Opinion ID: 1264938
Heading Depth: 1
Heading Rank: 7

Heading: The Constitutionality of the Video Lottery Acts

Text: The issues raised in the Cities and Counties Petition, the Coalition Petition, and the Intervenor Racing Association Brief concern the constitutionality of the State's video lottery statutes. According to W.Va.Code § 29-22-18a(a) [t]here is continued a special revenue fund within the state lottery fund in the state treasury which is designated and known as the `state excess lottery revenue fund.' Pursuant to W.Va.Code § 29-22-18a(b), for the fiscal year beginning July 1, 2003, the Lottery Commission was directed to deposit $19,000,000.00 from the state excess lottery revenue fund into the economic development project fund to repay the principal, interest, and redemption premium, if any, on the revenue bonds issued by the Economic Development Authority to pay all or a part of the cost of constructing, equipping, improving, and maintaining the projects certified by the Economic Development Grant Committee. W.Va.Code § 29-22-18a(d)(1) and (2). Revenues received under the provisions of W.Va.Code §§ 29-22A-10b and 10c of the Racetrack Video Lottery Act, and the Limited Video Lottery Act, W.Va.Code §§ 29-22B-101 to 1903, except amounts due the Lottery Commission under W.Va.Code § 29-22B-1408(a)(1), are to be placed in the State Excess Lottery Revenue Fund pursuant to W.Va.Code § 29-22-18a(a). In sum, because the revenue bonds issued by the Development Authority to fund the grants are paid for by video lottery proceeds generated under the Racetrack Video Lottery Act and the Limited Video Lottery Act, the viability of the grants depends on the constitutionality of these two Acts. We note at the outset that those who challenge the constitutionality of Legislative enactments face a heavy burden. [5] The question, whether a law be void for its repugnancy to the constitution, is, at all times, a question of much delicacy, which ought seldom, if ever, to be decided in the affirmative, in a doubtful case. The court, when impelled by duty to render such a judgment, would be unworthy of its station, could it be unmindful of the solemn obligations which that station imposes. But it is not on slight implication and vague conjecture that the legislature is to be pronounced to have transcended its powers, and its acts to be considered as void. The opposition between the constitution and the law should be such that the judge feels a clear and strong conviction of their incompatibility with each other. Fletcher v. Peck, 10 U.S. (6 Cranch) 87, 128, 3 L.Ed. 162, 175 (1810). A court has a duty to attempt to find a proper basis for upholding the validity of a legislative enactment when its constitutionality is challenged[.] State ex rel. Appalachian Power Co. v. Gainer, 149 W.Va. 740, 746-47, 143 S.E.2d 351, 357 (1965) (citations omitted). Also, [c]ourts must use restraint in the exercise of their power to declare legislative acts to be unconstitutional. Gainer, 149 W.Va. at 747, 143 S.E.2d at 357 (citation omitted). To this end, we have held: In considering the constitutionality of a legislative enactment, courts must exercise due restraint, in recognition of the principle of the separation of powers in government among the judicial, legislative and executive branches. Every reasonable construction must be resorted to by the courts in order to sustain constitutionality, and any reasonable doubt must be resolved in favor of the constitutionality of the legislative enactment in question. Courts are not concerned with questions relating to legislative policy. The general powers of the legislature, within constitutional limits, are almost plenary. In considering the constitutionality of an act of the legislature, the negation of legislative power must appear beyond reasonable doubt. Syllabus Point 1, State ex rel. Appalachian Power Company v. Gainer, supra . As originally enacted, our State constitution prohibited lotteries. According to former Article VI, Section 36, [t]he legislature shall have no power to authorize lotteries or gift enterprises for any purpose, and shall pass laws to prohibit the sale of lottery or gift enterprise tickets in this State. On November 6, 1984, the voters of the State ratified an amendment to Article VI, Section 36 to allow the Legislature to authorize lotteries which are regulated, controlled, owned and operated by the State of West Virginia in the manner provided by general law, either separately by this State or jointly or in cooperation with one or more states[.] State ex rel. Mountaineer Park v. Polan, 190 W.Va. 276, 438 S.E.2d 308 (1993). Shortly thereafter, the Legislature enacted the State Lottery Act, W.Va.Code §§ 29-22-1 to -28, the purpose of which was, to establish and implement a state-operated lottery under the supervision of the state lottery commission and the director of the state lottery office who shall be appointed by the governor and hold broad authority to administer the system in a manner which will provide the state with a highly efficient