DAN MORALES

Al-r”RNEY CENERAL 

# QBffice

of tip Bttqrnep @eneral &ate of IDexae January 23,199s The Honorable David Sibley Chair, Senate Committee on Economic Development Texas State Senate P.O. Box 12068 Austin, Texas 787 11 Opinion No. DM-466 Re: Constitutionality of section 47.01(4)(B), Penal Code, which excepts certain types of electronic contrivances from the detinition of “gambling device,” and related questions (RQ-1060) Dear Senator Sibley: You have requested our opinion regarding the constimtionality of the legislature’s 1995 amendment to the definition of “gambling device*’ to exclude from its ambit certain kinds of machines that, for consideration, award prizes to a player on the basis of chance. Section 47.06(a) of the Penal Code provides: A person commits an offense if, with the intent to further gambling, he knowingly owns, manufacture, transfers, or possesses any gambling device that he knows is designed for gambling purposes or any equipment that he knows is designed as a subassembly or essential part of a gambling device. In 1995, the legislature amended the Penal Code’s definition of “‘gamblingdevice” to read:

“Gambling device” mesns any electronic, electromechanical, or mechanical contrivance not excluded under Psragraph (B) that for a consideration affords the player au opportunity to obtain snything of value, the award ofwhich is de&mined solely or partially by chance, even though acmmpanied by some skill, whether or not the prize is automaticahy paid by the contrivance. The term: (A) includes, but isnot limited to, gambling device versions ofbingo, keno, blackjack, lottery, roulette, video poker, or similar electronic, electromechsnical, or mechanical games, or facsimiles thereof, that operate by chauce or partially so, that as a result of the play or operation of the game award credits or free gamea, and that record the number of t&e games or credits so awarded and the cancellation or removal of the f&e games or credits, and (B) doea not inchide any electronic, electromechanical, or mechsnicaJ contrivance designed, made, and adapted solely forbona fide amusement purposea ifthe contrivance rewards the player exclusively with noncaahThe Honorable David Sibley - Page 2 (DM-466)

merchandise prizes, toys, or novelties, or a representation of value redeemable for those items, that have a wholesale value available from a single play of the game or device ofnot more thau 10times the amount charged to play the game or device once or $5, whichever is less. Penal Code $47.01(4). The substance of the 1995 amendment to the deiinition of gambling device wasinitiallyadoptedin1993.SeeActofMay31,1993,73dLeg.,RS.,ch.774,§1,1993Tex.Gen. Laws 3027, 3027. See genera& Attorney General Opinion DM-280 (1994) (history of 1993 amendments). Prior to 1993, a “gambling device” was defined as

any contrivance that for a consideration affords the player an opportunity to obtain anything of value, the award of which is determined by chance, even though accompanied by some skill, whether or not the prize is automatically paid by the contrivance. Section 47(a) of article III of the Texas Constitution provides: The Legislature shall pass laws prohibiting lotteries and gift enterprises in this State other than those authorized by Subsections (b), (d), and (e) of this section.’ You ash whether, in light of article III, section 47(a), the amended definitiorrof “gambling device” invalidly authorizes the operation of certain “lotteries” not contemplated by the constitution. We must, of course, begin with the proposition that a statute must be upheld “if areasonable cmstmction can be ascabined, which will render the statute constitutional.” Elyv. State,582 S.W.2d 416,419 (fex. Grim. App. [panel Op.] 1979). If, however, the amended definition of
“gambling device” authorizes the operation of slot machines, it cannot be upheld In Attorney General Opinion DM-302, this office considered whether the legislature was empowered, in the absence of a constitutional smendment, to authorize the operation of slot machines, either directly or by amending the definition of “‘bet”in section 47.01(l) of the Penal Code. Attorney General Gpiion DM-302 (1994). The opinion adopted the requestor’s chamcterization of a “slot machine” as a device that for consideration awards cash or other prizes solely on the basis of chance and that is not affkcted by any skill,judgment, or knowledge of aparticular player. Id.at 11. A device that fits this description, the opinion concluded, is “an unlawful lottery in contravention of article III, section 47 of the Texas Constitution.” Id. Theopinion noted that, although article III, section 47,

