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______________________________________________________________________________ 

TO BE PUBLISHED IN THE OFFICIAL REPORTS
 

OFFICE OF THE ATTORNEY GENERAL
 State of California
 

DANIEL E. LUNGREN
 Attorney General
 

OPINION : 

: No. 94-102 

of : 

: May 3, 1994

DANIEL E. LUNGREN : 

Attorney General : 

: 

CLAYTON P. ROCHE : 

Deputy Attorney General : 

: 

THE HONORABLE TED WEGGELAND, MEMBER OF THE CALIFORNIA 

STATE ASSEMBLY, has requested an opinion on the following question: 

May a person who represents a group of state lottery ticket purchasers be reimbursed

by them for the actual and necessary costs of managing their lottery pool? 

CONCLUSION 

A person who represents a group of state lottery ticket purchasers may be reimbursed

by them for the actual and necessary costs of managing their lottery pool. 

ANALYSIS 

At the November 6, 1984 General Election, the voters approved a constitutional

amendment authorizing "the establishment of a California State Lottery." (Cal. Const., art. IV, § 19, 

subd. (d).) Contemporaneously the California State Lottery Act of 1984 (Gov. Code, §§ 8880- 8880.72; "Act") was approved.1

 The constitutional amendment and implementing legislation

provide an exception to the proscription that "[t]he Legislature has no power to authorize lotteries

and shall prohibit the sale of lottery tickets in the State." (Cal. Const., art. IV, § 19, subd. (a).) 

The Act establishes a California State Lottery Commission ("Commission")

consisting of five members appointed by the Governor (§§ 8880.15-8880.23) with the authority to

"exercise all powers necessary to effectuate the purposes of" the Act (§ 8880.24). The Commission 

is specifically directed to promulgate rules and regulations (§§ 8880.26, 8880.33) and "make

available upon request to lottery game retailers a model agreement to govern the division of prizes 

1

All unidentified section references are to the Government Code. 

1. 94-102
 
 

 

among multiple purchasers of a winning ticket or tickets purchased through a group purchase or

pooling arrangement" (§ 8880.33).2 

Section 8880.33 relating to multiple purchasers of a state lottery ticket was enacted

by the Legislature in 1990. (Stats. 1990, ch. 420, § 1.)3 The purpose of the statute was explained

as follows: 

"The Legislature finds and declares that the purchase of a single lottery ticket

or a block of tickets by a group of people is a common and legitimate practice.

However, the absence of written agreements among the ticket purchasers often leads

to unnecessary confusion and disputes. The purpose of this act is to assist people in

entering into agreements prior to the purchase of tickets. Nothing in this act is

intended to alter or affect subdivision (g) of Section 8880.32 of the Government

Code regarding the nonassignability of prizes or to change any existing lottery

regulations or practices except as specified in this act." (Stats. 1990, ch. 420, § 2.) 

The formation of a state lottery pool such as is contemplated in section 8880.33 gives

rise to this request for our opinion. If a person is selected to represent multiple purchasers of a

lottery ticket or tickets, may he or she be reimbursed by them for the actual and necessary costs of

managing their lottery pool? For example, may the person charge a fee to cover such expenses as

photostating each ticket purchased and providing copies to each member of the pool, maintaining

a safety deposit box for the tickets, keeping all requisite records for the members, and completing

the necessary forms to claim any prizes? Specifically, would the reimbursement of expenses by the

lottery pool members violate section 337a of the Penal Code? The latter statute provides: 

"Every person, 

"1. Who engages in pool selling or bookmaking, with or without writing, at

any time or place; or 

"2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

"3. Who, whether for gain, hire, reward, or gratuitously, or otherwise,

receives, holds, or forwards, or purports or pretends to receive, hold, or forward, in

any manner whatsoever, any money, thing or consideration of value, or the

equivalent or memorandum thereof, staked, pledged, bet or wagered, or to be staked,

pledged, bet or wagered, or offered for the purpose of being staked, pledged, bet or

wagered, upon the result, or purported result, of any trial, or purported trial, or

contest, or purported contest, of skill, speed or power of endurance of man or beast,

or between men, beasts, or mechanical apparatus, or upon the result, or purported

result, of any lot, chance, casualty, unknown or contingent event whatsoever; or 

2

Regulations have been adopted by the Commission concerning the manner in which lottery pool

members are to be paid when a claim is presented for a winning ticket or spin. Official claim forms 

are also provided for multiple ownership claims. 

3

Section 5 of the initiative measure approved by the voters in 1984 provides: "No provision of

this Act may be changed except to further its purpose by a bill passed by a vote of two-thirds of the

membership of both houses of the Legislature and signed by the Governor." 

