Sons & Daughters of Idaho, Inc. v. Idaho Lottery Commission

                 IN THE SUPREME COURT OF THE STATE OF IDAHO

                                        Docket No. 32218

SONS & DAUGHTERS OF IDAHO, INC., a                   )
nonprofit corporation; and USA BOXING,               )   Boise, February 2007 Term
SNAKE RIVER, a nonprofit corporation,                )
                                                     )   2007 Opinion No. 36
     Petitioners-Appellants,                         )
                                                     )   Filed: February 23, 2007
v.                                                   )
                                                     )   Stephen W. Kenyon, Clerk
THE IDAHO LOTTERY COMMISSION,                        )
                                                     )
     Respondent.                                     )

       Appeal from the District Court of the Fourth Judicial District of the State of
       Idaho, Ada County, affirming the decision of the Lottery Commission. Honorable
       Ronald J. Wilper, District Judge.

       The decision of the Lottery Commission is affirmed.

       Lynn E. Thomas, Boise; Iver J. Longeteig, Boise, for appellants. Lynn E. Thomas
       argued.

       Honorable Lawrence G. Wasden, Attorney General, Boise, for respondent.
       Jeremy C. Chou argued.




SCHROEDER, Chief Justice.
       This appeal arises out of a petition for judicial review of a bingo license revocation.
                                      I.
                     FACTUAL AND PROCEDURAL BACKGROUND

       Sons and Daughters of Idaho, Inc. (S&D) and United States Amateur Boxing Federation,
Snake River Association (USAB) are nonprofit organizations licensed to conduct bingo games.
The organizations conduct bingo through their bingo committees, both of which consist of the
same two persons, Bill Tway and Bob Ford. The bingo operations take place at a facility in
Garden City informally known as “Big Bucks Bingo.” The organizations alternate days with
each organization conducting bingo three days per week. The organizations rent the building
and the non-gaming equipment such as tables, chairs and televisions on a per-day basis from
Z&J Services, Inc., a for-profit corporation owned by Tway and Ford. Z&J does not provide any
gaming equipment regulated under the bingo statutes. Tway and Ford serve on the bingo
committees. They are not otherwise affiliated with USAB, but they are or have been involved
with S&D as officers or directors.
        The present dispute began with a request by the Idaho Lottery Commission (“Lottery” or
“Commission”) to inspect the records of each organization as authorized by I.C. § 67-7709(5).
During the inspection Tway and Ford did not provide physical copies of the cancelled checks
associated with the bingo operations, stating that the bank did not return cancelled checks. The
Lottery thereafter sent notices of revocation to both S&D and USAB, which acted as complaints
for purposes of initiating a contested case agency proceeding.        With respect to S&D the
revocation was based on allegations that Tway, as an officer of S&D, was being indirectly
compensated from bingo proceeds through the payments to Z&J. With respect to USAB, the
basis of the revocation was that bingo revenues were not being allocated in accordance with
statutory requirements.     Both organizations were accused of contracting with outsiders to
conduct bingo games, and the notices stated that the organizations had “failed to provide the
documents as required by statute and regulation” at the time of the inspection. During the
proceedings the organizations executed releases allowing the Lottery access to their financial and
banking records. The Lottery obtained copies of the cancelled checks at a cost of some $1500 to
the Lottery.
        After a revocation hearing, the hearing officer recommended that S&D’s license be
revoked based on the finding that the rent payments to Z&J constituted indirect compensation to
Tway and Ford. With respect to USAB the hearing officer found that there was no violation
because Tway and Ford were not officers or directors of the organization and all of the payments
were within the statutory limitations. The hearing officer found that the games were not being
conducted by Z&J but by Tway and Ford individually as the members of each organization’s
bingo committee. The hearing officer found that the organizations were not required to keep
physical copies of the checks on the premises, and that their ability to retrieve the checks upon
request was sufficient to satisfy the statute.
        Both sides petitioned for reconsideration. The Lottery maintained that the hearing officer
should have found that Z&J was conducting the bingo games. S&D represented that it had taken


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curative action by restructuring the governing body of S&D so revocation was no longer
appropriate. The hearing officer rejected both petitions, reiterating his earlier finding that Z&J
was not actually conducting the bingo games, and noting that the issue of subsequent curative
measures was not properly before the hearing officer in that proceeding.
       The Commission agreed with the hearing officer that S&D had violated the prohibition
on indirect compensation. The Commission ruled that both organizations had “failed to keep and
account for all checks” as required by I.C. § 67-7709(1)(b) and that both licenses should
therefore be revoked. The organizations filed a petition for judicial review in the district court.
The district court affirmed, holding that the Commission provided adequate procedure and did
not abuse its discretion or act arbitrarily. It also rejected several constitutional arguments raised
by the organizations.
                                           II.
                                   STANDARD OF REVIEW

