Case Name: STATE of Indiana, Appellant, Hoosier Horse Industries, Inc. (Intervening Defendant) Appellant, v. Joseph H. NIXON, Appellee
Court: Supreme Court of Indiana
Jurisdiction: Indiana
Decision Date: 1979-01-05
Citations: 384 N.E.2d 152
Docket Number: No. 378S44
Parties: STATE of Indiana, Appellant, Hoosier Horse Industries, Inc. (Intervening Defendant) Appellant, v. Joseph H. NIXON, Appellee.
Judges: GIVAN, C. J., and PIVARNIK, J., concur.
Reporter: North Eastern Reporter 2d
Volume: 384
Pages: 152–166

Head Matter:
STATE of Indiana, Appellant, Hoosier Horse Industries, Inc. (Intervening Defendant) Appellant, v. Joseph H. NIXON, Appellee.
No. 378S44.
Supreme Court of Indiana.
Jan. 5, 1979.
Theodore L. Sendak, Atty. Gen., Donald P. Bogard, Deputy Atty. Gen., Chief Counsel, Ronald J. Semler, Deputy Atty. Gen., Indianapolis, for appellant State of Indiana.
Henry J. Price, James A. Strain, Donald E. Knebel, Indianapolis, for appellant Hoosier Horse Industries, Inc.
David F. McNamar, Michael R. Frances-chini, Indianapolis, Robert M. Gholston, Franklin, for appellee.

Opinion:
PRENTICE, Justice.
This is an appeal from a judgment granting injunctive relief and determining the constitutionality of 1977 Indiana Acts Public Law 47 (March 25, 1977), hereinafter referred to as the Pari-Mutuel Wagering Act.
The Indiana General Assembly enacted Public Law 47 over the veto of the Governor. The Act permits pari-mutuel wagering upon horse races and harness races under conditions contained in the Act, and establishes the Indiana Racing Commission to regulate racing and pari-mutuel betting. Under it, the Governor is empowered to appoint and remove this Commission's members. The Act provides for the licensing of persons and organizations to conduct racing with pari-mutuel betting, and provides that pari-mutuel race track betting shall be permitted only in those Indiana counties which authorize such betting by ordinance approved in a county-wide referendum. The Act empowers the Governor to appoint and remove the Commission's members, provides the manner in which the parimutuel betting operates and requires payment of a tax by the racetrack on its share ("retainage") of the bets to the State and County treasuries. Ind.Code § 4-25-1-1 to 4-25-6-15 (Burns 1977); Ind.Code § 35-45-5-5, 35-31-2-7 (Burns 1977).
Nixon, the plaintiff (appellee), sought a declaratory judgment that the Pari-Mutuel Wagering Act was unconstitutional and an injunction forbidding the Governor from appointing members to the Indiana Racing Commission, as required by the Act. The named defendants were the State of Indiana and the Honorable Otis R. Bowen, Governor of Indiana, ("State"). Hoosier Horse Industries, Inc., ("Hoosier Horse") a corporation desiring to conduct racetrack parimutuel betting, intervened as a defendant. The Johnson Circuit Court, after hearing evidence, found the Act to be unconstitutional upon several grounds and issued the requested injunctive and declaratory relief. The State and Hoosier Horse have appealed to this Court pursuant to Ind.R.App.P. 4(A)(8) which is applicable because a statute of this State has been declared unconstitutional.
I.
Nixon argues that this appeal is moot because of a failure of appellants to include the Governor of Indiana as a nominal party to the appeal. In this regard the State's brief expressly states that the Governor is not a party to the appeal. Nixon's argument and the State's assertion are incorrect. Indiana R.App.P. 2(B) provides that "All parties of record in the trial court shall be parties on appeal." (Emphasis added.) The rule operates of its own force to make all parties in the trial court parties on appeal, whether such parties participate actively or not. Therefore the asserted mootness, the immunity of the injunction against the Governor from review, does not exist.
