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Wisconsin Advisory Opinions January 01, 1996: Op. Att'y Gen. 02 (1996)

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Collection: Wisconsin Attorney General Opinions
Date: Jan. 1, 1996

Advisory Opinion Text


May 21, 1996 OAG 2-96

The Honorable Michael G. Ellis
Senate Majority Leader
119 Martin Luther King Jr. Blvd.
Room 101
Madison, WI 53702


The Honorable Fred A. Risser
Senate Assistant Minority Leader
119 Martin Luther King Jr. Blvd.
Room 422
Madison, WI 53702

Dear Senators Ellis and Risser:

The Senate Committee on Organization has requested a formal opinion regarding the constitutionality of the provisions in 1995 Assembly Bill 633 and 1995 Assembly Bill 774, both of which proposed to legalize video gambling in taverns throughout the State of Wisconsin. While the legislation utilizes the term "amusement devices" for these machines, the description of the operation of these machines reveals that they are, in fact, gambling machines as currently defined in section 945.01(3), Stats. My opinion is that such an expansion of gambling would violate article IV, section 24 of the Wisconsin Constitution.

THE LEGISLATIVE PROPOSALS

The legislation in question would legalize video gambling machines. 1995 Assembly Bill 774 (AB 774) provides for licensing and regulation of "amusement devices" by the Department of Revenue, a tax on the devices and exemptions from the criminal gambling provisions of chapter 945 for the devices. Section 24 of AB 774 describes the devices to be regulated:

"Amusement device" means any video amusement device if it awards or is capable of awarding the player with one or more redeemable free replays or credits for achieving certain scores or results and does not change the ratio of plays to free replays or credits so awarded. An amusement device set up for the purpose of play shall have a percentage of credits awarded to credits played of not less than 83%.

THE DEVICES IN QUESTION

AB 774 is intended to legalize games of chance. The "licensed and regulated amusement devices" which the bill purports to regulate would include various forms of video poker and video slot machines. Such machines are devices designed for use in gambling, offering the elements of "prize, consideration and chance."

Chance is present in any contest where it is "the dominant factor controlling the award." State v. Dahlky, 111 Wis. 2d 287, 296, 330 N.W.2d 611 (Ct. App. 1983). In discussing this "dominant factor" test, distinguishing chance from skill, the court noted "[t]he element of chance is present because the financial gain of any participant is the result of factors outside his control." State v. Dahlky, 111 Wis. 2d at 297, n.4. The dominant factor test was used in the gambling machine context prior to the current statutory language which was specifically being discussed in Dahlky. Seey Milwaukee v. Burnsy, 225 Wis. 296, 302, 274 N.W. 273 (1937), quoting Shapiro v. Mossy, 245 App. Div. 835, 281 N.Y. Supp. 72 (1935).

The court in U.S. v. 294 Various Gambling Devicesy, 718 F. Supp. 1236 (W.D. Pa. 1989), described the element of chance in the operation of video poker games:

[U]nlike most amusement games, a video poker player cannot extend the time of play regardless of the player's level of skill. For example, on pinball machines or Pacman, a player's manual dexterity, eye-hand coordination and experience may produce a longer game and greater enjoyment for the player. In video poker, each game has a finite time of play and no amount of skill or experience can extend play beyond that very short limit.

294 Various Gambling Devicesy, 718 F. Supp. at 1243.

Redeemable free replays are the "prize" encompassed by the term "gambling." Redeemable free replays have value simply because they are redeemable. Burnsy, 225 Wis. 296, was a case involving "redeemable" free replays, prior to any statutory mention of that term. The machine in question awarded tokens, or "chips," which could be utilized for free plays, although there was also an allegation that they could be redeemed for drinks. The question was whether the tokens had "value." Burnsy, 225 Wis. at 300-01. Burns argued that the chips only had value if they were actually redeemed. The court found that whether the chips were actually redeemed was "wholly immaterial." Burnsy, 225 Wis. at 303. The chips had value because they were redeemable, it did not matter whether they actually were redeemed.