‘Subsection (II)permitsthe 1eSislahuc to authorize bingo games conducted by a church or other nonprofit organization;subsection(d) does tbesameforcharitableraffles;andsubsection(e) permitsthe legislature to authorize a statelottery. p. 2619The Honorable David Sibley - Page 3 @M-466)

‘is not self-enacting, and, had the legislature never enacted any implementing legislation, suit would not lie to compel enactment” it is also the case that

where there is a history of penal statutes implementing the constitutional prohibition, repeal ofone ofthose prohibitions is not aneutral act, and, in our opinion, such repeal would contravene the constitutional proscription of subsection (a) of section 47 of article III. Prior to 1993, the definition of “gambling device” contained no exception for contrivances that atpresent fit within the scope of paragraph (J3)of article 47.01(4). The pm-1993 definition is of long standing. Thus, there exists a ‘history of penal statutes implementing the wnstitutional prohibition,” and as aresult, the amendment of section 47.01(4)‘s definition of “gambling device” in paragraph (B) to exempt tiom its proscription a limited class of contrivances, like the similar situation in Attorney General Opinion DM-302, “is not a neutral act.” The constitution allows no exception for lotteries whose prizes are small, even those that some might call deminimis.We w compelled to conclude that the exception from the definition of “gambling device” in section 47.01(4)(B) of the Penal Code invalidly authorizes the operation of certain “lotteries” not contemplated by the constitution. You also ask whether chapter 47 of the Penal Code prohibits the use of machmea known as “‘eight liners,’ which are video versions of slot machines, and other machines that operate wholly or partially by chance, reward players with prizes, and are not ‘adapted solely for bona fide amusement purposes. “‘2This question is prompted by your concern about the growth of the “eightliner” industry since the amended definition of “gambling device” was first adopted in 1993. You advise: This amendment essentially legalized machines that pay off in wupons

redeemable for non-cash memhandise valued at no more than five dollars. In practice, these machinea have been used to permit acoumulation of credits so that players have obtained winnings well in excess of the statutory limit. However, because of the exception’s inherent ambiguity, law enforcement authorities have enwuntered great difficulty in succeastirl prosecution. That difiiculty prompted the 75th Legislature topropose an smendment that would have clarified the exception, thus enhancing prosecutions. Despite widespread support r%orn the law enforcement wmmunity, that proposal failed to become law?

. . . .

‘Letter from Senator David Sibley, Chfdr,Ecomxnic Development Committ~, Texas State Senate, to tbe Honorable Dan Morales, Attorney Geoeml, Office of TexasAttorney General(Jan.4.1998).

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It is clear that the illegal use of “eight liners” in Texas wntinues to grow at a rapid pace. This growth has been fueled by a vague and potentially wnstitutionalIy defective amendment to the Penal Code’s gambling device definition.’ Although, aswe have concluded, the 1995 exception to the definition of “gambling device” in paragraph (B) of section 47.01(4) is void because it wntravenes the Texas Constitution’s proscription of “lotteries,” the rest of the definition remains intact. The 1995 act that enacted the present version ofarticle 47.01(4) wntains neither a severability clause nor anonseverability clause.5 Section 311.032(c) of the Government Code provides:

In a statute that does not contain a provision for severability or nonseverability, if any provision ofthe statute or its application to any person or circumstance is held invalid, the invalidity does not a&t other provisions or applications of the statute that csn be given effect without the invalid provision or application, and to this end the provisions of the statute are severable. The present version of the defmition of“gambling ” device “can be given effect without the invalid provision’* simply by placing aperiod after “credits” and before the semicolon in paragraph (A), by deleting the phrase “not excluded under Paragraph (El)”in the firstparagraph of article 47.01(4), and by severing paragraph (B). Ifthe contrivances described as “eight-liners’* fit the Penal Code’s definition of “gambling device,” Iieed of the unwnstitutional 1995 exception in paragraph (B), their possession is prvscribed. In State v.Mendel,871 S.W.2d 906 (Tex. App.-Houston [14th Dist.] 1994, no writ), the wurt, m&wing an attack on the wnstitutionality of article 47.01(4) on grounds of vagueness, wnsidered aparticular kind of machine that is virtually identical to the device you have described as an %igh-lmer.” The court said

