Court Opinion

ID: 4541050
Source: CourtListenerOpinion
Date Created: 2020-06-12 14:15:01.957472+00
Date Added: 2024-06-11T12:48:19.960654
License: Public Domain

2020 WI 54

                  SUPREME COURT              OF   WISCONSIN
CASE NO.:               2018AP947

COMPLETE TITLE:         Quick Charge Kiosk LLC and Jeremy Hahn,
                                  Plaintiffs-Appellants-Petitioners,
                             v.
                        Josh Kaul, in his official capacity as Attorney
                        General,
                                  Defendant-Respondent.

                           REVIEW OF DECISION OF THE COURT OF APPEALS
                           Reported at 388 Wis. 2d 525,934 N.W.2d 18
                               PDC No:2019 WI App 51 - Published

OPINION FILED:          June 12, 2020
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:          April 27, 2020

SOURCE OF APPEAL:
   COURT:               Circuit
   COUNTY:              Milwaukee
   JUDGE:               John J. DiMotto

JUSTICES:
HAGEDORN, J., delivered the majority opinion for a unanimous
Court.
NOT PARTICIPATING:

ATTORNEYS:

       For        the   plaintiffs-appellants-petitioners,        there      were
briefs filed by Ohioma Emil Ovbiagele, Samantha Huddleston, and
OVB    Law    &      Consulting,    S.C.,   Milwaukee.   There   was    an   oral
argument by Ohioma Emil Ovbiagele.

       For the defendant-respondent, there was a brief filed by
Colin T. Roth, assistant attorney general; with whom on the
brief was Joshua L. Kaul, attorney general. There was an oral
argument by Colin T. Roth.
                                                                          2020 WI 54

                                                                  NOTICE
                                                   This opinion is subject to further
                                                   editing and modification.   The final
                                                   version will appear in the bound
                                                   volume of the official reports.
No.    2018AP947
(L.C. No.   2016CV6655)

STATE OF WISCONSIN                             :            IN SUPREME COURT

Quick Charge Kiosk LLC and Jeremy Hahn,

            Plaintiffs-Appellants-Petitioners,
                                                                       FILED
      v.
                                                                  JUN 12, 2020
Josh Kaul, in his official capacity as Attorney
General,                                                             Sheila T. Reiff
                                                                  Clerk of Supreme Court
            Defendant-Respondent.

HAGEDORN, J., delivered the majority opinion for a unanimous
Court.

      REVIEW of a decision of the Court of Appeals.                  Affirmed.

      ¶1    BRIAN   HAGEDORN,    J.    Quick       Charge    Kiosk     LLC     is   the

commercial owner of kiosks that enable customers to pay for an

opportunity to win (or lose) money through a video game based on

chance.     After its kiosks were deemed illegal gambling machines

by the attorney general and law enforcement, Quick Charge and

its owner brought this declaratory judgment action.

      ¶2    Quick Charge asserts that its kiosks are not gambling
machines     because      they   do   not   satisfy         the      consideration
                                                                           No.   2018AP947

requirement under the gambling machine definition in Wis. Stat.

§ 945.01(3) (2017-18).1             Quick Charge points to the definition of

consideration for lotteries under § 945.01(5) and an exception

from that definition for "in-pack chance promotions" under Wis.

Stat. § 100.16(2).           This same definition and exception should

apply to gambling machines, Quick Charge contends, suggesting

its    kiosks       are   legally       compliant     in-pack     chance   promotions.

Further, Quick Charge argues there is no consideration even if

the ordinary legal definition of consideration applies because a

free       play    option    is     available.          We    disagree     with     these

arguments.

       ¶3        While the lottery statute expressly excludes in-pack

chance       promotions     from    its    definition        of   consideration,      the

gambling machine statute does not.                    The logical implication of

this textual distinction is that meeting the requirements of an

in-pack chance promotion does not exempt a mechanical device

from       the    consequences     of    being   an    illegal     gambling      machine.