City of Indianapolis v. Indiana State Board of Tax Commissioners, (1974) 261 Ind. 635, 308 N.E.2d 868, relied upon by Nixon, does not reconstruct the old rules of necessary and indispensable parties. In City of Indianapolis the only appellant was the city, which lacked standing. Therefore no proper complainant sought to invoke the jurisdiction of this Court, and there was consequently no "case or controversy" to be adjudicated. 261 Ind. at 638, 308 N.E.2d at 869. In this case the State is not alleged to lack standing as a party. The appeal is not moot.
II.
The Act defines the "pari-mutuel system of wagering" as follows:
" 'Pari-mutuel system of wagering' means the method or system or wagering on horses at the track only under which those persons who wager on horses, which finish in the position or positions for which wagers are taken, share in the total amount wagered, less deductions specified and permitted by law." Ind. Code § 4-25-1-10 (Burns 1977 Supp.).
The evidence as to the operation of the betting is not in dispute. Bettors make their bets by purchasing tickets in the amount they wish to risk. Bettors bet that a given horse will "win" (finish in first place), "place" (finish in first or second place), or "show" (finish in first, second, or third place) by purchasing the appropriate ticket. All money bet to win is placed in the "win pool," to place in the "place pool," and to show in the "show pool." The licensed pari-mutuel operator is authorized by the Act to retain 17% of each pool, Ind.Code § 4-25-4-3, from which he pays special taxes, and the operator and the State split the "breaks," fractional amounts left over after calculation of winnings to the nearest ten cents. The pools are distributed to bettors holding winning tickets as follows:
"(a) Win pool:
(1)Win tickets sold on all horses entered in a race, times the ticket prices = the gross win pool.
(2)Gross win pool, less 17% retainage = the net win pool.
(3) The net win pool, divided by the number of tickets sold on the winning horse = the gross payoff.
(4) Gross payoff, less breakage (if any) = payoff to a bettor holding a winning win ticket.
(b) Place pool:
(1) Place tickets sold on all horses entered in a race, times the ticket price = the gross place pool.
(2) The gross place pool, less 17% retainage, less the price of place tickets sold on the winning horse to place and place tickets sold on the place horse = the net place pool.
(3) The net place pool, divided by 2 (the win and the place horses) = the net place pool for the win and place horses.
(4) The net place pool for the winning horse, divided by the equivalent number of $2.00 place tickets sold on the winning horse := the place payoff for the equivalent number of $2.00 tickets before adding the price of the ticket purchased, less breakage (if any).
(5) The net place pool for the place horse, divided by the equivalent number of $2.00 place tickets sold on the place horse = place payoff for the equivalent number of $2.00 tickets before adding the price of the ticket purchased, less breakage, (if any).
(6)To the amounts determined in 4 and 5 add the price of the ticket purchased, less breakage (if any) = payoff to a bettor holding a winning place ticket.
(c) Show pool:
(1) Show tickets sold on all horses entered in a race, times the ticket price = the gross show pool.
(2) The gross show pool, less 17% retainage, less the price of tickets sold on the win, place, and show horses = the net show pool.
(3) The net show pool, divided by 3 (the win, place, and show horses) = the net show pool for each of the win, place and show horses.
(4) The net show pool for the winning horse, divided by the equivalent number of $2.00 show tickets sold on the winner = show payoff for the equivalent number of $2.00 tickets on the winning horse before adding the price of the ticket, less breakage (if any).
(5) The net show pool for the place horse, divided by the equivalent number of $2.00 show tickets sold on the winning place horse = show payoff for the equivalent number of $2.00 tickets on the place horse before adding the price of the ticket, less breakage (if any).
(6) The net show pool for the show horse, divided by the equivalent number of $2.00 show tickets sold on the winning show horse = show payoff for the equivalent number of $2.00 tickets on the show horse before adding the price of the ticket, less breakage (if any).