       When a district court acts in its appellate capacity under the Idaho Administrative
Procedure Act (IDAPA), this Court reviews the agency record independently of the district
court’s decision. Cooper v. Bd. of Prof. Discipline of Idaho State Bd. of Medicine, 134 Idaho
449, 454, 4 P.3d 561, 566 (2000). The standard of judicial review of an agency action is dictated
by statute. An agency’s order must be upheld by the reviewing court unless its decision (a)
violates statutory or constitutional provisions; (b) exceeds the agency’s statutory authority; (c) is
made upon unlawful procedure; (d) is not supported by substantial evidence in the record; or (e)
is arbitrary, capricious, or an abuse of discretion. § I.C. § 67-5279(3). The court defers to the
agency’s findings of fact unless they are clearly erroneous and does not substitute its judgment
for that of the agency as to the weight of the evidence. I.C. § 67-5279(1); Cooper, 134 Idaho at
454, 4 P.3d at 566.
       On questions of law the court generally exercises free review, although agencies are
sometimes entitled to deference on questions of statutory construction. Because the Commission
has been entrusted with administration of the bingo statutes, the Court may defer to its
interpretation of the statutes so long as that interpretation is reasonable and not contrary to the
express language of the statute. See J.R. Simplot Co. v. Idaho State Tax Comm’n, 120 Idaho 849,
862, 820 P.2d 1206, 1219 (1991).         Nevertheless, “the ultimate responsibility to construe
legislative language to determine the law” rests with the judiciary, and the underlying


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consideration whether or not such deference is granted is to ascertain and give effect to
legislative intent. Mason v. Donnelly Club, 135 Idaho 581, 583, 21 P.3d 903, 905 (2001);
Simplot, 120 Idaho at 853-54, 820 P.2d at 1210-11. Accordingly, the Commission’s reasonable
construction of the bingo statutes is entitled to deference, but only to the extent the rationales
supporting such deference are applicable under the circumstances. See Simplot, 120 Idaho at
862-66, 820 P.2d at 1219-23.
                                  III.
          THE COMMISSION’S FINDING THAT THE ORGANIZATIONS
       FAILED TO KEEP AND ACCOUNT FOR ALL CHECKS IS SUPPORTED
                            BY THE RECORD

       Contrary to the hearing officer’s recommendation, the Commission revoked USAB’s
license on the grounds that it had “failed to keep and account for all checks and withdrawal
slips” in violation of I.C. § 67-7709(1)(b). The same violation was found for revoking S&D’s
license as well. The statute states that “A licensed authorized organization shall keep and
account for all checks and withdrawal slips, including voided checks and withdrawal slips.” I.C.
§ 67-7709(1)(b).
       The organizations did not maintain physical copies of all its checks on the premises and
did not provide them on the day of inspection. The Lottery eventually obtained the checks from
the bank using releases executed by the organizations. The Lottery incurred some $1500 in
expenses to obtain the checks. It did not discover checks payable to “cash” until after it had
commenced the revocation proceedings, at which point it was too late to include that fact as a
separate basis for revocation in the charging documents.
       The hearing officer concluded that there was no failure to provide documents since the
checks eventually were provided.        The hearing officer determined that the reason the
organizations had no physical copies of the checks in their possession was that the banks did not
return the checks, and that there was no evidence of concealment or obstruction. The hearing
officer found that the organizations were in compliance with the statute:
       In this case, the evidence is clear that both organizations kept meticulous records
       of the cash in and out, and meticulous bank records of all transactions through the
       various bank accounts. The statutes must be read in context with practical
       business application. It is not necessary for the licensee to personally or
       physically retain actual possession of these items, so long as the items are
       safeguarded and maintained under sufficient control of the licensee so that they
       can be retrieved if needed. Where the items are retained by the licensee’s bank,

