Opinion ID: 1823137
Heading Depth: 3
Heading Rank: 1

Heading: Function of the System

Text: On January 14, 2006, before Barber moved to intervene, the parties filed a joint stipulation of facts (the stipulation). According to the stipulation, as supplemented by facts that are undisputed or uncontroverted, Innovative is a wholly owned subsidiary of Multimedia Games, Inc. (Multimedia), which provides computer equipment and software to promote the gaming activities of Native American, charitable gaming establishments, and state, national, and international lotteries. [2] In 2005, Multimedia began discussions with the owners of the race course regarding the development of a project to promote the race course, the primary business activity of which is pari-mutual wagering and racing activities for its patrons. Those discussions produced the scheme for the MegaSweeps operation. To implement its plan, Multimedia devised a sophisticated computer system to be installed at the race course. [3] The JCRA describes it as a unique one-of-a-kind system that was basically developed from scratch. JCRA's brief, at 58 n. 18. Essentially, it involved the sales of Internet access in conjunction with chances to win cash prizes. Innovative was incorporated to continue Multimedia's implementation, design and deployment of the system. The Internet-access aspect of the system installed at the race course is variously described as a cyber café or the CyberCenter. 8. Patrons obtain access to the services of the CyberCenter by purchasing computer access time (`cybertime') at a rate of one (1) dollar for four (4) minutes. . . . 9. The rate[] charged for [cybertime] is fair market value. . . . . 22. The products and services offered at the CyberCenter . . . provide for[, among other things,] . . . personal computer usage, Internet access and voice communications via the Internet, and information on pari-mutual wagering. . . . The CyberCenter features computer terminals that provide access to a personal computer with broadband Internet connection where users can browse the Internet, access email, and learn about and use commercial software applications licensed for use on that computer terminal. The package offered at the CyberCenter includes . . . services such as photocopying, printing, photographic reproduction . . .; access to software programs for use in preparing tax returns, computer games, and basic computer skills tutorials (for Windows, Microsoft Office, other programs and the Internet itself); and the sale or rental of certain computer hardware, including headsets that can be used for voice communications and flash drives for data retention and transfer. . . . . . . . 24. Customers must have an account in order to purchase cybertime. With that account number, the System keeps track of how much cybertime a customer has purchased and how much that customer has used. The account is accessed through a plastic account access card containing an encoded magnetic strip similar to a credit card. Once cybertime has been purchased, it can be used at any one of the . . . computer terminals located in the CyberCenter on both floors of the Birmingham Race Course facility. The computer terminals have restricted access requiring use of attached card swipe readers. The gaming aspect of the system is explained in the stipulation as follows: 10. The Birmingham Race Course offers a sweepstakes called the [MegaSweeps]. For every one (1) dollar of cybertime purchased, the consumer receives 100 entries in the [MegaSweeps]. The results of the respective entries, i.e., whether each is a winning or losing entry, are predetermined when the consumer purchases cybertime at the point of purchase. 11. The customer determines whether the sweepstakes entries are winners by reading the results online or on one of the 116 computers in the CyberCenter, calling a toll-free phone number, or by placing the computer access card in one of more than 1,300 electronic readers [`the readers'] that display winning and losing entries in an entertaining format, but standing alone are otherwise dumb terminals. Once the results have been revealed, winning entries are paid. . . . . . . . 18. All sweepstakes entries, whether obtained with the purchase of cybertime, by mail [ without a purchase ], or by request at the facility [ without a purchase ], are drawn in the same manner. Entries cannot be changed or altered at any time. 19. Although a customer does not immediately know the sweepstakes results when the entries are [assigned] to him, the customer is provided with a number of ways to reveal the results. The customer can learn the outcomes of his sweepstakes entries by accessing a website remotely, using the computer terminals, by calling a toll-free phone number, or by revealing the outcomes on a reader. 20. The Birmingham Race Course has over 1,300 readers. The readers are divided among different entertainment scenarios, and each reader reveals a batch of entries in a quantity selected by the customer. The customer swipes his account card to activate a reader. Once activated, the customer presses a button on the reader to see the results of the selected number of entries. 