(7) To the amounts determined in 4 and 5 and 6, add the price of the ticket purchased, less breakage (if any) = payoff to a bettor holding a winning show ticket." Finding of Fact No. 10.
The Act provides that a winning bettor can never recover less than the amount of his bet plus ten cents, Ind.Code § 4-25-4-5. The "odds" on each horse (return on amount of bet) are thus determined by the distribution of the bets. The Act provides that each pari-mutuel racetrack must maintain a sign displaying approximate odds as they develop during the period before the race when the ticket windows are open. Ind.Code § 4-25-4-5.
Witnesses testified that numerous factors enter into the outcome of the race itself, including the speed and endurance of each horse, the weight and ability of each jockey, the condition of the track and the length of the course. These factors can be assessed from the record of past success of horses and riders, knowledge of the genealogy and training of the horses, and observation of the horses and track before the race. The necessary documentary information can be obtained from "racing forms" of general circulation or from racetrack programs.
Based upon the provisions of the Act and this evidence, the trial court held that parimutuel wagering constituted a lottery within the meaning of the following provisions of our Constitution: "No lottery shall be authorized; nor shall the sale of lottery tickets be allowed." Indiana Constitution Article 15, § 8.
Appellants dispute this conclusion as contrary to law. Inasmuch as the Legislature is presumed to have concluded that pari-mutuel wagering was not a lottery, it was the burden of Nixon in the trial court to establish clearly that such wagering was within the constitutional prohibition. Reilly v. Robertson, (1977) Ind., 360 N.E.2d 171, 175. On appeal this Court presumes the correctness of the judgment of the court below, but this presumption will not remedy any deficiencies in Nixon's showing of unconstitutionality.
In Tinder v. Music Operating, Inc., (1957) 237 Ind. 33, 40, 142 N.E.2d 610, 614, heavily relied upon by Defendant and Intervening Defendant, we said:
"What is lottery? The Courts of Indiana have placed no other interpretation on the word 'lottery' than its commonly accepted meaning, defined in Webster's New International Dictionary, as follows: 'A scheme for the distribution of prizes by lot or chance; esp., a scheme by which one or more prizes are distributed by chance among persons who have paid or promised a consideration for a chance to win them, A game in which prizes are given from a pool to holders of cards matching others reserved for that purpose.' Lotteries are a species of gaming, and, although lotteries are gambling, not all forms of gaming or gambling are lotteries."
It is our opinion that the foregoing statement from the Tinder case need not and should not control our decision in the case before us. It was there held that in the operation of the machine in question, skill was a predominant factor, thereby removing it from the concept of a lottery, as above defined. We cannot say the same for pari-mutuel play, however, which falls into the category of a lottery, both under the literal definition of Tinder and under the broader constitutional concept which we recognize today.
Unquestionably, as ably argued, picking horses for speed and endurance requires considerable skill and study, and under the literal definition, mere wagering upon the outcome of a horse race would not be a lottery. Under the pari-mutuel system, however, the players are not so wagering. Rather, they are wagering upon the outcome of the race in combination with what the wagers of other players will be — both as to selection of horses and amounts wagered. Players can control their own bets, but they cannot control or logically calculate what the selections of others will be or what amounts they will bet. Yet, these are dominant factors in the results of the play. To some extent one may estimate the odds at the time he places his bet; but at that point such ability passes from his control and becomes entirely dependent upon what subsequent players do. Although not commonplace, neither is it a rarity for a winning horse to pay a higher percentage return to place or show bettors than to those who bet it to win.
It is clear that the element of luck in guessing the odds outweighs the element of skill in predicting the outcome of the race. Were it otherwise, the game could not survive, because it follows that the skilled could and would parlay their winnings until their bets eclipsed those of the unskilled and semi-skilled and soon would have all of the money.
Be that as it may, we have determined that the Tinder case, although correctly decided, upon its facts, is not determinative of this case. Although we have in other cases accepted the aforestated literal definition of "lottery," which embodies chance as a prime element, we are not bound to accept a definition applied at another time and for another purpose as definitive of the constitutional intent of 1851.