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       and available to the licensee on request or order, this is sufficient to satisfy the
       requirement of [the] statute.
The Commission rejected the hearing officer’s conclusion and found that the organizations had
failed to keep and account for all checks.
       The facts are not in dispute. Clearly the organizations did not keep copies of the checks
and have them available for inspection. Equally clear is the reason the bank did not give the
organizations copies of the checks -- the organizations did not ask the bank for them. The
organizations shifted the burden and expense of obtaining the checks to the Lottery.
       Idaho Code § 67-5248(1)(a) states that an order must include “a reasoned statement in
support of the decision.”      The Commission did not explain its decision.            However, an
understanding of the decision is apparent from the facts. Idaho Code § 67-7709(5) states that all
“financial books, papers, records and documents of an organization shall be kept as determined
by rule of the state lottery and shall be open to inspection.” The regulation requires that an
accounting of revenues and disbursements be retained in a licensee’s permanent records, along
with a copy of each Charitable Contribution Acknowledgement Report Form.                     IDAPA
52.01.02.122.04. The actions of the Commission must be read in light of the suspect position of
gambling in the State: "Gambling is contrary to public policy and is strictly prohibited except
for the following: c. Bingo and raffle games that are operated by qualified charitable
organizations in the pursuit of charitable purposes if conducted in conformity with enabling
legislation." Idaho Constitution, Art. III, sec. 20(1)(c). See also Idaho Code § 67-7701:
       It is hereby declared that all bingo games and raffles in Idaho must be strictly
       controlled and administered, and it is in the public interest for the state to provide
       for the administration of charitable bingo games and raffles to protect the public
       from fraudulently conducted bingo games and raffles, to assure that charitable
       groups and institutions realize the profits from these games, to prohibit
       professionals conducting bingo games or raffles for fees or a percentage of the
       profit and to provide that all expenditures by a charitable organization in
       conducting bingo games and raffles are in the best interest of raising moneys for
       charitable purposes.

       The public policy of the State is to assure that authorized gambling enterprises are
scrutinized carefully. Instead of keeping or obtaining and producing the underlying records
needed to fulfill the duty of scrutiny, the organizations told the Lottery to fetch the records at the
Lottery’s expense. The Commission acted within its authority and did not abuse its discretion in
determining that the organizations failed to keep and account for all checks.

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       The organizations argue that the Commission never charged them with “failing to keep
checks,” but merely with “failing to provide documents.” As the district court found, the notice
was sufficient to satisfy the requirements of due process and IDAPA by providing “a short and
plain statement of the matters asserted or the issues involved.” I.C. § 67-5242(1)(c).
       The organizations also argue that the decision to revoke USAB’s license was motivated
by bias or improper motive, in that the Commission had offered to settle if USAB severed all ties
with Tway and Ford but, upon USAB’s refusal, proceeded to revoke the license. The fact of
selective enforcement, without more, is not per se arbitrary. Young Elec. Sign Co. v. State ex rel.
Winder, 135 Idaho 804, 809, 25 P.3d 117, 122 (2001).           The Lottery’s decision to pursue
revocation against USAB based on its belief that Tway and Ford were doing violence to the spirit
of the law does not demonstrate the kind of animus that renders a decision-maker biased. See
Owsley v. Idaho Indus. Comm’n, 141 Idaho 129, 137, 106 P.3d 455, 463 (2005).
                                   IV.
            THE EVIDENCE SUPPORTS THE FINDING THAT TWAY AND
             FORD WERE BEING COMPENSATED AND ESTABLISHES
                 THAT Z&J WAS CONDUCTING BINGO GAMES

       The hearing officer recommended that S&D’s license be revoked based on his finding
that it was in violation of I.C. §§67-7709(1)(c) and 67-7711(3), which prohibit officers and
directors from being compensated out of bingo proceeds. Section 67-7709 regulates the use of
bingo proceeds, and includes the following provision:
               Any proceeds available in a bingo account after payment of [statutorily
       permissible expenses] shall inure to the charitable or nonprofit organization to be
       used for religious, charitable, civic, scientific testing, public safety, literary or
       educational purposes or for purchasing, constructing, maintaining, operating or
       using equipment or land, or a building or improvements thereto, owned, leased or
       rented by and for the charitable or nonprofit organization and used for civic
       purposes or made available by the charitable or nonprofit organization for use by
       the general public from time to time, or to foster amateur sports competition, or
       for the prevention of cruelty to children or animals, provided that no proceeds
       shall be used or expended directly or indirectly to compensate officers or
       directors.
I.C. § 67-7709(1)(c).    Section 67-7711, entitled “Licensing procedure,” contains a similar
limitation on compensation of officers and directors:
               The operation of bingo sessions or games or charitable raffles shall be the
       direct responsibility of, and controlled by, a special committee selected by the
       governing body of the organization. If the governing body has not appointed a