Moreover, consideration is present here because the kiosks can
be used exactly like a standard gambling machine notwithstanding

a free play option also being available.                     That is, customers can

pay for an opportunity to obtain something of value by chance.

We therefore hold that Quick Charge's kiosks meet the definition

of a gambling machine under Wis. Stat. § 945.01(3).

       All subsequent references to the Wisconsin Statutes are to
       1

the 2017-18 version.

                                             2
                                                                                 No.   2018AP947

                                       I.   BACKGROUND

      ¶4       Jeremy Hahn owns Quick Charge Kiosk LLC, a company

that places what Quick Charge describes as cellphone charging

kiosks in various convenience stores and gas stations throughout

the state.           Resembling in Hahn's words a "penny video poker

game," Quick Charge constructs the kiosks by modifying standard

gambling       machine    equipment          purchased           from    third      parties    to

enable a cellphone charging functionality.

      ¶5       A customer who puts money into a Quick Charge kiosk

receives two potential benefits.                           First, the kiosk gives the

customer credits to play a video game on the kiosk's screen with

a chance to win a cash prize.                         For every dollar inserted, a

customer       receives    100    credits.                Customers     wager    the    credits

throughout different rounds and either win or lose those credits

based on the game's results.                     These results are determined by a

random     number     generator.            If    all      credits      are   not    lost,     the

customer       can    print      out    a    ticket         representing         his   or      her

winnings.        That ticket is redeemable for cash from the store
where    the    kiosk     is   located.              If    all   credits      are    lost,     the

customer receives no cash prize and cannot continue playing the

video game without inserting more money.                          The kiosks' video game

pays out around 65% of all money inserted.

      ¶6       Inserting money into a kiosk also allows a customer to

charge a cellphone using the kiosk's attached charging cord.

Charging time is based on the amount deposited——$1 earns you one

minute of charging time.                Quick Charge has two different styles
of   kiosks,     and     their    cellphone           charging       functionalities          work
                                                 3
                                                                              No.   2018AP947

differently.         If customers use a "Quick Charge" kiosk only for

charging a phone, they can redeem the unused video game credits

for cash after the charging time expires——100 unused credits

equals $1.         In other words, charging can be done at no net cost.

A "Pow'R Up" kiosk, on the other hand, requires the customer to

play       the   video    game    at   least     once   in    order      to   redeem     any

credits.

       ¶7        Soon after these kiosks debuted in retail locations,

the    Attorney      General      opined    that   they      were    illegal        gambling

machines as defined by Wis. Stat. § 945.01(3).                           Several kiosks

were then seized by law enforcement for violating the statutory

prohibition on gambling machines.

       ¶8        Quick Charge, along with its owner, responded with a

declaratory judgment action naming the Attorney General in his

official capacity.               It sought a declaration that the kiosks

complied with the in-pack chance promotion exception under Wis.

Stat. § 100.16(2) and thus were not in violation of any gambling

laws       under   Wis.   Stat.    ch.     945.     The      circuit     court      granted
summary judgment in the Attorney General's favor, declaring the

kiosks illegal gambling machines.2                 The court of appeals affirmed

that decision, Quick Charge Kiosk LLC v. Kaul, 2019 WI App 51,

¶1,    388       Wis. 2d 525,      934     N.W.2d 18,     and       we   granted      Quick

Charge's petition for review.

       The Honorable John J. DiMotto, Milwaukee County Circuit
       2

Court, presided.

                                             4
                                                                              No.   2018AP947

                              II.      STANDARD OF REVIEW

    ¶9         We    review       a    summary       judgment       decision    de     novo,

applying       the     same       methodology         as    the     circuit    court     but

benefitting from the analyses of both courts below.                             Eichenseer

v. Madison-Dane Cty. Tavern League, Inc., 2008 WI 38, ¶30, 308

Wis. 2d 684, 748 N.W.2d 154.                    Summary judgment is appropriate

when there is no genuine issue of material fact and "the moving

party is entitled to judgment as a matter of law."                             Wis. Stat.

