race meetings from the general prohibition of the Alabama Criminal Code. Pursuant to such localized legislative authority, the Legislature has for the last 20 years pursued a policy of enacting legislation to authorize greyhound racing and pari-mutuel wagering thereon only in (i) an area with substantial tourist appeal (Mobile County) where greyhound racing was available nearby as a competing attraction in another state and (ii) poor rural counties with high unemployment where greyhound racing would provide economic stimulus and needed tax revenues. Moreover, recognizing that pari-mutuel wagering at race meetings is a regulated business which can succeed financially and recover the substantial capital investment required therefor only if protected from geographically proximate competition, the Legislature has heretofore enacted legislation authorizing pari-mutuel wagering at facilities located only in widely separated areas of the state.
(10) The Legislature has heretofore authorized horse racing and pari-mutuel wagering thereon only in a Class 1 municipality because the size and cost of horse racing facilities, the magnitude of public attendance required for the successful operation of such facilities, and the scope of public improvements and accommodations necessary to serve such facilities could best be provided by a Class 1 municipality and its surrounding area. The Legislature has heretofore been reluctant to authorize greyhound racing and pari-mutuel wagering thereon for Class 1 municipalities because it was believed that such activities would produce relatively greater economic benefit if reserved for other areas of the state that needed the particular kind of economic stimulus provided thereby.
(11) On the basis of the experience of the Birmingham Racing Commission and its horse racing licensees with the continuing economic failure of horse racing, the Legislature now finds and determines that greyhound racing and pari-mutuel wagering thereon, as a separate activity or in conjunction with horse racing and pari-mutuel wagering thereon at the same racing facilities, must be made available to Class 1 municipalities if the economic objectives and public purposes of Act No. 84-131, as stated in the original legislative declarations and findings therefor, are to be realized. There is ample evidence and experience to support the conclusion that the lower purse structure and other operating costs of greyhound racing, the opportunity to schedule more racing events during a daily performance, and the greater interest and participation of that portion of the general public inclined to engage in pari-mutuel wagering, together with other differences related to the nature and amount of wagering, will promise greater economic success for greyhound racing in Class 1 municipalities than the City of Birmingham has heretofore been able to achieve with horse racing alone.
(12) It is therefore necessary and desirable, and in the best interest of the state and the people resident in Class 1 municipalities and the host county of each thereof, that commissions organized under this chapter be given the additional power to license and regulate greyhound racing and pari-mutuel wagering thereon for the purpose of enabling the Birmingham Racing Commission to participate fully in the implementation of the modified plan of reorganization that is pending before the bankruptcy court as of the date of these legislative findings and for the further purpose of enabling the City of Birmingham and any other Class 1 municipality to succeed in future efforts to stimulate economic development and generate additional public revenues through pari-mutuel wagering on greyhound racing or horse racing or both. In view of the contribution made by existing greyhound racing operations to the economic well-being of Greene County and Macon County and the importance of these operations as a source of employment for the people of these counties as well as tax revenues for the support of education and other vital public functions, the Legislature deems it desirable to protect the continued viability of greyhound racing in these counties by permitting greyhound racing and pari-mutuel wagering thereon in Class 1 municipalities only on the condition that an operator’s license for greyhound racing issued pursuant to this chapter shall restrict advertising by such operator in certain counties from which patrons of the existing greyhound racing operations in Greene County and Macon County are drawn.
(13) It is further necessary and desirable to modify certain provisions of this chapter to assure that both horse racing and greyhound racing, together with pari-mutuel wagering on such activities, shall be licensed, conducted, and regulated in a manner that will not allow communication and other technological changes, together with market developments in the pari-mutuel wagering industry, to be implemented beyond the specific intentions of this chapter, as amended, without additional legislative authorization. In particular, it is important for this chapter, as amended, to provide in express terms, and to be strictly construed as so providing, that so-called “off track betting” or wagering of any kind on any racing event conducted at a racing facility licensed under this chapter, or televised to such racing facility from any other location, shall not be permitted at any location in the state other than a racing facility with a track for conducting live horse racing or greyhound racing that is licensed under the provisions of this chapter. It is further important that the exemption of racing commissions organized under this chapter from the jurisdiction of a state racing commission, as originally provided in this chapter, be repealed in order that the state may have the opportunity to consider and enact legislation that might bring the licensing and regulation of horse racing or greyhound racing and pari-mutuel wagering thereon under the jurisdiction of a state racing commission.
(14) It is further necessary and desirable (i) to permit the qualified voters of the host county of any Class 1 municipality and the qualified voters of such municipality who reside in the host county to determine by an election whether a commission shall be incorporated for such municipality and whether pari-mutuel wagering on horse racing or greyhound racing or both shall be authorized in such municipality, and (ii) in the case of any Class 1 municipality for which the incorporation of a commission and pari-mutuel wagering on either horse racing or greyhound racing, but not both, has been previously approved by an election of the qualified voters of such municipality and the host county, to permit such voters to determine whether the additional activity of pari-mutuel wagering on horse racing or greyhound racing, as the case may be, shall be authorized in that part of such municipality located in the host county.

Legislative History

(Acts 1984, No. 84-131, p. 159, §1; Acts 1991, No. 91-187, p. 246, §1.)