21. The entries the customer receives after the purchase of cybertime are the same entries that are revealed. When a customer's sweepstakes entries are revealed, those sweepstakes entries are marked as revealed and they cannot be revealed again. If a customer chooses to use a reader to reveal entries, a server selects the order in which a customer's outcomes are revealed. The total prize value of the subset is sent to the reader so the reader can show the outcome to the customer. For example, when a customer elects to reveal five of the customer's sweepstakes entries, a server might select five of the customer's sweepstakes entries that happen to be non-winners, in which case the appropriate communication would be relayed to the reader, and the reader would display that outcome to the customer. Alternatively, a server might select five of the customer's sweepstakes entries that happen to be winners and relay the appropriate communication to the reader. The reader will ultimately display the exact value of the customer's sweepstakes entries. (Emphasis added.) The trial court found that the readers are designed and arranged so that they look and sound like slot machines. Lt. Paul Logan, who conducted preseizure undercover operations at the race track, stated that the readers would indicate a winning entry by dings, tones and simulated change falling as in a slot machine. According to Lt. Logan, the readers also had casino-style names such as Bunch O'Luck, Crazy Blue Streak, Reel Thrills, Sun Dogs, Flamingo 7's, Major Money, Krazy Farm, Ed McMahon's Star Magic, Cherry Pop, Fruit Cocktail Deluxe, China Seas, Lock and Win, Double Cash Money, and many others. The payout percentage, that is, the ratio of winnings to the amount expended by the players, is 92%. Indeed, the typical reader was originally manufactured as a slot machine and had been modified for use in conjunction with the peculiar components of the MegaSweeps system, which include: 26. Central Database. The central component of the System is a database where the customer's account is tracked. The account maintains the cardholder's information, the balance of purchased cybertime remaining, the quantity of sweepstakes entries issued, and the balance of sweepstakes winnings revealed, but not yet redeemed. 27. Point of Sale Terminals. The Point of Sale Terminals allow customers to purchase cybertime for their accounts and to redeem any revealed winning sweepstakes prizes. The Point of Sale Terminal is connected to the Universal Point of Sale server which handles all transactions and connections with the Central Database. When a customer purchases cybertime a request is forwarded from the Point of Sale to the Universal Point of Sale server where it is credited to the customer's account in the Central Database. This sale of cybertime also triggers the System to give a customer promotional sweepstakes entries by associating them with the Customer's account at the time of purchase. 28. Computer Terminals. The Computer Terminals are state-of-the art personal computers that are the primary access point for the services sold by the CyberCenter. The Computer Terminals are equipped with a suite of licensed commercial software applications (like Microsoft Office) that can be used by customers on the local computer and they allow broadband access to the Internet. The Computer Terminals have attached swipe card readers that provide customers access by swiping their account access cards. The Computer Terminals are connected to a server called the CyberCenter Kiosk Webservice (`Computer Terminal server') that deducts cybertime from the customer's account as the customer uses access time at the Computer Terminal. 29. The Readers. The Readers reveal sweepstakes entries. The Readers are designed to show sights and sounds that heighten the suspense and excitement of the sweepstakes. The Readers reveal the outcomes to the customers in groups. The Readers do not determine the outcome of the sweepstakes; rather, they merely reveal the outcome to the customer in an entertaining manner. The only random process that takes place on the Reader is the determination of which entertaining display to use to show a losing outcome or a winning outcome of equal value. For example, a Reader might have several hundred different ways of showing a non-winning sweepstakes outcome to the customer. 30. Servers. The Point of Sale Terminals, Computer Terminals, and Readers are connected to three separate servers. The Universal Point of Sale server runs from the CyberCenter back office and handles requests from both the Point of Sale and Recharge Kiosks. The Universal Point of Sale server credits the customer's account in the database with cybertime when purchases are made at either the Point of Sale or the Recharge Kiosks and gives the customers sweepstakes entries. The Computer Terminal server also runs from the CyberCenter back office and controls access to the Computer Terminals. When a customer swipes an account access card at a Computer Terminal, the Computer Terminal server determines whether the customer has cybertime available. If so, the Computer Terminal server allows the customer access to the Computer Terminal. The Computer Terminal server keeps a record of the cybertime available on the customer's account. The Reader server determines which of the customer's sweepstakes entries will be revealed on any given request. For example, if a customer makes a request at a Reader to reveal five sweepstakes entries and the customer has 100 available, the Reader server determines which five entries to reveal. The Reader server then sends the information on the five entries to the Reader and marks those five entries as revealed in the database. 