§ 802.08(2).           The    parties        agree    on    the   material     facts,    but

dispute questions of statutory interpretation and application.

These    are    issues       of   law    we    review       independently.          Heritage

Farms,     Inc.      v.      Markel      Ins.        Co.,    2012    WI 26,     ¶24,     339

Wis. 2d 125, 810 N.W.2d 465.

                                      III.    DISCUSSION

    ¶10        Quick    Charge        disputes       that   its     kiosks    are    illegal

gambling machines under Wis. Stat. § 945.01(3)(a).                             The statute

defines a gambling machine as "[1] a contrivance [2] which for a
consideration [3] affords the player an opportunity to obtain

something of value, [4] the award of which is determined by

chance, even though accompanied by some skill and whether or not

                                                5
                                                                                 No.    2018AP947

the       prize         is     automatically        paid        by         the         machine."

§ 945.01(3)(a).3

      ¶11    Of these four criteria, Quick Charge contests only the

consideration requirement.4              It does so on two grounds.                        First,

Quick Charge looks to the lottery subsection which, along with

the   gambling          machine     definition,         is   found         in       Wis.   Stat.

§ 945.01.           The        lottery   subsection          contains           a      statutory

definition of consideration, and includes an exception from that

definition        for    "in-pack    chance       promotions"        under          Wis.   Stat.

§ 100.16(2).        § 945.01(5)(b)2.g.            Quick Charge argues that this

same definition and exception should apply to the consideration

requirement for gambling machines and that its kiosks are in-

pack chance promotions under § 100.16(2).                       Second, Quick Charge

asserts      that        its    kiosks   do       not    meet        the        consideration

requirement for gambling machines anyway because a free play

option is available.

      3While Wis. Stat. § 945.01(3) defines a gambling machine,
other statutes set forth the applicable criminal penalties. For
example, Wis. Stat. § 945.03(1m)(e) dictates that anyone who
"[s]ets up for use for the purpose of gambling or collects the
proceeds of any gambling machine" is guilty of a felony.     And
anyone who "[p]ermits a gambling machine to be set up for use
for the purpose of gambling in a place under his or her control"
is guilty of a misdemeanor under Wis. Stat. § 945.04(1m)(b).
      4As for the other elements, it is clear that Quick Charge's
kiosks are contrivances (mechanical devices) that afford an
opportunity to obtain something of value by chance.

     Wisconsin   Stat.   § 945.01(3)(b)   also   provides  three
exceptions to the gambling machine definition.      Quick Charge
does not argue that its kiosks meet any of them.

                                              6
                                                                           No.    2018AP947

       ¶12      Wisconsin Stat. § 945.01(5)(a) defines a lottery                         as

"[1]       an   enterprise       [2]   wherein    for    a   consideration        [3]   the

participants are given an opportunity to win a prize, [4] the

award of which is determined by chance, even though accompanied

by   some       skill."      On    its    face,   this    definition    is       virtually

identical        to   the    gambling     machine     definition     except       for   its

application to an "enterprise" rather than to a "contrivance."

However,        the   different        subsections    contain     one   other      notable

distinction.            Unlike gambling machines under § 945.01(3), the

lottery         subsection       specifically      defines       "consideration"        and

expressly contains nine exceptions from that definition.                                See

§ 945.01(5)(b).5            One of those exceptions is "[u]sing a chance

promotion exempt under s. 100.16(2)."                    § 945.01(5)(b)2.g.

       ¶13      Wisconsin        Stat.    § 100.16,      found    within     a     chapter

addressing marketing and trade practices, sets forth a separate

albeit related prohibition.                  Subsection (1) prohibits selling

items with the representation or pretense that a prize might be

included with the purchase (i.e., a prize sale).                           § 100.16(1).
Subsection        (2)     then    states    that     "[t]his      section"——that        is,

§ 100.16 and its proscription of prize sales——"does not apply to

       5   Wisconsin Stat. § 945.01(5)(b)1. provides:

       "Consideration" in this subsection means anything
       which is a commercial or financial advantage to the
       promoter or a disadvantage to any participant, but
       does not include any advantage to the promoter or
       disadvantage to any participant caused when any
       participant learns from newspapers, magazines and
       other periodicals, radio or television where to send
       the participant's name and address to the promoter.

