Opinion ID: 2001496
Heading Depth: 1
Heading Rank: 14

Heading: New York's Prohibition Against Commercialized Gambling

Text: New York prohibits commercialized gambling, including the for-profit, casino gaming contemplated herein. This prohibition is set forth in the Bill of Rights of the New York State Constitution ( see NY Const, art I, § 9). Article I, § 9 was adopted to protect[] . . . the family man of meager resources from his own imprudence at the gaming tables ( see International Hotels Corp. [Puerto Rico] v Golden, 15 NY2d 9, 15 [1964], citing Carter and Stone, Reports of Proceedings and Debates of the Convention of 1821, at 567 [Hosford 1821]). Article I, § 9 (1) of the New York State Constitution reads, in pertinent part: except as hereinafter provided, no lottery or the sale of lottery tickets, pool-selling, bookmaking, or any other kind of gambling, except lotteries operated by the state and the sale of lottery tickets in connection therewith as may be authorized and prescribed by the legislature, the net proceeds of which shall be applied exclusively to or in aid or support of education in this state as the legislature may prescribe, and except pari-mutuel betting on horse races as may be prescribed by the legislature and from which the state shall derive a reasonable revenue for the support of government, shall hereafter be authorized or allowed within this state; and the legislature shall pass appropriate laws to prevent offenses against any of the provisions of this section.  (Emphasis supplied.) Article I, § 9 (2) provides: any city, town or village within the state may by an approving vote of the majority of the qualified electors in such municipality voting on a proposition therefor submitted at a general or special election authorize, subject to state legislative supervision and control, the conduct of one or both of the following categories of games of chance commonly known as: (a) bingo or lotto, in which prizes are awarded on the basis of designated numbers or symbols on a card conforming to numbers or symbols selected at random; (b) games in which prizes are awarded on the basis of a winning number or numbers, color or colors, or symbol or symbols determined by chance from among those previously selected or played, whether determined as the result of the spinning of a wheel, a drawing or otherwise by chance. Subdivision (2) further provides: If authorized, such games shall be subject to the following restrictions, among others which may be prescribed by the legislature: (1) only bona fide religious, charitable or non-profit organizations of veterans, volunteer firefighter and similar non-profit organizations shall be permitted to conduct such games; (2) the entire net proceeds of any game shall be exclusively devoted to the lawful purposes of such organizations; (3) no person except a bona fide member of any such organization shall participate in the management or operation of such game; and (4) no person shall receive any remuneration for participating in the management or operation of any such game. Additionally, with respect to subdivision (2): Unless otherwise provided by law, no single prize shall exceed two hundred fifty dollars, nor shall any series of prizes on one occasion aggregate more than one thousand dollars. The legislature shall pass appropriate laws to effectuate the purposes of this subdivision [and] ensure that such games are rigidly regulated to prevent commercialized gambling. Consistent with this provision, the Legislature has outlawed commercialized gambling ( see Penal Law art 225). [20] In order to give effect to article I, § 9 of the New York State Constitution, the Legislature enacted article 9-A of the General Municipal Law, New York's Games of Chance Licensing Law ( see General Municipal Law § 185 et seq. ). The stated purpose of article 9-A is consistent with New York's legal prohibition and strong public policy against commercialized gambling. General Municipal Law § 185, which sets forth the purpose of article 9-A, provides, in pertinent part: The legislature hereby declares that the raising of funds for the promotion of bona fide charitable, educational, scientific, health, religious and patriotic causes and undertakings, where the beneficiaries are undetermined, is in the public interest. It hereby finds that, as conducted prior to the enactment of this article, games of chance were the subject of exploitation by professional gamblers, promoters, and commercial interests. It is hereby declared to be the policy of the legislature that all phases of the supervision, licensing and regulation of games of chance and of the conduct of games of chance, should be closely controlled and that the laws and regulations pertaining thereto should be strictly construed and rigidly enforced; that the conduct of the game and all attendant activities should be so regulated and adequate controls so instituted as to discourage commercialization of gambling in all its forms, including