Although many rules of statutory construction are equally applicable to constitutional construction, we do not apply them with as much rigidity. The objective of both is to arrive at the intent; but constitutional objectives are customarily broad and general, whereas statutory objectives tend to be narrow and specific.
In Ellingham v. Dye, (1912) 178 Ind. 336, 379, 99 N.E. 1, 16, we said:
"It would not be practicable, if possible, in a written constitution, to specify in detail all its objects and purposes, or the means by which they are to be carried into effect. Such prolixity in a code designed as a frame of government has never been considered necessary nor desirable. Therefore, constitutional powers are often granted or restrained in general terms, from which implied powers and restraints may necessarily arise."
It is well settled that constitutions are to be liberally construed, giving to their provisions a construction that is broader than that given to statutes, since the powers and restraints dealt with in constitutions are unlimited. Constitutions are the basic foundation upon which our statutes are constructed. They are expected to operate over a longer period of time; and the methods of revision are much more cumbersome than in the case of statutes. In consequence, constitutions, if they are to serve their intended purpose, cannot be construed with the strictness of statutes or contracts, although many rules of construction are applicable to all three. It has often been said that constitutions are "living documents." This, in our view, is not to say that they are to be disregarded or altered at the whim of judges but rather " the constitution is primarily a set of principles and not rules." Integration of Bar Case, (1943) 244 Wis. 8, 11 N.W.2d 604, 621.
In Bain Peanut Co. et al. v. Pinson et al., (1931) 282 U.S. 499, 51 S.Ct. 228, 75 L.Ed. 482, Mr. Justice Holmes said: "The inter pretation of constitutional principles must not be too literal." and in United States v. Lefkowitz, (1932) 285 U.S. 452, 52 S.Ct. 420, 76 L.Ed. 877, 82 A.L.R. 775, it was written that the principles, rather than the direct operation or literal meaning of the words used, measure the purpose and scope of the constitution.
"The provisions of the constitution must receive a liberal, practical commonsense construction and new provisions must be considered with reference to the situation intended to be remedied or provided for." McMillan v. Siemon, (1940) 36 Cal.App.2d 721, 98 P.2d 790, Cal. 4th Dist. Court of Appeals,
"The provisions of the constitution, or of a statute should receive a practical rather than a technical, construction, one leading to a wise policy rather than of 'mischief or absurdity.' " California Employment Stabilization Commission v. Municipal Court, etc., (1944) Calif. Court of Appeals 1st Dist., 62 Cal.App.2d 781, 145 P.2d 361; Unemployment Reserve Commission v. St. Francis Homes Association, (1943) Calif. Court of Appeals, 1st Dist., 58 Cal.App.2d 271, 137 P.2d 64.
"It has been very appropriately stated that the pole-star in the construction of [the] constitutions is the intention of the makers and adopters.
"Wherever the purpose of the framers of a constitution is clearly expressed, it will be followed by the courts. Even where terms of a constitutional provision are not entirely free from doubt, they must be interpreted as nearly as possible in [consonant] with the objects and purposes in contemplation at the time of their adoption, because in construing a constitutional provision, its general scope and object should be considered." (Emphasis added). State ex rel. Jones v. Lockhart, (1953) 76 Ariz. 390, 265 P.2d 447.
"The primary object in construction is to ascertain the 'common understanding' as to the meaning of any provision entertained by 'both those who framed and those who ratified' it . If there be any doubt concerning any constitutional provision, 'the court should also look to the nature and objects of the particular powers, duties and rights in question, with all the light and aids of contemporary history, and give to the words of each provision just such operation and force, consistent with the legitimate meaning, as will fairly secure the end proposed.' " (Emphasis added). Kirkpatrick v. King, (1949) 228 Ind. 236, 91 N.E.2d 785 and cases there cited.