operation. W.Va.Code § 29-22-2 (1985). In 1993, as a result of the Lottery Commission's expansion of its lottery operations to include an electronic video lottery game at Mountaineer Park's thoroughbred race track in Hancock County, this Court was faced with the question, whether the Constitution requires the legislature to pass laws which prescribe: (1) the manner in which electronic video lottery operations are regulated, controlled, owned and operated before any can be properly conducted; and (2) sufficient standards to guide the Lottery Commission so that the delegation of authority is constitutional and does not vest the Lottery Commission with uncontrolled discretion. State ex rel. Mountaineer Park v. Polan, 190 W.Va. at 279, 438 S.E.2d at 311 (footnote omitted). In Syllabus Point 1 of Mountaineer Park, we held: Article VI, section 36 of the West Virginia Constitution provides an exception to the prohibition against lotteries to allow the operation of a lottery which is regulated, controlled, owned and operated by the State of West Virginia in the manner provided by general law. Only those lottery operations which are regulated, controlled, owned and operated in the manner provided by general laws enacted by the West Virginia Legislature may be properly conducted in accordance with the exception created under article VI, section 36 of our Constitution. Applying this rule to the facts before the Court, we concluded that, because the legislature has not enacted general laws for the regulation, control, ownership and operation of electronic video lottery, and because the legislature failed to prescribe adequate standards in the State Lottery Act to guide the Lottery Commission in the exercise of the power conferred upon it with respect to electronic video lottery, the Lottery Commission was without authority under the Constitution to establish electronic video lottery. 190 W.Va. at 285-86, 438 S.E.2d at 317-18. We did note, however that [t]he legislature in subsequent legislation could, of course, amend [W.Va.Code §§ 29-22-1, et seq. ] to clearly state that video gambling devices are part of the lottery system. 190 W.Va. at 285, 438 S.E.2d at 317. [6] The Legislature quickly addressed this Court's holding in Mountaineer Park and enacted the Racetrack Video Lottery Act, W.Va.Code §§ 29-22A-1, et seq., in 1994. The purpose of the Act is to define and provide specific standards for the operation of video lottery games at pari-mutuel racing facilities licensed by the state racing commission[.] W.Va.Code § 29-22A-2(e) (1994). The Act defines video lottery as, a lottery which allows a game to be played utilizing an electronic computer and an interactive computer terminal device, equipped with a video screen and keys, a keyboard or other equipment allowing input by an individual player, into which the player inserts coins, currency, vouchers or tokens as consideration in order for play to be available, and through which terminal device the player may receive free games, coins, tokens or credit that can be redeemed for cash, annuitized payments over time, a non-cash prize or nothing, as may be determined wholly or predominantly by chance. Video lottery does not include a lottery game which merely utilizes an electronic computer and a video screen to operate a lottery game and communicate the results of the game, such as the game Travel, and which does not utilize an interactive electronic terminal device allowing input by an individual player. W.Va.Code § 29-22A-3(aa) (1994). Video lottery game is defined as, a commission approved, owned and controlled electronically simulated game of chance which is displayed on a video lottery terminal and which: (1) Is connected to the commission's central control computer by an on-line or dial-up communication system; (2) Is initiated by a player's insertion of coins, currency, vouchers or tokens into a video lottery terminal, which causes game play credits to be displayed on the video lottery terminal and, with respect to which, each game play credit entitles a player to choose one or more symbols or numbers or to cause the video lottery terminal to randomly select symbols or numbers; (3) Allows the player to win additional game play credits, coins or tokens based upon game rules which establish the random selection of winning combinations of symbols or numbers or both and the number of free play credits, coins or tokens to be awarded for each winning combination of symbols or numbers or both; (4) Is based upon computer-generated random selection of winning combinations based totally or predominantly on chance; (5) In the case of a video lottery game which allows the player an option to select replacement symbols or numbers or additional symbols or numbers after the game is initiated and in the course of play, either: (A) Signals the player, prior to any optional selection by the player of randomly generated replacement symbols or numbers, as to which symbols or numbers should be retained by the player to present the best chance, based upon probabilities, that