Opinion ID: 1160930
Heading Depth: 3
Heading Rank: 1

Heading: California Gambling Law

Text: Since 1849, the California Constitution has generally prohibited all lotteries and the sale of all lottery tickets. In the original document of 1849, the Constitution prohibited all lotteries and the sale of all lottery tickets, doing so in article IV, section 27. In the current document of 1879, it continues the prohibition, formerly in article IV, section 26, and presently in article IV, section 19, subdivision (a), which declares: The Legislature has no power to authorize lotteries and shall prohibit the sale of lottery tickets in the State. Since 1872, section 319 et seq. of the Penal Code also has prohibited all lotteries and the sale of all lottery tickets. But since 1984, through the addition of article IV, section 19, subdivision (d), the California Constitution has provided: Notwithstanding subdivision (a), there is authorized the establishment of a California State Lottery. As we explained in Western Telcon, Inc. v. California State Lottery (1996) 13 Cal.4th 475, 484, 53 Cal.Rptr.2d 812, 917 P.2d 651 ( Western Telcon ), a lottery is defined by three elements, namely, a prize, distribution by chance, and consideration. Consideration is the fee (in the form of money or anything else of value) that a participant pays the operator for entrance. (See Cal. Gas. Retailers v. Regal Petroleum Corp. (1958) 50 Cal.2d 844, 853-854, 857-862, 330 P.2d 778.) Chance means that winning and losing depend on luck and fortune rather than, or at least more than, judgment and skill. ( Finster v. Keller (1971) 18 Cal.App.3d 836, 844-845, 96 Cal.Rptr. 241; People v. Hecht (1931) 3 P.2d 399,119 Cal.App. Supp. 778, 784-787.) Prize encompasses property that the operator offers to distribute to one or more winning participants and not to keep for himself. ( Western Telcon, supra, at pp. 485-4 88, 53 Cal.Rptr.2d 812, 917 P.2d 651.) The property offered may exist apart from the fees the participants pay the operator or it may arise from the fees themselves, as when, in the commonly used parimutuel system, the property consists of the fees in the form of a pool that remains after the operator has taken out some amount for himself. ( Id. at p. 488 & fn. 4, 53 Cal. Rptr.2d 812, 917 P.2d 651.) The prize or prizes, however, must be either fixed in advance of the play or determined by the total amount of fees paid. ( Id. at p. 489, 53 Cal.Rptr.2d 812, 917 P.2d 651.) Commencing in 1872, the year of the Penal Code's enactment, section 330 of that code has proscribed a number of games by name; since 1885 (Stats.1885, ch. 145, § 1, p. 135), the list has included the game twenty-one. Also commencing in 1872, section 330 of the Penal Code has prohibited all banking games, that is, those games in which there is a person or entity that participates in the action as the one against the many ( People v. Ambrose (1953) 265 P.2d 191, 122 Cal.App.2d Supp. 966, 970), taking on all comers, paying all winners, and collecting from all losers ( Sullivan v. Fox (1987) 189 Cal. App.3d 673, 678, 235 Cal.Rptr. 5), doing so through a fund generally called the bank ( Western Telcon, supra, 13 Cal.4th at p. 487, 53 Cal.Rptr.2d 812, 917 P.2d 651). As we expressly held in Western Telcon, a banking game is not a lottery, and a lottery is not a banking game, for the two are mutually exclusive. (13 Cal.4th at p. 494, 53 Cal.Rptr.2d 812, 917 P.2d 651.) In a lottery, the operator distributes the prize or prizes to the winner or winners.... ( Id. at p. 485, 53 Cal. Rptr.2d 812, 917 P.2d 651.) The operator is not a participant and, hence, does not compete with the participants. He has no interest in the outcome of the lottery, because neither the fact the prize will be disposed of, nor the value of the prize to be distributed, depends upon which, or how many, of the participants might win it. ( Id. at p. 488, 53 Cal.Rptr.2d 812, 917 P.2d 651.) Insofar as the operator is concerned, the result is invariable: he will give over the prize to one or more of the participants. (See id. at pp. 485-86, 53 Cal.Rptr.2d 812, 917 P.2d 651.) In a banking game, by contrast, the banker pays off all winning wagers and keeps all losing wagers. ( Id. at p. 485, 53 Cal.Rptr.2d 812, 917 P.2d 651.) He is in fact a participant and, hence, compete[s] with the other participants: `he is the one against the many.' ( Id at p. 488, 53 Cal.Rptr.2d 812, 917 P.2d 651.) He has an interest in the outcome of the game, because the amount of money he will have to pay out, or be able to take in, depends upon whether each of the