"It is settled by very high authority, that in placing a construction upon a constitution or any clause or part thereof, the court should look to the history of the times, and examine the state of things existing when the constitution or any part thereof was framed and adopted, to ascertain the old law, the mischief, and the remedy." (Emphasis added). State v. Gibson, (1871) 36 Ind. 389, 391.
"In order to properly determine the meaning of the said § 1 of Art. 3, we should consider the purpose which induced its adoption." (Emphasis added). State ex rel. Black v. Burch, (1948) 226 Ind. 445, 457, 80 N.E.2d 294, 299.
"In construing and giving an interpretation to the Constitution, we must take into consideration the situation as it existed at the time of its adoption." State ex rel. Holt, et al. v. Denny, Mayor, et al., (1888) 118 Ind. 449, 458, 21 N.E. 274, 277.
It has been said that it is the spirit which vivifies and the letter which killeth. Downes v. Bidwell, (1901) 182 U.S. 244, 21 S.Ct. 770, 45 L.Ed. 1088.
Utilizing the liberal approach to constitutional construction and the conviction that the fundamental principle of such construction is to give effect to the intent of those who framed and adopted the organic law, the following are some of the very practical results that have been reached by the courts, including our own.
In Board of Election Commissioners, etc. v. Knight, (1917) 187 Ind. 108, 117 N.E. 565, it was held that the word "appointment," as used in Article XV, Section 1 of our State Constitution meant "method of selection," relying upon McPherson v. Blacker, (1882) 146 U.S. 1, 27, 13 S.Ct. 3, 36 L.Ed. 869, where it was said that although the word "appoint" is not the most appropriate word to describe the result of a popular election, it was sufficiently comprehensive to cover that mode and was manifestly used as conveying the broadest power of determination.
In Hively v. School City of Nappanee, (1929) 202 Ind. 28, 169 N.E. 51, it was held that "indebtedness," within the meaning of that word as used in Article XIII of the State Constitution, was created by an arrangement whereby a municipal corporation, although not legally bound to pay, would be required to pay or lose the property-
In Spickerman, et al. v. Goddard, (1914) 182 Ind. 523, 107 N.E. 2, looking to the purpose of the constitutional provision, we upheld the constitutionality of the use of voting machines over the contention that in 1851, when the Constitution was adopted, the meaning of the word "ballot" was plain, well understood and meant "a printed or written expression of the voter's choice, We there said:
"The purpose of the framers of a constitutional provision must be sought, and given effect, if found. Our organic law was framed to better secure to the people of the State their right to life, liberty and the enjoyment of the fruits of their industry. It was designed for the use of common practical people while pursuing their varied occupations, and not as a rigid mold to fetter their growth and development. It was written by statesmen, selected for their wisdom, while in convention assembled, and was designed for practical use rather than as a declaration of abstract principles. In seeking its purposes, it must be viewed from the standpoint of the statesmen who formulated it, rather than that of lexicographers and philologists who neither participated in the work nor considered its provisions. Story, Constitution § 400, 454; Moore-Mansfield, etc., Co. v. Indianapolis, etc., R. Co. (1913), 179 Ind. 356, 101 N.E. 296, 44 L.R.A.(N.S.) 816; Elwell v. Comstock (1906), 99 Minn. 261, 109 N.W. 113, 698, 7 L.R.A.(N.S.) 621, 9 Ann.Cas. 270; Detroit v. Board, etc. (1905), 139 Mich. 548, 102 N.W. 1029, 111 Am.St. 430, 69 L.R.A. 184, 5 Ann.Cas. 861. It is important that the end sought by the framers of this constitutional provision be not confounded with the means adapted to secure it. The object the framers had in view was secrecy in the people's choosing of officers or measures, and publicity in choosing by the members of the General Assembly. Williams v. Stein (1871), 38 Ind. 89, 10 Am.Rep. 97. Voting by ballot involves secrecy while viva voce voting insures publicity. The word 'ballot' was used as a symbol of secrecy while viva voce was used as the symbol of publicity. There was nothing sacred in the contrivance of a strip of paper with names or questions printed thereon, which the framers sought, to preserve by the use of the word 'ballot'; nor was there any imperative necessity for the use of the voice of the legislator which moved the convention to decree its perpetual exercise in legislative elections. The constitutional limitation is not violated by dispensing with the use of the paper contrivance in the one case, or the legislator's natural voice in the other, if, in the former the people may choose in secret, and in the latter the legislator must make a public expression of his choice. Williams v. Stein, supra. It can scarcely be doubted, unless resort be had to technical quibbles, that the constitutional mandate would be satisfied by the legislator publicly raising his right hand to express his choice in a legislative election, instead of using his voice for such purpose." 182 Ind. at 525, 526, 527, 107 N.E. at 3. (Emphasis added).