2. 94-102
 
"4. Who, whether for gain, hire, reward, or gratuitously, or otherwise, at any

time or place, records, or registers any bet or bets, wager or wagers, upon the result,

or purported result, of any trial, or purported trial, or contest, or purported contest,

of skill, speed or power of endurance of man or beast, or between men, beasts, or

mechanical apparatus, or upon the result, or purported result, of any lot, chance,

casualty, unknown or contingent event whatsoever, or 

" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

" . . . is punishable by imprisonment in the county jail for a period of not

more than one year or in the state prison. 

" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " 

We conclude that the payment of reimbursement for the actual and necessary expenses incurred in

managing a state lottery pool would not constitute a violation of Penal Code section 337a. 

In analyzing the question presented, we may rely upon several principles of statutory 

construction. When interpreting the language of the statute, we are to "accomplish a result

consistent with the legislative purpose, i.e., the object to be achieved and the evil to be prevented

by the legislation." (Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d 1142, 1159.) "Both 

the legislative history of the statute and the wider historical circumstances of its enactment may be

considered in ascertaining the legislative intent." (Dyna-Med, Inc. v. Fair Employment & Housing

Com. (1987) 43 Cal.3d 1379, 1387.) "[I]t is well established that reports of legislative committees

and commissions are part of a statute's legislative history and may be considered when the meaning

of a statute is uncertain." (Hutnick v. United States Fidelity & Guaranty Co. (1988) 47 Cal.3d 456,

465, fn. 7.) "`The words of the statute must be construed in context, keeping in mind the statutory

purpose, and statutes or statutory sections relating to the same subject must be harmonized, both

internally and with each other, to the extent possible.'" (Walnut Creek Manor v. Fair Employment

& Housing Com. (1991) 54 Cal.3d 245, 268.) Statutes are to be construed in a manner which makes 

them reasonable and workable so as to avoid mischief and absurd results. (Regents of University

of California v. Superior Court (1970) 3 Cal.3d 529, 536-537; City of Costa Mesa v. McKenzie

(1973) 30 Cal.App.3d 763, 770.) 

As previously noted, the Legislature enacted section 8880.33 in 1990, recognizing

state lottery pools to be a "legitimate practice." Numerous committee reports concerning the 1990 

legislation contain the following analysis: 

"Existing law forbids poolsharing or bookmaking which is defined in the Penal Code

as, among other things, holding, forwarding, or receiving any bet `upon the result,

or purported result, of any lot, chance . . . or contingent event whatsoever.' The 

California Lottery Act does not supersede this prohibition. 

"The Lottery Act provides that lottery prizes are not assignable, except in the event

of the winner's death. 

"This bill: 

"1) Legitimizes the purchase of a lottery ticket by a group of persons. 

3. 94-102
 
 

"2) Requires the Lottery Commission to develop a model agreement for dividing a

prize among multiple holders of a single winning ticket, and to distribute this model

agreement, upon request, to lottery retailers." 

How does the legislative intent to legitimize the practice of state lottery pools apply to the

reimbursement of actual and necessary expenses incurred in managing a lottery pool? 

First, when read together with section 337a of the Penal Code, section 8880.33 must be

construed so as to legalize state lottery pools. The two statutes may be reconciled by finding section

8880.33 to be a limited exception to the general language of Penal Code section 337a. Such was the 

obvious intent of the Legislature as disclosed by the committee reports at the time section 8880.33

was enacted. We believe that no question arises, therefore, as to the lawfulness of managing a state

lottery pool and transmitting the actual purchase price of the lottery tickets by the pool

representative. This leaves only the question of the charge imposed to defray the actual and

necessary expenses incurred in managing the pool. 

In our view, a reasonable construction of the Act permits those participating in lottery

pools to contribute an amount to cover the actual and necessary expenses of their representative in

managing the pool.4

 To conclude otherwise would be anomalous. It would mean that the 

contributions of the lottery pool members which constitute the wager would be legal, but that the

charges for expenses, which are not part of the wager, would be illegal. We do not believe that the 

Legislature intended for lottery pool representatives to choose between (1) absorbing the costs of

managing the pools or (2) managing illegal pools by collecting such costs. 

By allowing reimbursement for expenses, no advantage is given to the representative

for managing what the Legislature has termed a legitimate practice. The payment of actual and

necessary costs prevents the representative from suffering economic loss. No justification for

denying cost reimbursement has been suggested. On the other hand, we find nothing in the

legislative history of section 8880.33 to suggest that a representative would be authorized to operate

a business in which the charges would generate income for the representative in addition to

reimbursement for actual and necessary expenses. Furthermore, we believe that actual and 

necessary expenses may be allowed only for out-of-pocket expenses generated by the specific group

purchase and prize redemption effort undertaken. For example, a charge based upon a percentage

of the prizes won would not be sufficiently related to the amount of expenses actually incurred. 

We conclude that a person who represents a group of state lottery ticket purchasers

may be reimbursed by them for the actual and necessary costs of managing their lottery pool. 

* * * * * 

4

The Commission's regulations and model agreements are silent regarding the subject of expenses

incurred by lottery ticket pool representatives. 

4. 94-102