the player may select a winning combinations; (B) signals the player, prior to any optional selection by the player of randomly generated additional symbols or numbers, as to whether such additional selection presents the best chance, based upon probabilities, that the player may select a winning combination; or (C) randomly generates additional or replacement symbols and numbers for the player after automatically selecting the symbols and numbers which should be retained to present the best chance, based upon probabilities, for a winning combination, so that in any event, the player is not permitted to benefit from any personal skill, based upon a knowledge of probabilities, before deciding which optional numbers or symbols to choose in the course of video lottery game play; (6) Allows a player at any time to simultaneously clear all game play credits and print a redemption ticket entitling the player to receive the cash value of the free plays cleared from the video lottery terminal; and (7) Does not use the following game themes commonly associated with casino gambling: Roulette, dice, or baccarat card games: Provided, That games having a display with symbols which appear to roll on drums to simulate a classic casino slot machine, game themes of other card games and keno may be used. W.Va.Code § 29-22A-3(y)(1)-(7) (1999). In 2001, the Legislature enacted the Limited Video Lottery Act, W.Va.Code §§ 29-22B-101, et seq., the purpose of which was to establish a single state owned and regulated video lottery thus allowing the State to collect revenue therefrom, control the operators of the machines, and stem the proliferation of gambling in the State. Club Ass'n v. Wise, 293 F.3d 723, 724 (4th Cir.2002) (footnote omitted). [7] The Act provides that all persons conducting limited video lottery on their premises must possess a video lottery retailer's license. W.Va.Code § 29-22B-501(d) (2001). It makes video gambling machines per se illegal gambling devices which may be seized and destroyed as illegal contraband. W.Va.Code § 29-22B-1801 (2001). Finally, those who possess unauthorized machines are subject to criminal prosecution. W.Va.Code § 29-22B-1703 (2001). Generally, the provisions of the Limited Video Lottery Act concerning the regulation and operation of video lottery machines are the same or substantially similar to the provisions of the Racetrack Video Lottery Act. The Coalition Petitioners now argue that the video lottery games authorized by the video lottery statutes constitute video gambling and not a lottery. The petitioners cite for support this Court's declaration in Mountaineer Park that electronic video lottery is different from the common state-run lottery games, and has been defined as `video poker, keno and blackjack,' 190 W.Va. at 284, 438 S.E.2d at 316, and U.S. v. Dobkin, 188 W.Va. 209, 212, 423 S.E.2d 612, 615 (1992), in which this Court found that [video poker] machines... have no relation whatsoever to a lottery or raffle. [8] In addition, petitioners aver that the 1984 electorate which approved of a lottery intended only to bring back state-run ticket lotteries when it voted to amend the constitution, not hard-nosed video gambling machines. This Court has previously defined the term lottery. In State v. Matthews, 117 W.Va. 97, 184 S.E. 665 (1936), we stated in Syllabus Point 1 that [t]he word lottery is commonly understood to mean `a scheme for the distribution of prizes by chance.' Later in Syllabus Point 4 of State v. Hudson, 128 W.Va. 655, 37 S.E.2d 553 (1946), this Court held that [t]he essential elements of a lottery are consideration, prize and chance; and any scheme or device, by which a person, for a consideration, is permitted to receive a prize or nothing, as may be determined predominantly by chance, is a lottery. Even though Hudson is almost sixty years old, its three-pronged definition of lottery is still accepted by the overwhelming majority of jurisdictions, as well as the United States Supreme Court. Opinion Of The Justices, 795 So.2d 630, 635 (Ala.2001) (footnote omitted). See also 54 C.J.S. Lotteries § 2 (1987) (A lottery is defined ... as a scheme for the distribution of prizes or things of value by lot or chance among persons who have paid, or agreed to pay, a valuable consideration for the chance to obtain a prize[.] (Footnote omitted.)). In State v. Hudson, supra , the defendant asserted that the operation of a punch board was not a lottery so as to be prohibited under W.Va.Code § 61-10-11 (1939). [9] Specifically, the activity at issue involved, punching numbers from the board, which was four or five inches long and three inches wide. The winning number was concealed at the top and a controlling or tip number openly appeared elsewhere on the board. Certain tickets were placed or fastened in the board in such manner that a person who had purchased a chance could, by punching a particular place on the surface, eject from a small compartment or section a roll of paper which bore a specific number. In operating the board, the person keeps