In U.S. v. 294 Various Gambling Devicesy, the court discussed the nature of redeemable free replays in the video poker games before it:

Unlike most amusement devices, video poker offers the potential to win incredibly large numbers of free games. Unlike video amusement games such as Pacman, which offer extended play, or pinball games which offer limited numbers of potential free games, all earned through skill in the play of the machine, video poker machines offer up to 400 free games for a single winning hand based solely on luck of the draw. Video poker machines also accumulate credits from game to game, permitting a player to accumulate a maximum of between 899 and 9,999 credits, depending on the setting of a particular machine. Such numbers are more than can realistically be played out (e.g., 900 free games at 10 seconds per game would translate to 2 1/2 non-stop hours of play), and are indicative of some value other than the entitlement to a free game.

294 Various Gambling Devicesy, 718 F. Supp. at 1243.

Machines such as those described in AB 774 are "devices designed for use in gambling." Machines offering characteristics such as redeemable free replays (knock-off switches) and meters to record the number of free replays that are redeemed would be in violation of the Gambling Devices Act of 1962, 15 U.S.C. 1171-78 (Johnson Act). This act specifically applies to machines which are "designed and manufactured primarily for use in gambling." 15 U.S.C.A. 1171(a)(2) (1982). Numerous federal cases have found video amusement devices of the type described in AB 774 to be in violation of the Johnson Act. Seey, e.g.y, United States v. 5 Gambling Devicesy, 346 F. Supp. 999 (W.D. La. 1972); U.S. v. 294 Various Gambling Devicesy, 718 F. Supp. 1236 (W.D. Pa. 1989); U.S. v. 137 Draw Poker-type machines & 6 Slot Mach.y, 606 F. Supp. 747 (N.D. Ohio, 1984).

AB 774 itself recognizes that the play of these "amusement devices" would be "gambling" as that term is currently used in Wisconsin law. In order to avoid criminal liability for this new industry, the drafters specifically found it necessary to draft language excepting the operation of these machines from four of the six gambling-specific terms defined in section 945.01. Specifically, the legislation would amend definitional sections to provide that: "[p]laying an amusement device licensed under ch. 564" does not constitute a bet (creating sec. 945.01(1)(dm)); "[a]n amusement device licensed under ch. 564 or an amusement device possessed by a person who is registered under s. 564.03 (2) or (4)" is not a gambling machine (creating sec. 945.03(3)(b)1m.); "'[g]ambling place' does not include a place... where an amusement device licensed under ch. 564 is played or stored" (creating sec. 945.01(4)(am)); and the play of such machines is not a "lottery" (creating sec. 945.01(5)(am)). In addition, the legislation attempts to limit the current general definition of the term "gambling machine" to apply only to traditional "slot machines" (amending sec. 945.01(3)(a)).

CONSTITUTIONAL PROHIBITIONS

Since the creation of the State of Wisconsin in 1849, our constitution has contained a prohibition against lotteries. The constitutional provision never defined the term "lottery." However, case law and other tools of constitutional interpretation make clear that this term was to be broadly interpreted, meaning all forms of gambling.

In April of 1993, article IV, section 24(1) of the Wisconsin Constitution was amended to state that "[e]xcept as provided in this section, the legislature may not authorize gambling in any form." The essence of this 1993 change was to replace the term "lottery" with the term "gambling" in subsection (1) of section 24. The actual question on the ballot at that time was "[s]hall article IV of the constitution be revised to clarify that all forms of gambling are prohibitedy except bingo, raffles, pari-mutuel on-track betting and the current state-run lottery and to assure that the state will not conduct prohibited forms of gambling as part of the state-run lottery?" (emphasis added). 1993 Enrolled Joint Resolution 3.y

As with the original constitutional provision prohibiting lotteries, there was no definition for the term "gambling" as used. Since the term itself is not defined, we resort to other principles of law in interpreting this constitutional provision. In construing the constitution, courts will rely on the same rules that govern statutory construction. yThe words should be construed to give effect to the intent of the framers. State v. Benoy, 116 Wis. 2d 122, 138, 341 N.W.2d 668 (1984). The courts in interpreting constitutional provisions will examine:

"(1) The plain meaning of the words in the context used;

"(2) The historical analysis of the constitutional debates....
"(3) The earliest interpretation of this section by the legislature as manifested in the first law passed following the adoption of the constitution...."

