Did Maryland's Lotto game revenue go only to counties, or also to the cities and towns within those counties?

Plain-English summary

The Comptroller of the Treasury asked whether revenue from Maryland's newly created "Lotto" game had to be distributed only to the state's 23 counties and Baltimore City, or also to the state's incorporated municipalities. The governing statute directed the Comptroller to distribute Lotto proceeds to the "political subdivisions" of the state but never defined that term. The opinion found the term genuinely ambiguous, noting that Maryland courts and the General Assembly itself had used "political subdivisions" inconsistently, sometimes including municipalities and sometimes referring to counties alone, depending on context. Turning to the statute's legislative history, the opinion found that every fiscal note, staff memorandum, and supporting chart prepared for the bill calculated projected Lotto revenue only at the county level, with no breakdown for any of the state's roughly 166 municipalities and special tax districts. That conclusion was reinforced by a contemporaneous bill-review letter from the Attorney General's office describing the distribution as going to "the various counties and Baltimore City," and by the State Lottery Agency's own published regulations, which described Lotto revenue as returning to "the 23 Maryland Counties and Baltimore City." Based on this legislative history and administrative interpretation, the opinion concluded that Lotto revenue was intended for counties only.

Currency note

This opinion was issued in 1984. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Did Maryland's Lotto game revenue go only to counties, or also to the cities and towns within those counties?
According to this 1984 opinion, only to the 23 counties and Baltimore City. The Attorney General concluded that the term "political subdivisions" in the Lotto distribution statute referred only to counties, not to the state's incorporated municipalities or special tax districts.

Why was the term "political subdivisions" ambiguous in the first place?
The opinion explained that Maryland's Court of Appeals had used the term inconsistently across different legal contexts, sometimes treating municipalities as political subdivisions and sometimes not, and that the General Assembly itself had defined or used the term differently in different statutes, so the court could not resolve the question from the statutory language alone.

What evidence convinced the Attorney General that only counties were meant?
The opinion pointed to the bill's fiscal notes and supporting legislative staff documents, which calculated projected Lotto revenue only at the county level with no municipal breakdown, a contemporaneous bill-review letter from the Attorney General's office describing distribution to "the various counties and Baltimore City," and the State Lottery Agency's own published regulations describing revenue as returning to "the 23 Maryland Counties and Baltimore City."

Background and statutory framework

Article 88D, §8A of the Maryland Code, enacted by Chapter 394, Laws of Maryland 1983 (House Bill 812), directed the Comptroller to distribute Lotto proceeds quarterly to the state's "political subdivisions" based on each subdivision's share of statewide Lotto receipts, but did not define that term. The opinion applied the standard rule that ambiguous statutory language requires resort to legislative history, drawing on the bill's fiscal notes, Ways and Means Committee files, a contemporaneous Attorney General bill-review letter, and the Lottery Agency's own regulatory filings under Article 88D, §8A(a), all of which referred to distribution among the 24 "subdivisions" (the 23 counties plus Baltimore City) without any indication that Maryland's separately incorporated municipalities were intended to share in the revenue.

Citations

Statutes:

• Article 88D, §8A(a) of the Maryland Code (authorizes the weekly Lotto game)
• Article 88D, §8A(c)(1) of the Maryland Code (directs quarterly distribution of Lotto proceeds to political subdivisions)
• Article 88D, §8A(c)(2) of the Maryland Code (distribution formula based on each subdivision's share of receipts)
• Article 88D, §8A(d) of the Maryland Code (indemnification provision for the State's general fund)
• Article 88D, §8A(e) of the Maryland Code (sunset provision)
• Chapter 394, Laws of Maryland 1983 (enactment of the Lotto game statute, House Bill 812)
• Article 1, §14 of the Maryland Code ("county" includes Baltimore City)
• Article III, §4 of the Maryland Constitution (legislative districting reference to political subdivisions)
• Article III, §36 of the Maryland Constitution (requires lotteries to operate for the benefit of the State)
• §12-201(h) of the Real Property Article (broad definition including school boards)
• §3-904(i) of the Natural Resources Article (broad definition including sanitary districts)
• §1-501(c) of the Natural Resources Article (broad definition including conservation districts)
• Article 16A, §3(c) of the Maryland Code (Civil Defense and Disaster Preparedness Act, includes municipalities)
• Article 41, §538(e) of the Maryland Code (Neighborhood Housing Services Fund, includes municipalities)
• §5-901(h) of the Natural Resources Article (Program Open Space, counties only)
• Article 33, §16-2(b)(4) of the Maryland Code (tax-free bonds for voting machines, counties only)
• §7-104(a) of the Courts Article (allocation of appeal costs, counties only)
• §3-919(a) of the Natural Resources Article (excludes municipalities in one provision of the same subtitle)
• Article 15A, §§35-39 of the Maryland Code (State Aid for Police Protection Fund)
• Article 15A, §37(a)(1) and (2) of the Maryland Code (separately defines "subdivision" and "municipality")
• Article 15A, §37(c) of the Maryland Code (formula for dividing police aid between counties and municipalities)
• §7-302(b) of the Courts Article ("political subdivision or municipality" used separately)
• Article 40, §63 of the Maryland Code (fiscal note requirement for bills)
• Article 40, §64 of the Maryland Code (fiscal note content requirements)