The Court of Appeals of Kentucky in Meredith, Attorney General v. Kauffman, (1943) 293 Ky. 395, 169 S.W.2d 37, departed from a literal application of a constitutional provision that "no Senator or Representative shall, during the term for which he was elected, nor for one year thereafter, be appointed or elected to any civil office of profit in this commonwealth, which shall have been created during the said term ." (Emphasis added).
The Kentucky court there held that the obvious purpose behind the constitutional provision was to exclude persons from office who were concerned in its creation and to minimize improper bias in the vote of the representatives. The court said:
"The Constitution is concerned with the substance and not with the form and its framers did not intend to forbid a common sense application of its provisions. "Under a common sense application of the provision in question appellee is not ineligible to hold the office since he neither voted nor had the opportunity to vote on the act creating the office and was not a member of the General Assembly until its function in the creation of the office had been fully performed." (Emphasis added).
The Supreme Judicial Court of Massachusetts held that a constitutional provision that judges should be "retired" upon attaining the age of seventy years, did not render unconstitutional a statute providing for the re-call, for temporary or restricted duty, of judges so retired. The court said:
"If possible, the amendment must be construed so as to accomplish a reasonable result, and to achieve its dominating purpose. Its words should be interpreted in the sense most obvious to the common intelligence, because a matter proposed for public adoption must be understood by all entitled to vote." (Emphasis added).
The majority of courts from other states that have considered this question under constitutional provisions like or similar to our own have held pari-mutuel gambling not to be proscribed. However, there is no particular logic disclosed in their opinions. All of such cases appear to be but rationalizations toward a pre-determined result by placing a literal interpretation upon the word "lottery," those courts have foreclosed a practical, common sense inquiry as to purpose and have contented themselves with considerations of whether winners of lotteries, as that term is generally employed, need be determined "solely" by chance or may be determined "predominately" by chance or even "substantially" by chance. Such considerations may be of technical and academic interests but are of little practical value in determining what the state's policy was to be in regard to enterprises in which the consumers, as a group, have no chance.
Demonstrative of the lack of logic employed in some of the opinions upon the issue are the following excerpts:
"While an element of chance no doubt enters into horse and dog races, it does not control them." Ginsberg v. Centennial Turf Club, (1952) 126 Colo. 471, 251 P.2d 926.
The court obviously was reflecting upon the prospects of selecting the winner of a race rather than upon the prospects of winning in pari-mutuel play.
The Court of Appeals of Illinois in People v. Monroe, (1932) 349 Ill. 270, 182 N.E. 439, said that persons among whom the pari-mu-tuel purse was to be divided are not uncertain, as they are "those who bet on the winning horse." Are not the winners in a classical lottery just as certainly those who hold the tickets drawn?
The court proceeded to compare the parimutuel bettor to a salesman paid on commission, saying that both were "dependent in some degree on chance, ." One is compelled to wonder, from that analogy, how long the salesman would survive if his function were to sell and re-sell the same item repeatedly between the same two persons. Clearly this is the service rendered by pari-mutuel systems, to provide a speculative event and to serve as "stake-holder" while the money, diminished by the commission, is passed around among the same players.
