Tp Racing v. Adog

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

T. P. RACING, L.L.L.P., Plaintiff/Appellant,

v.

ARIZONA DEPARTMENT OF GAMING, et al., Defendants/Appellees.

No. 1 CA-CV 22-0224
FILED 12-15-2022

Appeal from the Superior Court in Maricopa County
No. LC2021-000324-001
The Honorable Daniel J. Kiley, Judge

AFFIRMED

COUNSEL

Gust Rosenfeld, PLC, Phoenix
By Craig L. Keller
Co-Counsel for Plaintiff/Appellant

Peebles Kidder LLP, Arvada, CO
By Conly J. Schulte, Pro Hac Vice (argued)
Co-Counsel for Plaintiff/Appellant
Fennemore Craig, PC, Phoenix
By Patrick Irvine (argued)
Co-Counsel for Defendants/Appellees

Arizona Attorney General’s Office, Phoenix
By Lena Kalkbrenner
Co-Counsel for Defendants/Appellees

MEMORANDUM DECISION

Judge Paul J. McMurdie delivered the Court’s decision, in which Presiding
Judge Brian Y. Furuya and Judge Jennifer B. Campbell joined.

M c M U R D I E, Judge:

¶1 T.P. Racing, L.L.L.P. (“TP Racing”), appeals the denial of its
application for an event wagering operator license. We find no reversible
error and affirm.

FACTS AND PROCEDURAL BACKGROUND

¶2 In April 2021, the Arizona Legislature enacted the Event
Wagering Act (“Act”), A.R.S. §§ 5-1301 through 5-1321. The Act authorizes
the Arizona Department of Gaming (“Department”) to issue up to ten event
wagering operator licenses1 to non-Indian tribe applicants. A.R.S.
§ 5-1304(A). Such applicants must be either the “owner of an Arizona
professional sports team or franchise,” the operator of a sports facility that
hosts an annual PGA Tour event, the promotor of a NASCAR race held in
Arizona, or the owner’s, operator’s, or promoter’s designee. A.R.S.
§ 5-1304(A)(1).

¶3 In August 2021, TP Racing applied for an event wagering
operator license. In its application, TP Racing asserted that it owns a
professional sports franchise because it owns the horseracing venue Turf
Paradise. It relied partly on the Department’s website, which states that in
1956, “Turf Paradise opened its doors becoming one of Arizona’s first

1 An event wagering operator license allows the licensee to accept
wagers on sports or other events. A.R.S. § 5-1301(4)(a); see also A.R.S.
§ 5-1303(A) (license required to conduct event wagering).

2
 TP RACING v. ADOG, et al.
Decision of the Court

sports franchises.” TP Racing also claimed to own a sports franchise
because it holds a permit from the Department to conduct racing meetings.

¶4 The Department denied TP Racing’s application. It explained
that, inter alia, TP Racing failed to show it owned an Arizona professional
sports team or franchise and did not meet the statutory definition of
“professional sport.” TP Racing appealed, and the administrative law judge
recommended the Department affirm the denial. The Department adopted
the administrative law judge’s decision. TP Racing then filed a complaint
for judicial review.

¶5 In its order, the superior court found that TP Racing failed to
establish that horseracing is a professional sport because TP Racing does
not race its horses or participate in organizational play. The court also
concluded that TP Racing does not own a professional sports team or
franchise because a sports franchise is either the team or the right to field a
team, neither of which TP Racing owns. As a result, the court affirmed the
Department’s denial of TP Racing’s application.

¶6 TP Racing appealed, and we have jurisdiction under A.R.S.
§§ 12-120.21(A)(1) and 12-913.

DISCUSSION

¶7 We review de novo the superior court’s judgment. We must
determine “whether the administrative action was not supported by
substantial evidence or was illegal, arbitrary and capricious, or involved an
abuse of discretion.” Carlson v. Ariz. State Pers. Bd., 214 Ariz. 426, 430, ¶ 13
(App. 2007). We accept the agency’s findings of fact but apply our
independent judgment to questions of law, such as questions of statutory
interpretation. Id.

¶8 For TP Racing to qualify for licensure under A.R.S.
§ 5-1304(A)(1), it must show that it is the “owner of an Arizona professional
sports team or franchise.” Because TP Racing does not claim to own a team,
our analysis hinges on whether it owns a professional sports franchise.
Neither “franchise” nor “sports franchise” is defined by statute. See A.R.S.
§ 5-1301.

¶9 TP Racing makes two distinct arguments: 1) TP Racing owns
Turf Paradise, a professional sports franchise because the Department has
long called it such, and 2) TP Racing owns a horseracing permit, a
professional sports franchise because the right to conduct commercial
horseracing cannot be exercised without express permission from the State.