Cases:

• Bledsoe v. Bledsoe, 294 Md. 183, 188-89 (1982) (statutory construction principles; resort to legislative history when language is ambiguous)
• Bradshaw v. Prince George's County, 284 Md. 294, 300-301 (1979) (words susceptible of more than one construction require the legislature's intended meaning)
• James v. Prince George's County, 288 Md. 315 (1980) (modified other aspects of Bradshaw)
• In the Matter of Legislative Districting of the State, 271 Md. 320, 324 (1974) (municipalities are political subdivisions for legislative districting purposes)
• Maryland-National Capital Park and Planning Comm'n v. Montgomery County, 267 Md. 82, 93 (1972) (cities are generally political subdivisions of a state)
• County Council v. Investors Funding, 270 Md. 403, 419 (1973) ("political subdivisions" used to mean counties only in a different context)
• City of Baltimore v. Sitnick, 254 Md. 303, 311 (1969) ("political subdivisions" used to mean counties only)
• Welsh v. Kuntz, 196 Md. 86, 93 (1950) (courts resort to legislative history when a statute's meaning is doubtful)
• North Charles General Hospital v. Employment Security Admin., 286 Md. 115, 118 (1979) (following Welsh v. Kuntz on legislative history)
• Valentine v. Board of License Commissioners, 291 Md. 523, 533-34 (1981) (Attorney General opinions are entitled to some weight in statutory construction)
• Read Drug and Chemical Co. v. Claypoole, 165 Md. 250, 257-58 (1933) (same, on the weight given to AG opinions)
• Comptroller v. Rockhill, Inc., 205 Md. 226, 233 (1954) (contemporaneous administrative construction of a statute should not be disregarded absent strong reasons)
• Smith v. Higinbothom, 187 Md. 115, 132 (1946) (following the same contemporaneous-construction rule)

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1984/Volume69_1984.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

LOTTERY

Local Government-"Political Subdivisions"-Counties/Municipalities-Lotto Revenues Allocated To "Political Subdivisions" Are To Be Distributed Only To Counties And Baltimore City, Not To Municipalities.

January 17, 1984

The Honorable Louis L. Goldstein
Comptroller of the Treasury

You have requested our opinion concerning the proper distribution of the revenue generated by the "Lotto" game recently initiated by the State Lottery Agency. Specifically, you have asked whether the revenue is to be distributed only to Maryland's 23 counties and Baltimore City;1 or, conversely, whether Lotto revenue is to be distributed among both the counties and the municipal corporations ("municipalities") in this State.

For the reasons given below, we conclude that Lotto revenues should be distributed to the counties only.

I
The Lotto Statute

Under Article 88D, §8A(a) of the Maryland Code, the Lottery Commission and Director "shall provide for a 'lotto' game to be conducted on a weekly basis", in accordance with regulations adopted by the Commission. This provision was enacted as Chapter 394, Laws of Maryland 1983 (House Bill 812).

Article 88D, §8A(c)(1) addresses the disposition of the revenue derived from Lotto:

"Notwithstanding any other provision of this article, all receipts from 'lotto' games shall be placed in a special separate account of the Comptroller. After payment of prizes and other expenses of operating the 'lotto' games, the Comptroller shall distribute the remaining proceeds of the game to the political subdivisions of the State on a quarterly basis."

The term "political subdivision" is used again in §8A(c)(2):

"The amount to be distributed every 3 months to each political subdivision shall be the sum of the amounts determined as follows:

An amount for each subdivision which shall be a share of 100 percent of the revenues to be distributed bearing the same proportion to 100 percent of the revenues as the total amount of receipts from 'lotto' games in that subdivision during that 3-month period bears to the total of statewide receipts from 'lotto' games in that 3-month period."2

The word "subdivisions" also appears twice in §8A(d), which is, in effect, an indemnification provision for lottery revenues allotted to the State's general fund.3 Additionally, the term "political subdivisions" is used in §8A(e), a sunset provision terminating this statutory program one year after the game commences.4 Finally, uncodified Section 2 of Chapter 394 authorizes the "political subdivisions" to "accure as revenues for the 1984 fiscal year any distributions authorized pursuant to this Act".