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       special committee, the members of the governing body shall be held responsible
       for the conduct of the bingo sessions or games or raffles. No directors or officers
       of an organization or persons related to them either by marriage or blood within
       the second degree shall receive any compensation derived from the proceeds of a
       bingo session or raffle regulated under the provisions of this chapter. An
       organization shall not contract with any person not employed by, or a volunteer
       for, the organization for the purpose of conducting a bingo session or raffle on the
       organization’s behalf.
I.C. § 67-7711(3). Tway and Ford comprised the special committee referred to in section 67-
7711(3) for both organizations. In the case of S&D, they were also officers or directors of the
organization. The bingo committee positions filled by Tway and Ford were not paid positions
within the organizations, and there was no allegation that Tway and Ford were embezzling or
mishandling the funds.      However, the hearing officer found that they were indirectly
compensated from the bingo proceeds because some of the money was used to rent the
equipment and the facility from Z&J, which was owned or controlled by Tway and Ford or their
relatives. The Commission affirmed the recommendation and adopted the hearing officer’s
findings.
       Although the hearing officer found a violation by S&D because of Tway’s and Ford’s
positions in the organization, he found that the arrangement was permissible with respect to
USAB. He expressly rejected the Lottery’s allegation that Z&J was a “‘management company’
engaged in operating the games,” finding instead that Z&J was involved merely as a renter of the
building and equipment. He also noted that all of the workers at the bingo operation were either
volunteers or were employed directly by the organizations and found that the games were
conducted by Tway and Ford personally as members of the organizations’ bingo committees.
The fact that bingo proceeds were going to Z&J in the form of rent was found to be immaterial
because the expenses did not exceed the statutory limits and no one associated with Z&J was an
officer or director of USAB.       Accordingly, while the Lottery prevailed on its indirect
compensation claim against S&D, its claim that the organizations had contracted with another
party to conduct bingo sessions on its behalf was rejected by the hearing officer.            The
Commission adopted and affirmed the recommendation that S&D’s license be revoked based on
the indirect compensation claim.
       The factual details of the arrangement are complicated.          Tway testified that the
agreement, which is not written, is intended to comply strictly with the limitations in I.C. § 67-
7709(1), which provides as follows:

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               (a) All funds received in connection with a bingo game . . . shall be
       placed in a separate bank account. No funds may be disbursed from this account
       except the charitable or nonprofit organization may expend proceeds for prizes,
       advertising, utilities and the purchase of supplies and equipment in playing bingo,
       taxes and license fees related to bingo, the payment of compensation, and for the
       purposes set forth below for the remaining proceeds.
               ...
               (d) All gross revenues received from bingo games by a charitable or
       nonprofit organization must be disbursed in the following manner[:] . . . not more
       than sixty-five percent (65%) of the gross revenues shall be utilized for prizes in
       the charitable bingo game, not less than twenty percent (20%) of gross revenues
       shall be used for charitable purposes enumerated in this subsection and not more
       than fifteen percent (15%) of the gross revenues shall be used for administrative
       expenses associated with the charitable bingo game. . . . Two hundred fifty dollars
       ($250) or one-tenth of one percent (.1%) of annual gross revenues, as per the
       previous year’s annual bingo report whichever is greater may be paid as wages for
       the conduct of any one (1) bingo session. Such pay shall be on an hourly basis
       and shall be directly related to the preparation, conduct of and cleaning following
       a bingo session. Such wages shall be part of the fifteen percent (15%) gross
       revenues used for administrative expenses.
Tway and Ford carefully control the prizes offered so that the prize payout remains very close to
the 65% maximum. The expenses are also calibrated by agreement between the organizations
and Z&J so that they usually equal exactly 15% of the proceeds. In theory, the equipment rental
rates are set at some fixed rate, with the total discounted as necessary to bring the total expenses
within the 15% statutory limit. Tway never affixed an actual number to that rate, stating only
that the organizations pay “up to a reasonable amount, but not to exceed 15 percent.” He thought
commercial rental places would charge about two dollars per chair and seven dollars per table,
which, with 100 tables and 400 chairs in the facility, would suggest a “reasonable” amount of
$1500 per day to rent the equipment. But the actual payment is always determined by the excess
of the 15% portion of revenues over all other administrative expenses because, as Tway
explained, the bingo revenues are never high enough to raise the 15% level to anywhere near the
“reasonable amount.” In other words, after paying the actual costs of payroll and supplies and
other third party expenses associated with each bingo session, Z&J simply takes whatever is left
of the allowable 15% portion. The remaining 20% ostensibly goes to the organizations.
       In addition to the equipment rent, Z&J also receives rent on the building, but it is not
counted as an “administrative expense.” Instead, building rent is paid on a day-to-day basis out
of the organization’s 20% take for that day’s bingo session. This arrangement is designed to
conform to the provision in I.C. § 67-7709(1)(c) allowing net bingo proceeds to be used not just