the rolls which carry his tip number until all the sections of the board are punched. The concealed number is then exposed. The person who has a tip number and a number which corresponds with the concealed number is the winner of the prize. State v. Hudson, 128 W.Va. at 659, 37 S.E.2d at 556. This Court used the definition of lottery set forth in Syllabus 4 of Hudson to conclude that the operation of the punch board was a lottery. It is clear that all of the elements of a lottery are present in the case at bar. Those who participated in the operation of the punch board paid for the right to share in the distribution of a prize, and the result of their venture depended entirely upon chance. No skill was required of any person who punched a number from the board, and the prize consisted of money. The punch board described in the evidence is a lottery, and this Court so holds. State v. Hudson, 128 W.Va. at 666, 37 S.E.2d at 559. Shortly, thereafter, this Court again had the opportunity to determine whether a certain activity constituted a lottery. In State v. Greater Huntington Theatre Corp., 133 W.Va. 252, 55 S.E.2d 681 (1949), this Court affirmed judgment against the defendant for conducting a lottery in violation of W.Va.Code § 61-10-11. The activity at issue concerned a give away night at local theaters whereby movie patrons who purchased the price of admission and registered for a drawing won cash prizes if their names were drawn. In applying the definition of lottery set forth in State v. Hudson , this Court concluded that a purchase of a ticket for theater entertainment constituted consideration for a chance to win a prize, and that the right to a prize was determined by chance. Therefore, the give away night was a lottery prohibited by W.Va.Code § 61-10-11. More recently, in State v. Wassick, 156 W.Va. 128, 191 S.E.2d 283 (1972), a pinball machine distributor appealed his conviction for violating W.Va.Code § 61-10-11. The specific issue was whether free plays on a pinball machine constituted a prize under the definition of lottery. This Court determined that they did and affirmed the judgment below. In explaining its decision, the Court stated: The device used in the instant case was a multiple-coin pinball machine with complicated features that were seemingly designed for payoffs to be made in the use thereof. The free plays provided for in such machine are a prize because they have some value to the player either in playing additional games without charge or receiving a payoff and the fact that the free games are won predominantly by chance for a consideration because of the coins placed in the machine, we hold it to be a lottery per se under the lottery statute of this State. State v. Wassick, 156 W.Va. at 136, 191 S.E.2d at 288. Thus, a review of the cases cited above indicates that this Court has traditionally applied its definition of a lottery broadly to include a number of different activities utilizing various devices including a punch board, a drawing, and a pinball machine. We will now determine whether video lottery machines as defined under the Racetrack Video Lottery Act and the Limited Video Lottery Act fit within this Court's broad definition of lottery. The Racetrack Video Lottery Act and the Limited Video Lottery Act define video lottery as a lottery in which the player inserts coins and currency  as consideration in order for play to be available[.] W.Va.Code §§ 29-22A-3(aa) (1999) and 29-22B-330 (2001) (emphasis added). In regards to the prize element, video lottery allows the player to receive free games or a voucher that can be redeemed for cash, a noncash prize or nothing. Id. [10] Concerning the element of chance, both Acts define a video lottery game as a simulated game of chance. W.Va.Code §§ 29-22A-3(y) (1999) and 29-22B-332 (2001). In addition, the game [i]s based upon computer-generated random selection of winning combinations based totally or predominantly on chance[.] W.Va.Code §§ 29-22A-3(y)(4) and 29-22B-332(4). Moreover, video lottery is specifically defined as a lottery in which prizes may be awarded as may be determined wholly or predominantly by chance. W.Va.Code §§ 29-22A-3(aa) and 29-22B-330. We also note the legislative findings in W.Va.Code § 29-22A-2(a) (1994) of the Racetrack Video Lottery Act that limited video lottery games authorized by this article are lotteries as that term is commonly understood and as that term is used in West Virginia Constitution, article VI, section thirty-six, the video lottery games authorized by this article being lottery games which utilize advanced computer technology[.] The same legislative findings are made in W.Va.Code § 29-22B-201(2) (2001) of the Limited Video Lottery Act. This Court reviews legislative findings with great deference. In Syllabus Point 2 of State ex rel. Ohio Cty. Comm'n v. Samol, 165 W.Va. 714, 275 S.E.2d 2 (1980), we held that [a]bsent a claim that legislative findings are irrational or have no bearing on a legitimate State purpose, they are not subject to judicial investigation. Even