The statute nowhere defines the term "political subdivisions".

II
Uncertain Meaning of "Political Subdivisions"

We begin with familiar principles of statutory interpretation:

"[I]t is the duty of the courts to declare the law as the General Assembly has made it, that is, to ascertain and give effect to the intention of the legislature. This we have said on many occasions is the cardinal rule of statutory construction. ... In ascertaining the legislative intent we look to the language used, and when such language is clear and unambiguous, it must be held to mean what it expresses. However, where the language is ambiguous and of doubtful import, the duty of the courts is to ascertain and give effect to the true legislative intent. In short, the judicial function of statutory construction lies wholly within the domain of ambiguity and uncertainty. When exercising this function the courts may resort to extrinsic aids such as examining the history of the passage of the law, the reports of committees and commissions, the introduction of amendments and testimony given before legislative committees." Bledsoe v. Bledsoe, 294 Md. 183, 188-89 (1982).

See also, e.g., Bradshaw v. Prince George's County, 284 Md. 294, 300-301 (1979) ("If the words used are clear and unambiguous, our search for the legislative intent ends. If, however, the words are susceptible of more than one construction, they should be given the meaning intended by the legislature".).5

Thus, we first consider whether the term "political subdivisions" is "clear and unambiguous", or whether the term is "susceptible of more than one construction".

In some contexts, the Court of Appeals has construed the term "political subdivisions" to include municipalities. For example, the Court has held that "incorporated municipalities are political subdivisions within the contemplation of §4 of Article III of the Constitution of Maryland", which concerns the size and boundaries of legislative districts. In the Matter of Legislative Districting of the State, 271 Md. 320, 324 (1974).6 See also Maryland-National Capital Park and Planning Comm'n v. Montgomery County, 267 Md. 82, 93 (1972) ("the general rule appears to be that cities are political subdivisions of a state"). Cf. 55 Opinions of the Attorney General 391 (1970). Yet, in a different context, the Court of Appeals has also used the term "political subdivisions" to refer only to the counties of this State. See County Council v. Investors Funding, 270 Md. 403, 419 (1973); City of Baltimore v. Sitnick, 254 Md. 303, 311 (1969). At no time of which we are aware has the Court of Appeals been called on to construe the term "political subdivisions" in the context of State revenue distribution.

More tellingly, the General Assembly itself has not ascribed any consistent meaning to "political subdivisions". At times the term is used or defined so broadly as to encompass not only municipalities but also school boards [§12-201(h) of the Real Property Article], sanitary districts [§3-904(i) of the Natural Resources ("NR") Article], and conservation districts [NR §1-501(c)].

In some statutory contexts, the terms "political subdivisions" and "subdivisions" clearly refer to both counties and municipalities. See e.g., Article 16A, §3(c) (Civil Defense and Disaster Preparedness Act); Article 41, §538(e) (Neighborhood Housing Services Fund). In other statutory contexts, the terms clearly refer to counties only. See, e.g., NR §5-901(h) (Program Open Space); Article 33, §16-2(b)(4) (tax-free bonds for purchase of voting machines); §7-104(a) of the Courts Article (allocation of costs on appeal). Indeed, in a single subtitle of the Natural Resources Article, the term "subdivision" is first defined to include both counties and municipalities [NR §3-904(i)] but is then used in one provision to mean jurisdictions other than municipalities [NR §3-919(a)].

Finally, we note that in another program for the distribution of State funds, the State Aid for Police Protection Fund, Article 15A, §§35 through 39, the terms "subdivision" and "municipality" are used and defined separately. Article 15A, §37(a)(1) and (2). If the General Assembly routinely used "subdivision" to include municipalities, such separate definition would not have been necessary.7 Moreover, the separate usage in the statute governing distribution of State aid for local police suggests that the General Assembly is especially cognizant of the need for careful specificity when it intends to distribute State revenues to municipalities.8

In sum, there is no fixed or unambiguous meaning that must be ascribed to the term "political subdivisions". On the contrary, as evidenced by the varying uses of the term by both the Court of Appeals and the General Assembly, it is quite "susceptible of more than one meaning". Bradshaw v. Prince George's County, 284 Md. at 301. Therefore, we must look to the legislative history and other pertinent material to determine the meaning intended by the General Assembly.