At the hearing on the motions to quash the indictments, the court heard testimony from Officer Templeton of the Houston Police Depsrtment about the Lucky 8Liner vidw slot machinea possessed by appelleea. Appelleea are the owners of the club in which the video slot machines were found. The machines will accept anything from a quarter to a one hundred dollar bill. Depending on the amount of money that is put in the machine, it gives the player a set number of credits. A player wagers the number of credits he chooses, pushes abutton, and then an electronic display depicts lines of tiuit and numbers, much like a traditional slot machine. After accumulating credits, employees of the club paid the player in cash at the rate of one dollar

‘ Id.

‘SeeAct of May 27, 199574th Leg., R.S., ch. 318, 1995 Tex. Gen. Laws 2734,2734.
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per four credits. The employee then touched a “knockoff switch,” which would reset the credits at zero. Officer Templeton testified that this “knockoff switch along with the “accounting memo@ ofthe machine, thenumber of credits bet on each play, and the absence of any skill involved in its play, tended to establish the machine’s character as a gambling device. Merdel, 871 S.W.2d at 907-08. The three elements necessary to wnstitute aprohibited “lottery” are: 1) the offering of a prize, 2) by chance, and 3) the giving ofwnsideratLn for an opportunity to win the prize. Cityof Winkv.Gntth Amusement Co., 100 S.W.2d 695,701 (Tex. 1936); see Attorney General Gpinion DM-302 (1994); Letter Opinion No. 97-008 (1997) (and cases cited therein). As the wurt found in MenaX, an “eight-liner” functions solely on the basis of “chance” and its operation obviously requires the payment of consideration in order to play. Furthermore, we have been advised that, while most eight liners do not pay off directly in cash, coupons are redeemable for, inter ah, g$t cxatificatea from avariety of reputable merchants. Thus, the three elements necessary to wnstitute aprohibited “lottery” appear to be present in the case of “eight-liners.” We believe it likely that a court would tind, as did the Mendelcourt, that an eight-liner is a “gambling device” within the statutory defiuition. Finally, you ark whether the Texas Lottery Commission and the Texas Alcoholic Beverage Commission ‘possess the statutory enabling authority to pass rules permittirqthe agencies to suspend or revoke a license if a regulated entity owns or operatea an ‘eight-liner.“’ In order to sell tickets offered by the state lottery, a person must be licensed as a “sales agent.‘” The Lottery Commission is required, after a heating, to “suspend or revoke a license” of a sales agent ifit Suds, in&r aliu, that the individual ‘has been convicted of afelony, aiminal fraud, gambling or gambling-related offense, or a misdemeanor involving moral turpitude, if leas than 10 years has elapsed since the mrmmation ofthe sentence, parole, maudatory supervision, or probation saved forthe ~ffense.‘~ Ifan “‘eight-liner”or similar machine is a “‘gamblingdevice” under section 47.01(4) of the Penal Code, conviction for owning or possessing such a device under section 47.06(a) is au offense for which the Lottery Commission may suspend or revoke the license of a sales agent. The Lottery Commission also has rulemaking authority to consider the conduct of an applicsnt or licensee with respect to gambling.8

6Gov’tCode 5466.151.

‘ Id. 8466.155(a)(l)(A).