State v. Benoy, 116 Wis. 2d at 136-37; Jacobs v. Majory, 139 Wis. 2d 492, 502, 407 N.W.2d 832 (1987).

The change in the term "lottery" resulted from the need to codify a distinction between gambling, which was to be generally prohibited, and the state lottery, which was to be only a limited exception to the prohibition. On February 3, 1993, prior to final passage of 1993 Senate Joint Resolution 2, which formed the basis of the constitutional question at the referendum election, I wrote a letter to Representative Marlin Schneider regarding the intent of this distinction: "I believe that the term 'gambling' is more readily understandable to the voter than the term 'lottery,' with the broad definition provided it by the Supreme Court and the Legislature. It is important that the Legislature make clear in its consideration of this amendment, that it intends the term 'gambling' to be as broadly prohibitory as the term 'lottery,' as it has been interpreted." The Legislature made that clear by their actions. The Legislative Reference Bureau analysis accompanying 1993 Senate Joint Resolution 2, which resulted in placement of the proposed constitutional amendment on the April 1993 ballot, stated "[s]ubstituting 'gambling' for 'lottery' in subsections (1) and (2) of section 24 of article IV reinstates the legislature's and the general public's understanding of the status of gambling in Wisconsin: except as specifically authorized by statutes implementing section 24 of article IV of the constitution, gambling is prohibited."

Further, illegal gambling in the State of Wisconsin has traditionally been prosecuted as a violation of our state's lottery laws. While the term "gambling" is used in the title of the chapter, and in the titles of sections 945.02, 945.03 and 945.04, the specific acts prohibited in those sections concern "lotteries," "gambling machines" and the placement or acceptance of "bets." The organization of chapter 945 in this manner, and the use of the term "gambling" as a generic term describing the activities prohibited by that chapter originated with the drafting of our criminal code in 1953-55 and continues to the present time without change. Clearly, the Legislature understands "gambling" to be the broadest term used in discussing these prohibited activities.

Finally, the overall context of the 1993 constitutional amendment supports a conclusion that the video gambling devices described in AB 774 are prohibited. The question before the voters was whether the constitution should make clear that "all forms of gambling are prohibited... and to assure that the state will not conduct prohibited forms of gamblingy as part of the state-run lottery." 1993 Enrolled Joint Resolution 3 (emphasis added). The new constitutional language specifically describes a number of games which the state lottery is prohibited from offering, including "any game or device that is commonly known as a video game of chance or a video gaming machine or that is commonly considered to be a video gambling machine." Wis. Const. art. IV, 24(6)(c)9. It was understood, at the time of the constitutional amendment, that games such as those described in AB 774 were "prohibited forms of gambling."

In light of the plain meaning of the term "gambling," the broad use of the term "gambling" during the ongoing debate regarding the term "lottery" which preceded the constitutional amendment, and the nature of the term "gambling" as understood by the Legislature and used in the overall scheme of the 1993 constitutional amendment and chapter 945, it is clear that the term "gambling" as used in article IV, section 24(1) of the Wisconsin Constitution encompasses participation in all forms of gaming where the elements of prize, consideration and chance are present. The 1993 amendment clarified that all forms of gambling should continue to be prohibited by the constitution, unless a specific exception was provided therein.

CONCLUSION

Article IV, section 24 of the Wisconsin Constitution provides that "the legislature may not authorize gambling in any form." The term "gambling" has the same meaning as the broadest interpretations of the term "lottery" which preceded it, applying to all enterprises which encompass the three elements of prize, consideration and chance. The operation of the devices described in 1995 Assembly Bill 633 and 1995 Assembly Bill 774 would entail each of those elements. It is my opinion that enactment of 1995 Assembly Bill 633 or 1995 Assembly Bill 774 by the Legislature would be a violation of the Wisconsin Constitution.

Sincerely,

James E. Doyle
Attorney General

JED:ARK:vmz

CAPTION:

Enactment of 1995 Assembly Bill 633 or 1995 Assembly Bill 774, which would purport to license and regulate certain "amusement devices," would be the authorization of "gambling." Such an act by the Legislature would be a violation of article IV, section 24(1) of the Wisconsin Constitution.