III
Legislative Intent

When we turn to the background, objectives, and purposes of Chapter 394 (House Bill 812), we are convinced that the General Assembly's intent was to provide revenue from Lotto to the counties alone, not to any incorporated towns or municipalities.

A. Legislative History

We find clear support for this conclusion in the legislative history itself. "Where there is doubt as to the meaning of a statute, the court will resort to the history of the enactment in search of the legislative intention." Welsh v. Kuntz, 196 Md. 86, 93 (1950). Accord, North Charles General Hospital v. Employment Security Admin., 286 Md. 115, 118 (1979). We have identified several elements in the statute's history that reflect this legislative intent:

1. The fiscal notes prepared for House Bill 812 contain a county-by-county breakdown for the distribution of all anticipated revenues from Lotto. The fiscal notes describe the recipients of these revenues as "the subdivisions". There is no suggestion whatever that any of the revenues were to be distributed to municipalities.

These fiscal notes provide an especially useful insight into the legislative intent because, by law "[a] bill or joint resolution shall not be voted upon by a standing committee unless it is accompanied by a fiscal note or waiver of a fiscal note". Article 40, §63. Such notes specifically address the revenue and expenditure impact of proposed legislation. Article 40, §64.

2. We have carefully reviewed the legislative committee files regarding House Bill 812. The file of the Ways and Means Committee contains a memorandum from the Department of Fiscal Services to a member of the Committee's staff, reporting an estimate "that a Lotto game would produce a net revenue of $40 million". Memorandum from Jay Ladin to T. Eloise Foster (March 10, 1983). Attached to that memorandum is a chart setting forth an "estimated distribution to the subdivisions on the basis of FY 82 Sales". The attached chart lists only the 24 counties as the "subdivisions" to which an estimated distribution of the $40 million revenue was projected. The projection was based upon the actual percentage of 1982 lottery sales for each of those counties.

We find it significant that there is no estimated breakdown for any municipalities. Nor does this memorandum or its attachment contain a breakdown of the 1982 lottery sales at the municipal level-figures that would have been necessary in order to project an estimate of Lotto revenue to such municipalities.9 The conclusion we draw is that the information presented to the General Assembly by the Department of Fiscal Services, and on which the General Assembly ultimately acted, assumed that only the counties would receive Lotto revenue.

3. The Ways and Means Committee file contains two other particularly relevant documents. One is a county-by-county breakdown of daily lottery agent terminals. Here again, the breakdown extends to the county level only; it does not proceed further to the level of municipalities. The other is a document, prepared by the Department of Fiscal Services, captioned "Estimated Lotto Game Distribution and Property Rate Equivalent (cents)". Based on Department of Assessments and Taxation figures reflecting each county's estimated assessable base, the chart reflects, for each of the 24 counties, the equivalent amount of property tax revenue to be realized from projected Lotto game distributions. Here again, the General Assembly's focus was limited to the effect on the counties alone, not on the municipalities, as would be expected if they were intended to share in the revenue as well.

4. During the course of the legislative deliberations on House Bill 812, questions arose regarding its constitutionality.10 A letter of advice on the subject listed the authorities supporting what the author termed "our conclusion that distributions of Lottery funds to the counties" is constitutional. Letter from Robert A. Zarnoch, Assistant Attorney General, to Gerard F. Devlin, State Delegate (March 29, 1983) (emphasis added). We do not, of course, mean to suggest that this letter addressed the very question that you have posed. Nevertheless, we find this to be another indication that the 1983 General Assembly, and its counsel, assumed that the legislation in question provided for distribution of Lotto revenue only "to the counties".

B. Contemporaneous Construction by the Attorney General

After the enactment of House Bill 812, the legislation was reviewed by this Office for legal sufficiency and constitutionality. In our bill review letter affirming the constitutionality of the bill, we wrote as follows:

"We have considered whether the mandated distribution to the political subdivisions, i.e., the various counties and Baltimore City, is in violation of Article III, Section 36 of the Maryland Constitution". Bill Review Letter (H.B. 812) from Stephen H. Sachs, Attorney General, to Harry Hughes, Governor (May 9, 1983) (emphasis added).

While the Court of Appeals has made it clear that an Opinion of the Attorney General is not binding on the courts, it has recognized that the Attorney General's view is entitled to some weight in construing statutes. See Valentine v. Board of License Commissioners, 291 Md. 523, 533-34 (1981); Read Drug and Chemical Co. v. Claypoole, 165 Md. 250, 257-58 (1933). We therefore believe that the bill review letter of May 9, 1983, as a contemporaneous expression of the Attorney General's view of the legislative intent, is relevant in ascertaining that intent.