In Utah State Fair Association v. Green, (1926) 68 Utah 251, 249 P. 1016, the court said: "It is not an element of chance as to the amount he may lose but only as to the amount he may win." We are unable to discern how the pari-mutuel differs in this regard from the classical lottery — the price of the lottery ticket being known.
Of all the courts upholding the constitutionality of pari-mutuel statutes in the face of anti-lottery constitutional provisions, Kentucky alone has at least been candid, if not altogether legalistic. The Court of Appeals of that state, writing in 1931, after observing that it had not previously occurred to anyone that betting on races, elections or similar forms of wagering constituted a lottery, proceeded to say: "Indeed, the contention that betting on horse races by the pari-mutuel system constitutes a lottery is of recent origin in this state. For nearly half a century the General Assembly and the Court of Appeals have proceeded upon the general understanding that the whole subject of betting and gaming was within the power of the Legislature to prohibit, regulate or classify, prohibiting in part and permitting in part, according to its view of the public policy to be enforced. Upon the faith of such legislation and decisions, large investments have been made, and, although the Legislature may radically change the law, without regard to the consequences on a particular business, it is a doctrine of almost universal acceptance that the courts will not, under such circumstances, overturn a long line of decisions.'' (Emphasis added). Commonwealth v. Kentucky Jockey Club, 238 Ky. 739, 38 S.W.2d 987.
We are fortunate in that we may judge the statute in question without the frustration, doubtlessly encountered by the Kentucky court, as to what would be the impact of illegitimatizing an on-going major industry and eliminating a source of substantial state revenue.
There is no disagreement concerning the historical development of lotteries, as generally conducted in the early eighteen hundreds. Neither is there any question but that they were then held in infinitely lower esteem than other forms of gaming, such as betting upon horse races, election contests or even card games. Accordingly, they were treated differently under the laws— the lotteries the most harshly, because they were the most pernicious. The following brief paragraph from an 1850 unanimous opinion of the Supreme Court of the United States aptly sums up the viewpoint of learned men, at that time, concerning both the effects of gambling upon the welfare of the people and the obligation of governments — the "mischief" and the "remedy."
"The suppression of nuisances injurious to public health or morality is among the most important duties of government. Experience has shown that the common forms of gambling are comparatively innocuous when placed in contrast with the widespread pestilence of lotteries. The former are confined to a few persons and places, but the lottery infests the whole community; it enters every dwelling; it reaches every class; it preys upon the hard earnings of the poor; it plunders the ignorant and simple." Phalen v. Commonwealth of Virginia, (1850) 8 Howard 163, 12 L.Ed. 1030 at 1033.
Defendant and Intervening Defendants contend that the "mischief" of 1851 was lotteries, as then known and conducted, i. e. numbers drawn at random to determine who, among the purchasers of chances, was to win the prizes. However, we are of the opinion that the "mischief" was commercialized gambling that, as was said in Phalen v. Commonwealth, supra, "infests the community," "preys" upon the poor and "plunders" the "ignorant and simple," and that lotteries were but the form that such mischief took at that time and had for many years theretofore. Lotteries, thus, were the symbol of commercial gambling enterprises.
To dream of riches unearned and the willingness to gamble to achieve them appear to be inherent in the nature of man. The mischief flowing from these qualities, when man is left to his own devices, is relatively innocuous. But it becomes an injurious nuisance, a "pestilence," when capitalized upon by those who do not gamble or play the game at all but make an unconscionably profitable business of providing the temptation, lure of profits that are out of all proportion to the investment, labor and skill involved, to the weak and unwary. These businesses operate by taking a percentage of all moneys gambled on the event and by paying to'the winners only the remaining portion, or by formulating the game so that the mathematical odds are in their favor, or by a combination of the two. Under either system, all that is required is a sufficient volume of play, and no player can win; while the operators cannot but profit. The profits, in turn, are available to promote and advertise for more play and so on, ad infinitum.