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for charitable purposes but also for “purchasing, constructing, maintaining, operating or using
equipment or land, or a building or improvements thereto, owned, leased or rented by and for the
charitable or nonprofit organization and used for civic purposes or made available by the
charitable or nonprofit organization for use by the general public from time to time.”1 The
hearing officer found that a strict reading of I.C. § 67-7709(1)(a) affirmatively requires building
rent to be taken out of the 20% net proceeds rather than being counted as part of the 15%
administrative expenses, since the cost of facilities is not enumerated as a permitted expense in
that section. The rental rate on the building is determined in a manner similar to the equipment
rental. The theoretical rent is $650 per day but is limited by whatever the actual net proceeds
are, less a guaranteed payment of $1500 per month to each organization. In other words, after
paying out prizes and third party administrative expenses, the remaining 20% of bingo revenues
is divided up between the organizations and Z&J, with the organization receiving the first $1500
in revenues, and then Z&J receiving the remainder, up to a total of $650 per day. Theoretically
any excess over the $650 per day rent would remain in the hands of the organization, but Tway
testified that this had never happened. The Lottery points to evidence suggesting that even if the
potential rent were met in a given month, the excess would be applied to make up for the
shortfall during other months, essentially ensuring that the organizations would never receive
more than the guaranteed payment.
       The net result of the whole arrangement is that each organization receives guaranteed
payments totaling $18,000 per year, with nothing more, while Z&J realizes the entire net profit
from the bingo operation, less the guaranteed amount of $36,000 per year. The hearing officer
suggested as a very rough estimate that the combined annual gross revenues from bingo
operations of the two organizations might average around $750,000 which, even after paying out
prize distributions and actual third party expenses, places the “lions’ share” of the profits in
Z&J’s hands. There was no evidence that the organizations are being misled or defrauded. The
president of USAB testified that the organization was happy to sponsor the bingo games in order
to receive the guaranteed payment.

1
  To demonstrate compliance with the condition in section 67-7709(1)(c) requiring that the
building be available for public use from time to time, the organizations posted a sign behind the
cashier’s stand which reads, “THIS FACILITY IS AVAILABLE FOR PUBLIC USE FROM
TIME TO TIME AT NO CHARGE. PLEASE SEE US FOR DETAILS.” The hearing officer
found that this was sufficient to render it “available” for purposes of the statute.

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       This is an arrangement that can be characterized as indirect compensation to Tway and
Ford so far as Z&J is concerned. It is also an arrangement that runs afoul of the prohibition in
I.C. § 67-7711(3) on contracting with outsiders to conduct bingo. That section provides that an
organization “shall not contract with any person not employed by, or a volunteer for, the
organization for the purpose of conducting a bingo session.” The fact that Tway and Ford do not
receive a paycheck from the organizations does not mean that they are volunteers working on
behalf of the organization. Where a business transaction is alleged to be in violation of a statute,
it is the substance of the transaction, not the form that controls. Transp. Equip. Rentals, Inc. v.
Ivie, 96 Idaho 223, 224, 526 P.2d 828, 829 (1974) (quoting Wood v. Sadler, 93 Idaho 552, 555,
468 P.2d 42, 45 (1970)) (“We will not hesitate to pierce a device or form which is designed to
circumvent the usury laws in order to reach the economic substance of a transaction.”); O’Bryant
v. City of Idaho Falls, 78 Idaho 313, 325, 303 P.2d 672, 678 (1956). The organizations are
correct in that nothing in the statutes prevents Z&J from renting its building and equipment to the
organizations, even if individuals with an interest in Z&J then use the building to conduct bingo
as volunteers on behalf of the organizations. But in this case Z&J receives not rents, but bingo
profits. The substance of the arrangement is that Z&J pays what is essentially a royalty to S&D
and USAB in exchange for the use of their bingo permits. It appears the amount of the payment
to Z&J has almost nothing to do with the organizations’ usage of the equipment or the building
but is driven entirely by bingo revenues. This fact indicates that “rent” is a label designed to
obscure the fact that Z&J is conducting bingo on behalf of the organizations, and that it is in fact
the organizations who are “renting” their licenses to Z&J. Z&J’s interest in the bingo proceeds
resembles an equity stake, not a landlord’s claim as a creditor.
       The definition of “conduct” is “to direct the course of; manage or control.” American
Heritage Dictionary of the English Language (4th ed. 2000). To say that the organizations,
through their bingo committees, direct or manage the bingo operations makes no sense when it is
clear that Z&J, not the organizations, ultimately bears the burden of managing the expenses and
ensuring that the operation remains profitable. To the extent Tway and Ford exercised control
over the expenses, they were doing so as agents of Z&J, not as agents of the organizations. This
conclusion is consistent with the hearing officer’s finding that Z&J carried virtually all of the
business risk of the operation. Based on the undisputed findings that Z&J was receiving all of