31. Customer Tracking Terminal (`CTT'). The CTT provides a mechanism for entering the customer's account data into the System and issuing a customer account card. Customers new to the CyberCenter must sign up and get an account card to begin tracking cybertime. The CTT interfaces with the Customer Tracking System. 32. Customer Tracking System (`CTS'). The CTS provides an interface between the central database and the CTT. In addition to facilitating account creation and data entry, the CTS can be leveraged to facilitate promotions. 33. Recharge Kiosk. The recharge kiosks are automated stations that allow existing customers with account access cards to purchase additional cybertime and add it to their accounts. If customers have won cash prizes in the sweepstakes, they can use the Recharge Kiosks to [apply] those winnings towards additional cybertime purchases. The Recharge Kiosks are connected to the Universal Point of Sale server. 34. Management Terminal. The management terminals allow users to monitor and control the system. They provide access to reports on how the System works and on the current state of the System. Management Terminals are personal computers running proprietary software that provides them with a means of requesting and displaying information from the Central Database. Customers who call in to determine the outcome of their sweepstakes entries will be serviced by employees of the CyberCenter through the Management Terminals. Management Terminals provide access to information from the database through their connection to the Management Terminal Service. 35. Management Terminal Service (`MTS'). The MTS connects the Management Terminals to the Central Database. The MTS packages requests for information from the Management Terminals and returns the data requested from the database. The MTS runs on a server in the back office of the CyberCenter. (Emphasis added.) In a nutshell, the MegaSweeps system functions as follows: A consumer wishing to play the readers opens an account by obtaining a magnetically encoded card, either by mail or at the point of sale at the race track. In either event, the account is simultaneously assigned, by the central database and a server, a number of MegaSweeps entries corresponding to the amount of cybertime the consumer obtained. The assignments are selected from any 1 of 20 pools containing 200 million entries in each pool. According to Clifton Lind, Multimedia's chief executive officer, the entries in each pool are randomized by chance before they are assigned to a consumer. The consumer activates one of the 1,300 readers by inserting his slide card into a slot on the reader. Once activated, the reader allows a consumer to reveal his entries. The consumer chooses an option and presses a button. Subsequently, the reader server reveals the selected number of entries. Whether those entries correspond to any of the winning entries that were assigned to the consumer's account at the point of sale is determined by a computer algorithm. The consumer may continue selecting options until all of his entries have been revealed. When the consumer logs off the reader, his account status is maintained in the central database. The system will print out a report of the transaction, including the amount of winnings, if any. Subsequently, the consumer may collect his winnings at a cash advance cage. In the alternative, he may exchange his winnings for more cybertime and, consequently, additional MegaSweeps entries, by inserting his card into one of the recharge kiosks and entering the amount of his winnings to be applied toward the purchase of more cybertime. Barber contends that the readers are slot machines with certain parts removed. Barber's brief, at 48 n. 12. Thus, he insists, the readers are illegal because they are `readily adaptable or convertible' to slot machines within the definition of § 13A-12-20(10). Id. In its order, the trial court concluded that the readers are not slot machines because the readers are `dumb terminals,' reasoning (1) that no element of chance is present at the readers,  and (2) that no consideration is paid or can be paid to use the readers. (Emphasis added.) Barber, however, contends that both these elements are present if the components of the system are understood as working collectively and that the trial court erred in looking solely at the readers to determine whether gambling devices were present. Barber's brief, at 47 (emphasis added). With a payout percentage of 92%, the owners do not  and could not  argue that the third element of gambling is absent in this case, that is, they do not contend that prizes are not being awarded. Instead, echoing the rationale of the trial court, Innovative insists that because the winning entries are predetermined within the central database at the moment the player receives his card, prizes are not awarded on the basis of a future contingent event, within the meaning of § 13A-12-20(4). Innovative's brief, at 66. Thus, this case turns on whether the MegaSweeps involves the elements of chance and consideration.