Opinion ID: 739314
Heading Depth: 3
Heading Rank: 2

Heading: The Issued/Unissued Distinction

Text: 31 Moreover, we are in full agreement with those courts that have found the distinction between issued and unissued licenses to be esoteric. See id.; Cleveland, 951 F.Supp. at 1261. The courts that have embraced this distinction--and consequently have held that an unissued license is not property--provide no justification whatsoever for making the distinction. See Granberry, 908 F.2d at 280; Kato, 878 F.2d at 269; Murphy, 836 F.2d at 253-54. It is perhaps true, as some other courts have surmised, that the issued-unissued distinction is based upon the reasoning that an issued license has great value in the hands of the licensee but an unissued license has negligible value in the hands of the government. See, e.g., Martinez, 905 F.2d at 713; Cleveland, 951 F.Supp. at 1261. But, as do Martinez and Cleveland, we also reject this questionable logic. 32 First, the law of the Fifth Circuit strongly suggests that the strained distinction between issued and unissued licenses should be rejected. Cleveland, 951 F.Supp. at 1261. In Loney, 959 F.2d at 1334, the defendants were convicted of wire fraud based upon a scheme to defraud American Airlines of frequent-flyer award coupons. We held that the award coupons--as owned by an airline--are property for purposes of the wire fraud statute, notwithstanding the fact that airlines cannot use the award coupons themselves and that the award coupons arguably have little monetary value to the airlines. See id. at 1336; see also Cleveland, 951 F.Supp. at 1261. We have thus refused to draw a distinction between issued and unissued frequent-flyer award coupons, and we likewise see no relevant distinction between issued and unissued video poker licenses. 33 Second, it is simply not the case that unissued video poker licenses have only negligible value to Louisiana. In the hands of the licensee, the license is something of value, for it allows the licensee to operate the video poker machines and collect significant revenue from their use; in the hands of Louisiana, the license has value both because (1) the State expects to collect an up-front fee (before issuance) and a percentage of net revenues (in the future) from the putative licensees and (2) the State values its rights to control the licenses and to choose the parties to whom it issues the licenses. The licensee and the licensor may value the video poker license differently; nevertheless, the license is valuable to both. 34 Third, as a number of courts have noted, the contention that  'licenses are property in the hands of the licensees, but never in the hands of the government represents an inversion of historical fact.'  Cleveland, 951 F.Supp. at 1261, (quoting United States v. Turoff, 701 F.Supp. 981, 989 (E.D.N.Y.1988)); see also Martinez, 905 F.2d at 714. As noted by Professor Reich in his seminal article on property rights, a license is an example of government largess that is originally public property, comes from the state, and may be withheld completely. Charles Reich, The New Property, 73 Yale L.J. 733, 778 (1964) (cited in Martinez, 905 F.2d at 714; Cleveland, 951 F.Supp. at 1261; Turoff, 701 F.Supp. at 989-90). 35