                                             7
                                                     No.   2018AP947

an in-pack chance promotion," followed by seven criteria that

must be met to qualify for this exception.   § 100.16(2).6    Thus,

    6   Wisconsin Stat. § 100.16 provides:

    (1) No person shall sell or offer to sell anything by
    the representation or pretense that a sum of money or
    something of value, which is uncertain or concealed,
    is enclosed within or may be found with or named upon
    the thing sold, or that will be given to the purchaser
    in   addition   to   the  thing   sold,  or   by   any
    representation, pretense or device by which the
    purchaser is informed or induced to believe that money
    or something else of value may be won or drawn by
    chance by reason of the sale.

    (2) This section does not apply to an in-pack chance
    promotion if all of the following are met:

    (a) Participation is available, free and without
    purchase of the package, from the retailer or by mail
    or toll-free telephone request to the sponsor for
    entry or for a game piece.

    (b) The label of the promotional package and any
    related advertising clearly states any method of
    participation and the scheduled termination date of
    the promotion.

    (c) The sponsor on request provides a retailer with a
    supply of entry forms or game pieces adequate to
    permit free participation in the promotion by the
    retailer's customers.

    (d) The sponsor does not misrepresent a participant's
    chances of winning any prize.

    (e) The sponsor randomly distributes all game pieces
    and maintains records of random distribution for at
    least one year after the termination date of the
    promotion.

    (f) All prizes are randomly awarded if game pieces are
    not used in the promotion.

    (g) The sponsor provides on request of a state agency
    a record of the names and addresses of all winners of
                                 8
                                                                            No.    2018AP947

an in-pack chance promotion is not a standalone provision.                               It

is   a    statutory        exception      to    an    illegal    prize     sale.       And,

connecting          this    with     Quick         Charge's     argument       here,    the

legislature has also provided that an in-pack chance promotion

is an exception to what might otherwise be considered an illegal

lottery.       Wis. Stat. § 945.01(5)(b)2.g.

         ¶14   Quick Charge contends its kiosks are in-pack chance

promotions      under      Wis.    Stat.       § 100.16(2).       If     so,    they    lack

consideration         as   defined     for     lotteries.        The     crux     of   Quick

Charge's       theory        is     that       the       statutory     definition        of

consideration for lotteries should also be used for gambling

machines.       If the same definition is used and the kiosks are in-

pack chance promotions, then the kiosks are not illegal gambling

machines.       While creative, this theory runs headlong into basic

principles of statutory interpretation.

         ¶15   It    is    true    that    when      a    particular     term     is    used

throughout a chapter, we usually understand it to carry the same

meaning each time.           Bank Mut. v. S.J. Constr., Inc., 2010 WI 74,
¶31, 326 Wis. 2d 521, 785 N.W.2d 462.                       But this principle only

applies "absent textual or structural clues to the contrary."

State v. Cox, 2018 WI 67, ¶17, 382 Wis. 2d 338, 913 N.W.2d 780

(citation omitted).           Here, contrary clues abound.

         ¶16   While         the          legislature           expressly          defined

"consideration" for purposes of a lottery, exceptions and all,

         prizes valued at $100 or more, if the request is made
         within one year after the termination date of the
         promotion.

                                               9
                                                                       No.   2018AP947

it did not do the same for gambling machines.                     And the separate

gambling provisions are found in the exact same section of the

Wisconsin       Statutes.        To   make   its    point    crystal   clear,     the

legislature provided that the lottery provision's definition of

consideration,         including      its    exclusion       of    in-pack    chance

promotions, applies only to "this subsection," meaning lotteries

under Wis. Stat. § 945.01(5).                Nothing in the gambling machine

provision cross-references             lotteries     under § 945.01(5) or         in-

pack chance promotions under Wis. Stat. § 100.16(2).