the rental of commercial premises for games of chance, and to ensure a maximum availability of the net proceeds of games of chance exclusively for application to the worthy causes and undertakings specified herein; that the only justification for this article is to foster and support such worthy causes and undertakings, and that the mandate of section nine of article one of the state constitution, as amended, should be carried out by rigid regulations to prevent commercialized gambling, prevent participation by criminal and other undesirable elements and prevent the diversion of funds from the purposes herein authorized (General Municipal Law § 185 [emphasis added]). Similarly, the activities of the body charged with the administration of New York's Games of Chance Licensing Law, the New York State Racing and Wagering Board (Board), are consistent with New York's legal prohibition and strong public policy against commercialized gambling. General Municipal Law § 188-a (1) provides that the Board shall:  Supervise the administration of the games of chance licensing law and [] adopt, amend and repeal rules and regulations governing the issuance and amendment of licenses thereunder and the conducting of games under such licenses, which rules and regulations shall have the force and effect of law and shall be binding upon all municipalities issuing licenses, and upon licensees of the board, to the end that such licenses shall be issued to qualified licensees only, and that said games shall be fairly and properly conducted for the purposes and in the manner of the said games of chance licensing law prescribed and to prevent the games of chance thereby authorized to be conducted from being conducted for commercial purposes or purposes other than those therein authorized, participated in by criminal or other undesirable elements and the funds derived from the games being diverted from the purposes authorized, and to provide uniformity in the administration of said law throughout the state, the board shall prescribe forms of application for licenses, licensees, amendment of licenses, reports of the conduct of games and other matters incident to the administration of such law (General Municipal Law § 188-a [1] [emphasis added]). Likewise, General Municipal Law, article 9-A, § 186 (4), pertaining to the types of organizations authorized to conduct games of chance in New York State, reflects New York's strong public policy against commercialized gambling. General Municipal Law § 186 (4) provides that: `Authorized organization' shall mean and include any bona fide religious or charitable organization or bona fide educational, fraternal or service organization or bona fide organization of veterans or volunteer firemen, which by its charter, certificate of incorporation, constitution, or act of the legislature, shall have among its dominant purposes one or more of the lawful purposes as defined in this article, provided that each shall operate without profit to its members, and provided that each such organization has engaged in serving one or more of the lawful purposes as defined in this article for a period of three years immediat[e]ly prior to applying for a license under this article. It has been argued that the State Legislature had authority to enact part B of chapter 383 of the Laws of 2001 because: (1) since New York allows what is ostensibly class III gaming for charitable and other purposes, New York must allow the commercialized, for-profit casino gaming at issue here; and (2) the citizens of New York State, by approving gambling for charitable and other purposes, have thereby approved class III commercialized casino gaming. This argument is unavailing because instead of focusing on whether the New York State Constitution authorizes the Legislature to pass a law authorizing the Governor to agree to bring about unconstitutional, commercialized gambling, this argument incorrectly focuses on the noncommercial gambling New York State permits as justification for the contention that New York State can enter compacts for the establishment of commercialized gambling facilities on Indian lands. Put another way, this argument fails to consider the plain language of article I, § 9 of the State Constitution [21] and how this constitutional provision affects the Legislature's authority, or lack thereof, to enact legislation related to commercialized gambling. As noted above, article I, § 9 generally proscribes gambling except for lotteries where the net proceeds are applied towards education, pari-mutuel betting on horse races, [22] and games of chance to be engaged in by certain types of organizations (e.g., nonprofit organizations) and conducted for specific, limited purposes (e.g., charitable). Under article I, § 9, these games of chance are strictly regulated to ensure that they are not commercialized. For example, article I, § 9 dictates where net proceeds go, who manages or operates the game, that no person shall be paid for