‘Id.$5466.015,

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Likewise, the Lottery Commission is authorized to issue licenses for “‘theconduct ofbingo;‘* to manufacture “bingo supplies;“rO to sell, distribute, or supply “biio equipment, devices, or supplies for use in bingo games in this state;“” and to sell or supply “automated bingo services for the use of licensed authorized orga&ations.“‘2 None of these licenses may be issued to any person who has been convicted of a“gambling offense,“” and the Lottery Commission, after ahearing, may suspend or revoke any license for failure to comply with the act, “for any reason that would allow or require the commission to retbse to issue or renew a license of the same clas~.“‘~ Just as is the case for lottery sales agents, conviction for owning orpossessing a “gambling device” under section 47.06(a) of the Penal Code is an offense for which the Lottery Commission may suspend or revoke the license of any individual licensed to participate in various bingo activities. The Alcoholic Beverage Commission is specifically authorized to “prescribe and publish rules necessary to carry out the provisions ofthis wde.“r5 The commission is t%rtherauthorized to “supervise and regulate licensees and permittees and their places ofbusiness in matters affecting the public,” and this “authority is not limited to matters specifically mentioned in [the] [Alcoholic Beverage Code]. “I6 Finally, “a license or permit issued under [the] code is a purely personal privilege and is subject to revocation or suspension ifthe holder is found to have violated aprovision of this code or a rule of the commission.“” The authority of the Alcoholic Beverage Commission with regard to licensees or permittees charged or convicted of misdemeanor gambling offenses is very extensive. An original or renewal application for aretail dealer’s license shall be denied ifthe applicant has within the past three years been convicted of an offense involving “‘gamblingor gaming.“‘s Additionally, an original orrenewal license shall be denied under section 61.42(a)(3) or 61.42(a)(7) and may be denied under section 61.43(a)(l), 61.43(a)(3). or 61.43(a)(9). An original or renewal application for a permit may be denied under section, 1l&(a)(l), 11.46(a)(3), 11.46(a)(6), or 11.46(a)(S).

9v.T.C.S. art. 1794 3 13(c). “Id. 5 134a). “Id. 5 13b(a).

‘Vd. 5 1344). “Id. 85 13(c)(2), (4); 13a(c), 13b(c), 134~). “Id. $ 16(d). “Alco. Bev. Code 0 5.31.

‘Vd. 5 5.33. “Id. 5 6.01(b). “Id. 8 69.06(a)(4), (c)(l), (2); see also id. 0 25.06(a)(4), (c). p. 2623The Honorable David Sibley - Page 7 @M-466)

In our opinion, the Alcoholic Beverage Commission could reasonably conclude that aperson charged with or convicted ofamisdemeanor gambling offense under the Penal Code had “wnducted his business in a place or manner which wsrrants the cancellation or suspension of a licenseI [or permit]2obased on the general welfare, health, peace, morals, safety, and sense of decency of the people.‘*’ Such a conclusion would then furnish sufficient grounds for a suspension for up to sixty days or a cancellation of the individual’s retail dealer on- or off-premises license or permit. Furthermore, we believe that the Alcoholic Beverage Commission is authorized to enact a rule prohibiting the presence of“eight-liners” in facilities licensed by the Alcoholic Beverage Commission, and it could then revoke the license orpermit of an individual found, after notice and hearing, to have violated the rule. Both the Alcoholic Beverage Code and the enabling statntes ofthe Lottery Commission offer means for the commissions to significsntly halt the intrusion of these machines upon an unsuspecting public.

191d.5 61.71(@(17). =9d. $5 11.61(b)(7), .612(a).

*‘ Id. 5 61.71(a)(l7); seeoh id. $ 11.61.
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## SUMMARY The amended definition of “gambling device” inparagraph (B) of section 47.01(4) of the Penal Code invalidly authorizes the operation of certain
“lotteries” proscribed by article III, section 47 ofthe Texas Constitution. The Lottery Commission has statutory and mlemskiig authority to consider the conduct or activities of an applicant or licensee with respect to gambling. Additionally, the Alcoholic Beverage Commission has mlemaking and statutory authority to regulate permittees and licensees who have been found, after proper notice and a hearing, to have engaged in a gambling offense as defined in the Penal Code.

DAN MORALES Attorney General of Texas JORGE VEGA First Assistant Attorney General SARAH J. SHIRLEY Chair, Opiion Committee Prepared by Rick Gilpin Assistant Attorney General

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