C. Contemporaneous Construction by Lottery Agency

The Department of Fiscal Services and the Attorney General were not alone in their beliefs that House Bill 812 was intended to provide for distribution of Lotto revenues only to the counties. Without question, this was also the interpretation of the agency charged with conducting the game, the State Lottery Agency. In publishing the regulations for operation of the game, as mandated by Article 88D, §8A(a), the Lottery Agency gave the following estimate of the economic impact of its Lotto regulations:

"In the Lotto game's first year, all net revenues will be returned to the 23 Maryland Counties and Baltimore City in an equal proportion to the sales from those counties and Baltimore City." 10:18 Md. R. 1629 (September 2, 1983).

In the same estimate of economic impact, the Lottery Agency identified the economic impact of the Lotto game "[o]n other State or local agencies" besides itself: in doing so, it refers to only the "State Subdivisions (24)", an unmistakable numerical reference to the 24 counties. Similarly, where required to list the direct and indirect effects of the Lotto game "on [the] public", the Lottery Agency again refers only to the effect on the "State Subdivisions (24)".

The Court of Appeals has "adopted the rule that the construction placed upon a statute by administrative officials soon after its enactment should not be disregarded except for the strongest and most cogent reasons". Comptroller v. Rockhill, Inc., 205 Md. 226, 233 (1954). Accord Smith v. Higinbothom, 187 Md. 115, 132 (1946). The Lottery Agency's construction was published less than four months after House Bill 812 was signed into law by the Governor and nearly two months before the first sale of Lotto game tickets.

D. Conclusion

In sum, we are convinced that the General Assembly, in enacting House Bill 812, intended to provide for the distribution of Lotto revenues to the 24 Maryland counties, and not to the additional 166 incorporated towns, municipalities, and special tax districts. We believe this conclusion to be amply supported by the legal authorities reviewed above. Additionally, we believe it to be supported by what we and, we believe, the general public in fact understood House Bill 812 to be accomplishing: an additional revenue source to the counties.

IV
Conclusion

In summary, it is our opinion that, under the distribution formula contained in Article 88D, §8A of the Maryland Code, Lotto revenue may be distributed only to Maryland's 23 counties and Baltimore City, not to any of the municipal corporations in the State.

Stephen H. Sachs, Attorney General

Gerald Langbaum
Assistant Attorney General

Avery Aisenstark
Chief Counsel,
Opinions and Advice

1 Pursuant to Article 1, §14 of the Maryland Code, the word "county" includes Baltimore City. Throughout this Opinion, references to "counties" include Baltimore City.

2 We do not believe that any distinction was intended between the terms "political subdivision" and "subdivision".

3 Under §8A(d), if revenues to the general fund from lottery games are below a specified figure, the gap will be filled from Lotto receipts. Obviously, the General Assembly was protecting the State treasury against the possibility that the Lotto game would reduce the revenue from other lottery games, the proceeds from which are placed in the State's general fund.

4 We have been advised by the Lottery Agency that Lotto game ticket sales began on October 31, 1983.

5 Aspects of Bradshaw unrelated to its discussion of statutory construction were modified in James v. Prince George's County, 288 Md. 315 (1980).

6 Article III, §4 of the Constitution reads as follows: "Each legislative district shall consist of adjoining territory, be compact in form, and of substantially equal population. Due regard shall be given to natural boundaries and the boundaries of political subdivisions."

7 See also §7-302(b) of the Courts Article (referring to a "political subdivision or municipality").

8 It is also significant that the General Assembly provided a clear formula for determining how this police protection aid is to be divided among each county and the municipalities in that county. Article 15A, §37(c). The absence of any such formula in Article 88D, §8A, and, indeed, the possibility that the term "political subdivision", if construed broadly, might extend to yet other entities in a county, such as special tax districts, creates further ambiguity.

9 The Lottery Agency has advised us that, while its records identify all lottery vendors as to the county in which they are located, their records do not further identify the vendors as to whether they are located in a municipality within a county. While it would be possible to determine such information, the Lottery Agency was not asked to do so during the legislative deliberations of House Bill 812.

The Comptroller's Office has advised us that there are 166 municipalities and special tax districts in Maryland to which it distributes local income tax revenue. Some of these are quite small; three, for example, generate less than 50 annual State income tax returns. None of these 166 were referred to in the committee files.

10 The constitutional issue was whether distribution of Lotto revenues to political subdivisions violated the provisions of Article III, §36 of the Maryland Constitution, requiring that lotteries in Maryland be operated for the "benefit of the State".