participating in the management or operation of the game, and prize amounts. Further, article I, § 9 (2) provides that, The legislature shall pass appropriate laws to effectuate the purposes of this subdivision [and] ensure that such games are rigidly regulated to prevent commercialized gambling. The legislation passed, pursuant to this constitutional directive, i.e., the Games of Chance Licensing Law, similarly seeks to discourage commercialization of gambling in all its forms, including the rental of commercial premises for games of chance, and to ensure a maximum availability of the net proceeds of games of chance exclusively for application to [] worthy causes and undertakings (General Municipal Law § 185). Based on the foregoing, article I, § 9 of the New York State Constitution clearly prohibits gaming for commercialized purposes and commercialized games of chance, and further, acts as a limitation on the power of the Legislature to enact laws pertaining to such gaming and games of chance. [23] Here, the Legislature, by enacting part B of chapter 383, authorized the Governor to execute tribal-state compacts for the establishment of up to six class III, for-profit casino gaming facilities on Indian lands and after-acquired lands pursuant to 25 USC § 2719 (b) (1) (A). There is no dispute, and the majority agrees, that the gaming facilities contemplated under this legislation (and the gaming and games to be engaged in at these facilities) are commercial in nature and fall squarely within the type of commercial gambling activity prohibited under article I, § 9. [24] Moreover, the provisions authorizing the execution of tribal-state compacts for the establishment of the above-mentioned prohibited facilities do not comport with article I, § 9. [25] Thus, in view of the limitation on the Legislature's power set forth in article I, § 9, and the axiom that where a constitutional limitation on the Legislature's power exists, a legislative enactment that seeks to exercise such power in spite of the limitation has no effect, the Legislature did not have the authority to enact part B of chapter 383 of the Laws of 2001. In light of this conclusion, that the Legislature had no power to enact the legislation, the next question that must be answered is whether IGRA somehow grants the Legislature the authority to enact part B of chapter 383. Respondents' main argument that the Legislature had the authority to enact part B of chapter 383 is that because the New York State Constitution permits charitable and other organizations to conduct noncommercial casino-style gaming in New York State, IGRA requires that New York must negotiate with Indian tribes to give them the opportunity to conduct commercial casino-style gaming. In support of this argument, respondents rely primarily on IGRA's legislative history regarding the for any purpose by any person provision relating to class II gaming (S Rep No. 100-446, 100th Cong, 2d Sess, Explanation of Major Provisions, at 12), [26] and United States v Sisseton-Wahpeton Sioux Tribe (897 F2d 358, 365 [8th Cir 1990] [cited for the proposition that IGRA's legislative history reveals that Congress intended to permit a particular gaming activity, even if conducted in a manner inconsistent with state law, if the state merely regulated, as opposed to completely barred, that particular gaming activity]). Based on the foregoing, respondents concluded that a State may not invoke state law prohibiting commercialized Class III gaming outside Indian lands to justify a refusal to undertake compact negotiations under IGRA. To the contrary, as long as a State permits class III gaming `for any purpose by any person,' IGRA expressly requires States to `negotiate . . . in good faith to enter into . . . a compact' and provides specific remedies where they fail to do so ( see Brief for State Respondents, at 44; regarding the remedies, see 25 USC § 2710 [d]). [27] The IGRA provisions and case law cited by respondents do not provide authorization for this State's Legislature to enact laws like part B of chapter 383. IGRA presupposes that the New York State Legislature has the authority to enact such laws. [28] However, nothing in IGRA, not the fact that IGRA preempts the field in the area of gaming on Indian lands, not the IGRA-defined role of states in the regulation of gaming on Indian lands, [29] not the requirement that states negotiate compacts in good faith, not the fact that the compact requirement is meant to take into account the interests of the tribe and state, not the fact that the Secretary of the Interior has the power to impose commercialized casino gambling if a compact is not entered into, counters the article I, § 9 limitation to the Legislature's power to enact legislation authorizing the State, through the Governor, to execute an agreement for the establishment of unconstitutional, illegal commercialized gambling. Put another way, state law, not federal law, necessarily governs the exercise of the