individual bets is won or lost. ( Ibid. ) The result is variable: the banker may either win or lose as to either some or all of the other participants. (See id. at pp. 485, 487, 489, 494, 53 Cal.Rptr.2d 812, 917 P.2d 651.) Commencing in 1885, section 330 of the Penal Code has similarly prohibited all percentage games, that is, those games in which the operator does not participate in the action but collects a percentage ... computed from the amount of bets made, winnings collected, or ... money changing hands. ( Sullivan v. Fox, supra, 189 Cal. App.3d at p. 679, 235 Cal.Rptr. 5.) Since at least 1872, all nonprohibited card games, primarily round games such as various forms of poker, have been permitted. (See, e.g., Monterey Club v. Superior Court (1941) 48 Cal.App.2d 131, 148-149, 119 P.2d 349.) Nevertheless, as reflected in section 19800 et seq. of the Business and Professions Code, such games are subject to regulation by the state and, in the absence of state regulation, to regulation and even prohibition by localities. (See Western Telcon, supra, 13 Cal.4th at p. 482, fn. 2, 53 Cal.Rptr.2d 812, 917 P.2d 651 [stating that gambling games that are not prohibited are generally subject to local control, with some state regulation].) Since 1911, section 330a of the Penal Code has prohibited all slot machines; section 330b of the same code, enacted in 1950, has redoubled the prohibition. The Penal Code's broad definitions of slot machines include virtually every kind of stand-alone gaming device. Section 330a impliedly defines slot machines as any ... machine, contrivance, appliance or mechanical device, upon the result of action of which money or other valuable thing is staked or hazarded, and which is operated, or played, by placing or depositing therein any coins, checks, slugs, balls, or other articles or device, or in any other manner and by means whereof, or as a result of the operation of which any merchandise, money, representative or articles of value, checks, or tokens, redeemable in, or exchangeable for money or any other thing of value, is won or lost, or taken from or obtained from such machine, when the result of action or operation of such machine, contrivance, appliance, or mechanical device is dependent upon hazard or chance.... (Pen.Code, § 330a, as added by Stats.1911, ch. 483, § 1, p. 951.) Section 330b expressly defines slot machines, in similar terms, as encompassing [a]ny machine, apparatus or device ... that is adapted, or may readily be converted into one that is adapted, for use in such a way that, as a result of the insertion of any piece of money or coin or other object, or by any other means, such machine or device is caused to operate or may be operated, and by reason of any element of hazard or chance or of other outcome of such operation unpredictable by him, the user may receive or become entitled to receive any piece of money, credit, allowance or thing of value or additional chance or right to use such slot machine or device, or any check, slug, token or memorandum, whether of value or otherwise, which may be exchanged for any money, credit, allowance or thing of value, or which may be given in trade, irrespective of whether it may, apart from any element of hazard or chance or unpredictable outcome of such operation, also sell, deliver or present some merchandise, indication of weight, entertainment or other thing of value. (Pen.Code, § 330b, subd. (2), as added by Stats.1950, First Ex.Sess.1950, ch. 17, § 1, pp. 452-453; see also Pen.Code, § 330.1 [containing similar definition].) Beginning in 1933, the California Constitution has authorized the Legislature to allow horse races and horse race wagering. (See now Cal. Const., art. IV, § 19, subd. (b), former art. IV, § 25a.) As reflected in section 19400 et seq. of the Business and Professions Code, the Legislature has done so, permitting licensed wagering in accordance with the parimutuel system. (Bus. & Prof.Code, §§ 19590, 19593.) Beginning in 1976, in article IV, section 19, subdivision (c), the California Constitution has authorized the Legislature to permit bingo: Notwithstanding subdivision (a), which proscribes lotteries, the Legislature by statute may authorize cities and counties to provide for bingo games, but only for charitable purposes. As reflected in section 326.5 of the Penal Code, the Legislature has done so. Lastly, since 1984, through the addition of section 19(e), the California Constitution has declared: The Legislature has no power to authorize, and shall prohibit casinos of the type currently operating in Nevada and New Jersey.