                                                10
the upside and bearing all of the business risk, with the organizations receiving only a guaranteed
payment, the hearing officer’s finding that Z&J was not “conducting” bingo is clearly erroneous.
       This conclusion is bolstered by considering the bingo statutes as a whole. Section 67-
7707 allows bingo to be conducted only by charitable and nonprofit organizations that meet the
statutory requirements. Section 67-7701 declares that the bingo statutes are designed “to assure
that charitable groups and institutions realize the profits from these games [and] to prohibit
professionals from conducting bingo games or raffles for fees or a percentage of the profit.” In
the context of these provisions, it is clear that the prohibition on outsourcing bingo operations
was intended to prevent an otherwise eligible organization from using its license in such a way as
to enable unlicensed entities to circumvent the general prohibition on conducting bingo. See also
I.C. § 67-7712(2)(c) (allowing revocation where a licensee has “knowingly caused, aided or
abetted, or conspired with another to cause, any person to fail or refuse to comply with” the
bingo statutes or regulations). A rule that a for-profit corporation may conduct bingo for profit
on behalf of a licensed organization by designating its agents as “volunteers” of the licensed
organization would render meaningless the prohibition on contracting with outsiders.
       The hearing officer based his recommendation on the finding that Tway and Ford, as
officers or directors of S&D, were indirectly compensated out of bingo proceeds by virtue of
their ownership interest in Z&J. That finding may be upheld because the rent payments in this
case are not really rent payments at all. A problem with focusing on the concept of indirect
compensation is that it raises difficult issues regarding how far proceeds may be traced and the
difficulty of intruding upon truly arms length transactions. However the problem with the
arrangement in this case is that Z&J was being directly compensated for conducting bingo on
behalf of the organizations. The violation applies equally to both S&D and USAB. It constitutes
an alternate basis for upholding the revocation of USAB’s license.
                                         V.
                             CONSTITUTIONAL ARGUMENTS
       A.      Vagueness
       The perceived vagueness complained of by S&D arises partly from the fact that the
Commission relied on the theory of indirect compensation of officers and directors instead of the
more direct violation of contracting with another entity to conduct bingo. Despite any confusion
as to the proper legal theory, the facts in this case support a finding that the bingo statutes were
violated. Any uncertainty as to whether the arrangement would be upheld under the statutes

                                                11
resulted not from the statute itself, but from the efforts to operate at the very edge of legality.
The lack of success does not indicate that the statute was vague.

       B.      Unity in Subject and Title
       S&D argues that I.C. § 67-7711 is invalid under Art. III, § 16 of the Idaho Constitution,
which requires that “[e]very act shall embrace but one subject and matters properly connected
therewith, which subject shall be expressed in the title.” According to S&D, the derivative
compensation provision in 67-7711(3) upon which the revocation was based is completely
unrelated to “licensing procedure” which is what the section purports to regulate.
       This argument is without merit. Contrary to S&D’s assertion, it is not at all unexpected
that a statute governing “licensing procedure” might specify some of the substantive conditions
that must be satisfied in order for a license to issue. The derivative compensation and anti-
outsourcing provisions, as conditions of licensure, are sufficiently related to licensing procedure
to survive a constitutional challenge.

                                              VI.
                                          CONCLUSION
       The decision of the Commission is affirmed on the bases set forth in this opinion. The
Commission is awarded costs.


       Justices TROUT, EISMANN, BURDICK and JONES CONCUR.




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