the legislative finding of a juristic fact is entitled to great weight and serious consideration[.] State ex rel. Cashman v. Sims, 130 W.Va. 430, 449, 43 S.E.2d 805, 817 (1947) (citation omitted). We find, therefore, that video lottery as created in the Racetrack Video Lottery Act and the Limited Video Lottery Act constitutes a lottery for the purposes of W.Va. Const., Art. VI, § 36. The Coalition petitioners aver, however, that even if the Court finds that video lottery is a lottery, it is not sufficiently regulated, controlled, owned and operated by the State as required by the exception for authorized lotteries in W.Va. Const., Art. VI, § 36. Instead, say the petitioners, the video lottery machines are operated, controlled and owned by their private manufacturers, operators, and retailers. Again, this Court disagrees. A plain reading of W.Va. Const., Art. VI, § 36 indicates that the exception for authorized lotteries does not require lotteries that are regulated, controlled, owned and operated by the State in an absolute sense, but rather in the manner provided by general law. The general law in the instant case is provided in the Racetrack Video Lottery Act and the Limited Video Lottery Act. The legislative findings of both Acts indicate: (b) The Legislature further finds and declares that the state can control, own and operate a video lottery by possessing a proprietary interest in the main logic boards, all erasable, programmable read-only memory chips used in any video lottery equipment or games, and software consisting of computer programs, documentation and other related materials necessary for the video lottery system to be operated. The state may acquire a proprietary interest in video lottery game software, for purposes of this article, through outright ownership or through an exclusive product license agreement with a manufacturer whereby the manufacturer retains copyrighted ownership of the software but the license granted to the state is nontransferable and authorizes the state to run the software program, solely for its own use, on the state's central equipment unit and electronic video terminals networked to the central equipment unit. (c) The Legislature further finds and declares that the state can control and regulate a video lottery if the state limits licensure to a limited number of video lottery facilities located at qualified horse or dog racetracks, extends strict and exclusive state regulation to all persons, locations, practices and associations related to the operation of licensed video lottery facilities, and provides comprehensive law enforcement supervision of video lottery activities. W.Va.Code §§ 29-22A-2(b) and (c) (1994) and 29-22B-202 (2001). [11] Our review of the challenged Acts indicates that the State's regulation, control, ownership, and operation of video lottery are extensive and are certainly sufficient to bring the video lottery within the scope of the exception for authorized lotteries in W.Va. Const., Art. VI, § 36. For example, video lottery terminals for use at licensed racetracks must be approved by the Lottery Commission and must conform to the exact specifications of the video lottery terminal prototype tested and approved by the Commission. W.Va.Code § 29-22A-5(f) (1994). The Lottery Commission directly or through a third-party vendor, maintains a central site system of monitoring the lottery terminals which may immediately disable the video lottery games and video lottery terminals. W.Va.Code §§ 29-22A-6(14)(h) (2001) and 29-22B-305 (2001). Applicants for a video lottery license must meet several qualifications in order to be approved. W.Va.Code §§ 29-22A-7 (2000) and 29-22B-502 (2001). Finally, the Lottery Commission is considered to own the main logic boards and all erasable programmable read-only memory chips. W.Va.Code §§ 29-22A-6(a)(7) (2001) and 29-22B-311 (2001). We conclude, therefore, that video lottery is regulated, controlled, owned and operated by the State of West Virginia in the manner provided by general law within the scope of the exception to the prohibition against lotteries in W.Va. Const., Art. VI, § 36. Accordingly, we hold that the video lottery created pursuant to the Racetrack Video Lottery Act, W.Va.Code §§ 29-22A-1, et seq., is a lottery which is regulated, controlled, owned and operated in the manner provided by general laws enacted by the West Virginia Legislature so that it properly and lawfully may be conducted in accordance with the exception to the prohibition against lotteries set forth in article VI, section 36 of the West Virginia Constitution. Further, we hold that the video lottery created pursuant to the Limited Video Lottery Act, W.Va.Code §§ 29-22B-101, et seq., is a lottery which is regulated, controlled, owned and operated in the manner provided by general laws enacted by the West Virginia Legislature so that it properly and lawfully may be conducted in accordance with the exception to the prohibition against lotteries set forth in article VI, section 36 of the West Virginia Constitution.