3
 TP RACING v. ADOG, et al.
Decision of the Court

A. The Department’s Website Does Not Dictate the Statutory
Meaning of “Franchise.”

¶10 TP Racing first argues that the Department was bound to
conclude that Turf Paradise is a sports franchise because the Department
has long called it that. The Department’s website says that in 1956, “Turf
Paradise opened its doors becoming one of Arizona’s first sports
franchises.”2

¶11 TP Racing cites Smiley v. Citibank (S. Dakota), N.A., 517 U.S.
735, 742 (1996), to argue that the Department’s “sudden and unexplained
change in position” is arbitrary, capricious, or an abuse of discretion. But
the Supreme Court in Smiley explained that “the mere fact that an agency
interpretation contradicts a prior agency position is not fatal.” Id. And the
Court determined that one statement in the case—a letter from an agency
official—was “too informal” to “be described as a change of official agency
position.” Id. at 742–43. Likewise, a website blurb about the history of
horseracing in Arizona is too informal to bind the Department.

¶12 TP Racing also contends that the online description is
admissible against the Department as an opposing party’s statement under
Arizona Rule of Evidence 801(d)(2). That rule applies only to the
admissibility of factual statements and does not affect questions of law.
State v. Fulminante, 193 Ariz. 485, 492, ¶ 18 (1999). TP Racing baldly asserts
that the Department’s statement is a confirmed admission “that Turf
Paradise is a sports franchise pursuant to A.R.S. § 5-1304(A)(1).” But
whether Turf Paradise is a franchise under the statute is necessarily a legal
question because it first requires us to determine the meaning of the statute.
See Carlson, 214 Ariz. at 430, ¶ 13 (Statutory interpretation is a legal
question.); see also A.R.S. § 12-910(F) (Courts must interpret statutes without
deference to an agency’s legal determinations.). In sum, the online
statement is not relevant to our statutory interpretation.

2 TP Racing describes the Department’s statement as “long-standing”
and “time-honored” but offered no evidence of when it first appeared on
the website. In any event, TP Racing acknowledged at oral argument that
the Department’s website pre-dated the Act.

4
 TP RACING v. ADOG, et al.
Decision of the Court

B. The Right to Conduct Commercial Horseracing in Arizona Is Not
a “Franchise” under the Act.

¶13 The parties disagree about the meaning of the statutorily
undefined word “franchise.” When we interpret statutes, the primary goal
“is to determine and give effect to legislative intent.” Wyatt v. Wehmueller, 167 Ariz. 281, 284 (1991). We begin by looking at the statute’s plain language
and give the words their ordinary meaning. Cao v. PFP Dorsey Invs., LLC,
253 Ariz. 552, 559, ¶ 26 (App. 2022). “Words in statutes, however, cannot be
read in isolation from the context in which they are used.” J.D. v. Hegyi, 236
Ariz. 39, 41, ¶ 6 (2014); see also Robinson v. Shell Oil Co., 519 U.S. 337, 341
(1997) (“The plainness or ambiguity of statutory language is determined by
reference to the language itself, the specific context in which that language
is used, and the broader context of the statute as a whole.”). If the language
is subject to only one reasonable interpretation, we apply that meaning.
Baker v. Univ. Physicians Healthcare, 231 Ariz. 379, 383, ¶ 8 (2013). But if the
statute is “reasonably susceptible to differing interpretations,” we
determine its meaning by considering secondary factors. Premier Physicians
Grp., PLLC v. Navarro, 240 Ariz. 193, 195, ¶ 9 (2016). Such factors include
“the context of the statute, the language used, the subject matter, its
historical background, its effects and consequences, and its spirit and
purpose.” Wyatt, 167 Ariz. at 284.

¶14 TP Racing argues that, as relevant to A.R.S. § 5-1304(A)(1), a
franchise is an exclusive right granted by the State, such as its permit to
conduct racing meetings. The Department does not dispute, and we agree,
that “franchise” has been defined, among other definitions, as “the
privilege of doing something which does not belong to all citizens as a
matter of common right.” Franchise, Ballentine’s Law Dictionary (3d ed. 2010).
And in Arizona, the right to conduct racing meetings does not exist without
the grant of a permit. See A.R.S. § 5-107.01(A) (permit required to conduct
racing meetings); see also Ariz. Downs v. Ariz. Horsemen’s Found., 130 Ariz.
550, 557 (1981) (legislature “has plenary power” over commercial
horseracing in Arizona). TP Racing also notes that other jurisdictions refer
to the right to conduct horseracing as a “franchise.” See, e.g., Ark. Code Ann.
§§ 23-110-301 to -308; N.Y. Rac. Pari-Mut. Wag. & Breed. Law §§ 201–257.
And although TP Racing concedes that our legislature labels this right as a
“permit,” see A.R.S. § 5-107, it urges us to consider that “permit,” “license,”
and “franchise” are synonymous in several other legal contexts.