It is obvious that lotteries, in the traditional sense, were just such commercial ventures, where the operators for a percentage of the wagers, promoted and provided a game of chance in which the players, as a class, could not win and the operators could not but profit.
The Supreme Court of Nebraska, in State ex rel. Sorensen v. Ak-Sar-Ben Exposition Co., (1929) 118 Neb. 851, 226 N.W. 705, declared that the pari-mutuel system of betting and gambling on horse races contained every element of a criminal lottery, consideration, chance, prize, and means of disbursement. It articulated the mischief in the following words:
"Gambling is in the same category. It attracts young and old to places of idleness, where valuable time and fruits of honest endeavor are lost. It deprives legitimate industry of profitable service and lessens individual regards therefor. The lure of profits that are out of all proportion to investment or service impairs the initiative essential to the highest development of ideal citizenship. It tends toward crime and increases the burden of law enforcement — burdens that fall on the people generally throughout the state."
Given the foregoing, we conclude that the concern of those who drafted and adopted our Constitution, including Article XV, section 8, was to minimize the harmful effects of gambling by sheltering the people from gaming enterprises promoted and operated for monetary gain by those who, because of the methods employed, are, in essence, purveyors rather than players. The pari-mutuel system is a purveying of a gaming enterprise which, because of the retainage of a percentage of all wagers, precludes the players, in sustained play, from winning while providing a reasonable assurance of a profit to the operators. In our judgment, and notwithstanding that a degree of skill is involved in selecting the horses most likely to perform well, the unpredictability of the odds to be paid and the limited predictability of the performance of the animals combine to provide the degree of "chance" required to meet the traditional textbook definitions of the term "lottery." However, whether or not it is a lottery, in the classical sense, is immaterial. Its effects are precisely those sought to be prevented by Article XV, section 8; and, it is, therefore, a "lottery" within the meaning of that term as therein employed.
As stated in Hovey, Governor v. State ex rel. Riley, (1889) 119 Ind. 386 at 388, 21 N.E. 890, at 890:
"We are far from asserting that the plain provisions of the Constitution may be broken down or overleaped by practical exposition, but what we do assert is, that where, as here, there are provisions not entirely clear and free from doubt, practical exposition is of controlling force."
Applying the word "lottery" in its literal sense would serve to proscribe but one form of commercialized gambling, while leaving those whom the proscription sought to protect exposed to the same mischief by methods identical in substance and different in form only. That such was the constitutional intent does not comport with common sense. When we put ourselves, as nearly as possible, in the position of those who framed and adopted our Constitution, we conclude that Article XV, section 8 was intended to proscribe the mischief occasioned by the lotteries, not merely the lotteries, and that the word "lottery" as used therein, embraces all forms of gaming which, by reason of retainage, service charge, or odds, preclude the participants, in sustained play, from winning while providing a reasonable expectancy of profit for the sponsors.
Whether or not state regulated pari-mu-tuel gaming is, under today's standards, an evil that needs to be protected against is a matter beyond the authority and concern of this Court. The majority of the legislators, in adopting a statute obviously believed that it is not. It is altogether possible that, if those who drafted and adopted the proscription under consideration were to reconsider the matter in the light of today's vastly changed society, they would view it differently. It is apparent to us, however, that in 1851 pari-mutuel gambling would have been regarded as a mischief of the class sought to be eliminated. The determination that the need for such protection no longer continues can be made only by those who have the authority, the people of Indiana acting by referendum upon a proposed constitutional amendment.
The Act is unconstitutional. The judgment of the trial court is affirmed.
GIVAN, C. J., and PIVARNIK, J., concur.
DeBRULER, J., dissents with opinion in which HUNTER, J., concurs.
HUNTER, J., dissents with opinion in which DeBRULER, J., concurs.
. Since the Act permits pari-mutuel betting to be conducted only by licensees of the Commission, an injunction against appointment of members thereto effectively frustrates implementation of the Act as a whole.