Legislature's power to enact legislation. [30] IGRA states that Class III gaming activities shall be lawful on Indian lands only if such activities are . . . located in a State that permits such gaming for any purpose by any person, organization, or entity (25 USC § 2710 [d] [1] [B]). Applying Justice Stevens' reasoning to the instant case, it does not follow that if a state permits class III gaming for charitable purposes, it must permit commercial gambling on Indian lands by way of a compact in violation of a state's own constitutional provision ( Cabazon, 480 US at 222-227 [Stevens, J., dissenting]). At most, the state would be required to permit class III gaming on Indian lands for charitable purposes. Such an interpretation would not violate the New York State Constitution. Nothing in IGRA requires the contrary. Moreover, the Constitution can be amended by the People of the State of New York. Mashantucket Pequot Tribe v State of Conn . (737 F Supp 169 [1990], affd 913 F2d 1024 [1990]) and California v Cabazon Band of Mission Indians (480 US 202 [1987]), two cases heavily relied on by respondents, do not change this conclusion because these cases are neither controlling nor applicable. In Mashantucket, the Pequot Tribe sought to enter into negotiations with the State of Connecticut to conduct casino-type games of chance on its reservation. Connecticut's statutory scheme generally prohibited commercial gambling but permitted nonprofit organizations to conduct Las Vegas nights and games of chance to raise funds for the organizations. At the heart of the Mashantucket decision was the conclusion of both the District Court and the Second Circuit that Connecticut regulated rather than prohibited gambling and thus Connecticut was required to negotiate a compact with the Pequot Tribe. On the other hand, the instant case involves article I, § 9 of the New York State Constitution, a provision which reflects New York's long-standing policy against the type of commercialized gambling sought to be permitted here and acts as a limitation on the Legislature's authority to enact legislation like part B of chapter 383. (See discussion of New York's long constitutional history of prohibiting gambling in Saratoga County Chamber of Commerce v Pataki, 100 NY2d 801, 826-828 [2003] [G.B. Smith, J., concurring in part and dissenting in part].) The antigambling provision is part of the supreme law of the State and can only be repealed by the People of New York State by amending the constitution ( see NY Const, art XIX, § 1). The New York State Constitution should be accorded significantly more deference than the statutes at issue in Mashantucket, statutes which did not reflect as strong an antigambling policy as New York's and have since been repealed. With respect to Cabazon, it should be noted that while IGRA has adopted Cabazon language pertaining to class II and class III gaming, on the facts and primary issue to be resolved, Cabazon can be distinguished from the instant case. First, unlike the instant case, Cabazon involved a state (i.e., California) that did not have as clear an antigambling policy as New York. Second, Cabazon involved an Indian tribe's attempt to operate bingo parlors which, under IGRA, falls under class II gaming and within tribal jurisdiction with oversight regulation by the National Indian Gaming Commission. Moreover, the Senate Report which accompanied the bill that eventually became IGRA (i.e., IGRA's legislative history) links language from Cabazon, i.e., the regulatory/prohibitory distinction, to class II gaming while remaining silent as to class III gaming, the gambling activity at issue here. Given this and the fact that class II and class III gaming are regulated in very different ways, Congress contemplated different treatment for class II and class III gaming. Third, Cabazon involved an analysis of: (1) whether a statute and county ordinances addressing gambling were criminal (i.e., prohibitory) or civil (i.e., regulatory); and (2) whether California could enforce its gambling laws on Indian land. The instant case considers whether the Legislature has the authority to enact legislation that is in direct contravention to the New York State Constitution. Thus, in view of the plain and unambiguous limitation on legislative authority set forth in article I, § 9 of the New York State Constitution, the State Legislature did not have the authority to enact part B of chapter 383 of the Laws of 2001. Further, neither IGRA nor any reading of Mashantucket and Cabazon could grant the Legislature such authority. Accordingly, part B of chapter 383 must be set aside as void and unconstitutional, including Executive Law § 12 (regarding Governor's authority to enter into tribal-state compacts) and the amendments to Penal Law § 225.30 (a) (1) and (b) (regarding the legalization of slot machines for class III gaming purposes). In affirming the lower court's holding regarding part B of chapter 383, and thereby disregarding