¶15 We, however, must read the words in “the context in which
they are used.” J.D., 236 Ariz. at 41, ¶ 6. The context surrounding the Act
shows that the legislature did not intend “franchise” to mean “permit,” as

5
 TP RACING v. ADOG, et al.
Decision of the Court

relevant to the subject matter of the Act. The Act is codified as Chapter 11
under Title 5 of the Arizona Revised Statutes. Within Title 5, the legislature
repeatedly describes the right to conduct racing meetings as a “permit.” See,
e.g., A.R.S. §§ 5-101, 5-107 to -112. And aside from the clause at issue, the
legislature only uses “franchise” in Title 5 to refer to “major league baseball
franchises” and a “professional football franchise.” A.R.S.
§§ 5-801, -815, -1139.

¶16 The legislature uses each of the two words consistently.
“Permit” refers to a right granted by the State; “Franchise” relates to
ownership of a sports team. And we presume that words “bear the same
meaning throughout a text.” Trisha A. v. Dep’t of Child Safety, 247 Ariz. 84,
88, ¶ 17 (2019) (citing Antonin Scalia & Bryan A. Garner, Reading Law: The
Interpretation of Legal Texts 170 (2012)). Similarly, where a text “has used one
term in one place, and a materially different term in another, the
presumption is that the different term denotes a different idea.” Scalia &
Garner, supra, at 170; see also id. at 172 (The presumption of consistent usage
applies across different code sections.).

¶17 TP Racing contends that “franchise” cannot relate to
ownership of a sports team here because the statute refers to ownership of
a “team or franchise.” See A.R.S. § 5-1304(A)(1). TP Racing argues that
“franchise” must mean something other than “team”; otherwise,
“franchise” would be redundant. We agree with the premise. We must
“give meaning, if possible, to every word and provision so that no word or
provision is rendered superfluous.” Nicaise v. Sundaram, 245 Ariz. 566, 568,
¶ 11 (2019). “Franchise,” therefore, is not synonymous with “team.”

¶18 Yet, in giving meaning to every word, we cannot simply
conclude that “franchise” does not mean “permit” or “team.” “Franchise”
must mean something. The Department suggests we adopt the Black’s Law
Dictionary definition of “sports franchise.” Black’s defines “franchise” in
relevant part as “[t]he business or territory controlled by the person or
entity that has been granted such a right.” Franchise, Black’s Law Dictionary
(11th ed. 2019). In that regard, “sports franchise” is defined as either 1) “A
franchise granted by a professional sports league to field a team in that
league” or 2) “The team itself.” Id.

¶19 The Department’s argument is persuasive. First, it is
uncontested that ownership “of an Arizona professional sports team or
franchise” requires ownership of either a professional sports team or a
professional sports franchise. See Scalia & Garner, supra, at 147 (“When
there is a straightforward, parallel construction that involves all nouns . . .

6
 TP RACING v. ADOG, et al.
Decision of the Court

in a series, a prepositive or postpositive modifier normally applies to the
entire series.”). And both Black’s definitions of a “sports franchise” would
apply consistently with the context of A.R.S. § 5-1304 and the Act as a
whole. As discussed, however, “sports franchise” cannot mean “sports
team,” thus precluding the applicability of the second definition. We,
therefore, conclude that a “franchise” under A.R.S. § 5-1304 is the right
“granted by a professional sports league to field a team in that league.” See
Franchise, Black’s Law Dictionary (11th ed. 2019).

¶20 TP Racing responds that this interpretation improperly limits
licensing eligibility to team sports, arguing that the statutory definition of
“professional sport” expressly includes individual sports. See A.R.S.
§ 5-1301(14) (Professional sports include, e.g., golf and motorsports.). But
this argument ignores that the definition of “professional sport” applies
elsewhere in the Act. See, e.g., A.R.S. § 5-1311(A)(3) (Professional sports
players and their family members may not apply for a license.). Thus, the
inclusion of individual sports in the definition of “professional sport” does
not preclude an interpretation that “professional sports team or franchise”
relates only to teams.

¶21 To be eligible for licensure under A.R.S. § 5-1304(A)(1), TP
Racing would have to show that it is the owner of a professional sports team
or the right to field a team. It does not claim either. Because we conclude
that TP Racing is ineligible for an event wagering operator license on this
ground, we need not decide whether horseracing is a professional sport. See
Progressive Specialty Ins. Co. v. Farmers Ins. Co., 143 Ariz. 547, 548 (App. 1985)
(Appellate courts generally should not decide questions unnecessary to the
disposition of the appeal.).

7
 TP RACING v. ADOG, et al.
Decision of the Court

CONCLUSION

¶22 We affirm.3

AMY M. WOOD • Clerk of the Court
FILED: AA

3 TP Racing requests an award of its attorney’s fees under A.R.S.
§ 41-1030(E). Because TP Racing did not prevail in its appeal, we deny its
request for attorney’s fees. Under A.R.S. § 12-342(B), we award the
Department its costs on appeal contingent on its compliance with ARCAP
21.

8