the article I, § 9 limitation on the Legislature, the majority has essentially concluded that IGRA provides a means for the Legislature to circumvent this State's constitutional limitations and pass legislation that it normally could not. This conclusion suggests, at least with regard to gaming on Indian lands, that IGRA exerts control over how legislation is passed and even supplants this State's Constitution. In view of New York State's status as a sovereign state and the fact that New York State's Constitution is the supreme law of the State, this notion is incorrect. Moreover, effectively extending power to IGRA, with regard to the State's Constitution, is improper because the people of New York State, not Congress or the Secretary of the Interior or the State Legislature, approve the State Constitution and any amendments thereto ( see NY Const, art XIX, § 1). Thus, if the people are not permitted to consider and vote on a subject covered under the State Constitution, their constitutional rights have been violated. For example, the people have approved certain exceptions to the State's general ban on gambling, as well as highly regulated, noncommercial games of chance authorized under article I, § 9 of the New York State Constitution and article 9-A of the General Municipal Law. [31] However, the high-stakes commercialized gaming and games contemplated under part B of chapter 383 were not approved by the people. [32] In other words, the Legislature, by purporting to make a policy decision within its power, i.e., enacting part B, delegated to the Governor the authority to execute tribal-state compacts, authority that, pursuant to the limitation on legislative power set forth in article I, § 9, the Legislature does not have. Accordingly, part B is not an improper delegation of legislative authority as plaintiffs contend. This implies that the Legislature had the authority to enact part B. Instead, because the Legislature does not have the authority to empower a state official to enter into an agreement for the establishment of commercialized gambling, the Legislature's delegation was an action without consequence. Although under General Municipal Law § 186 (3), other games of chance may be authorized by the Board, the following games, included in the instant Tribal-State Compact, have not been authorized as games of chance under New York law: (1) baccarat; (2) carribean stud poker; (3) keno; (4) let it ride poker; (5) minibaccarat; (6) pai gow poker; (7) pai gow tiles; (8) red dog; (9) sic bo; (10) super pan; (11) casino war; (12) spanish blackjack; (13) multiple action blackjack; and (14) three card poker. These games are not permitted to be engaged in for any purpose by any person, organization or entity ( see 25 USC § 2710 [d] [1] [B]). Accordingly, even if New York State could legally enter into a tribal-state compact, it could refuse to negotiate with the Seneca Nation of Indians regarding the tribe's operation of these unauthorized games ( see e.g., Cheyenne Riv. Sioux Tribe v State of S.D., 3 F3d 273 [8th Cir 1993]). Note also that New York State can refuse to negotiate if the Seneca Nation of Indians wants to operate a game that is a variation of the authorized game ( id. ). Moreover, in light of the article I, § 9 limitation to the Legislature's power, the subject matter of part B of chapter 383 clearly falls within the ban on commercialized gaming. This legislation, specifically the portions authorizing the execution of compacts, should first have been put through the amendment process so that the people of New York State could decide whether such compacts for the establishment of high-stakes games or gaming should become permissible under the State Constitution and whether the Legislature can enact legislation authorizing the execution of such compacts. Because the high-stakes commercialized gaming and games, and the provisions regarding the compacts were not put before the people through the amendment process, the rights of New York's citizens have been violated. Affirming part B presents another problem regarding the ability of the people to exercise their collective voice. During oral argument, state respondent conceded that theoretically, there would be no legal impediment to having casinos placed in New York City and Albany as long as the requirements regarding after-acquired Indian lands held in trust for an Indian tribe (25 USC § 2719 [b] [1] [A]) are met. Specifically, if the Secretary of the Interior: (1) purchases land in, for example, New York City and Albany and holds it in trust for Indian tribes; and (2) determines that a gaming establishment(s) on the newly acquired lands would be in the best interest of the Indian tribe and its members, and would not be detrimental to the surrounding community; and (3) the Governor concurs, there could be commercialized Indian gaming in New York City and Albany without the required approval, via the amendment process, of the people of the State of New York.