       ¶17     This textual language is far more than a tip; it is a

dead       giveaway.      The    legislature      explicitly      excluded   in-pack

chance promotions from the definition of an illegal lottery, but

not    an    illegal   gambling       machine.      The     natural   reading,    and

indeed the only reasonable one, is that the legislature meant

the exception to apply to lotteries, and not gambling machines.

Therefore, even if the kiosks met the requirements for in-pack

chance       promotions     as   defined     in    Wis.   Stat.    § 100.16(2),     a

question we do not need to answer here,7 nothing in any of the
relevant statutes exempts the kiosks from the consequences of

       In granting the Attorney General summary judgment, the
       7

circuit court rejected Quick Charge's argument that its kiosks
met the seven criteria of an in-pack chance promotion under Wis.
Stat. § 100.16(2).    Below, the court of appeals declined to
consider those criteria after determining the exception has no
application under Wis. Stat. § 945.01(3).    Quick Charge Kiosk
LLC v. Kaul, 2019 WI App 51, ¶¶22, 35 n.9, 388 Wis. 2d 525, 934
N.W.2d 18. We do the same here.

                                            10
                                                                            No.    2018AP947

the legislature's decision to prohibit and criminalize gambling

machines.8

       ¶18       This brings us to Quick Charge's argument that its

kiosks otherwise fail to satisfy the consideration requirement

of the gambling machine definition, which Wis. Stat. § 945.01(3)

does       not   further    define.         When       statutory       language    is    not

specially         defined    or    technical,       it    is     given    its     "common,

ordinary, and accepted meaning."                  State ex rel. Kalal v. Circuit

Court      for    Dane    Cty.,    2004    WI 58,      ¶45,     271    Wis. 2d 633,       681

N.W.2d 110.         And if a word has a distinct meaning in the law——as

"consideration"          does——it    should       be    given    its     accepted       legal

meaning.          See    Mueller   v.     TL90108,      LLC,    2020    WI 7,     ¶19,   390

Wis. 2d 34,        938    N.W.2d 566.        Black's       Law     Dictionary      defines

consideration as "[s]omething (such as an act, a forbearance, or

a return promise) bargained for and received by a promisor from

a promisee."            Consideration, Black's Law Dictionary (11th ed.

2019).       We apply this definition here as it is consistent with

       Quick Charge offers hypothetical in-pack chance promotions
       8

facilitated by a machine and wonders whether those too would
constitute prohibited gambling machines——for example, a bottle-
cap promotion in which a soda is purchased in a vending machine
or a fast-food promotion conducted online or through a
smartphone app.     We need not determine the scope of what
constitutes a "contrivance" or might otherwise meet the
definition of a gambling machine or an in-pack chance promotion
to conclude that the kiosks here meet the gambling machine
definition in Wis. Stat. § 945.01(3).

                                             11
                                                                          No.   2018AP947

the meaning of consideration in our common law.9                           See, e.g.,

Story v. Menzies, 3 Pin. 329, 330-31 (1851) (explaining money

paid in exchange for credit and a receipt was consideration);

DOR v. River City Refuse Removal, Inc., 2007 WI 27, ¶¶50-51, 299

Wis. 2d 561, 729 N.W.2d 396 (discussing various formulations for

how Wisconsin courts have defined consideration, notably as a

benefit to the promisor or a detriment to the promisee, and

mutual promises for future performance).

    ¶19     The kiosks' video game function wherein customers pay

for an opportunity to obtain a cash prize falls within this

understanding of consideration.                 For customers who pay money to

play the game, consideration occurs in two ways:                         The customer

first inserts money to receive video game credits.                              Then the

customer    risks    those      credits    in    the    video    game.      Each      step

involves    the     customer     trading    something       of    value     (money      or

credits)    to    obtain   an    opportunity       to    play    the   game     and     win

something    of      value.        This     bargained-for          exchange        is     a

paradigmatic example of consideration.
    ¶20     Quick Charge does not really argue otherwise.                        Rather,

it focuses on the fact that this is not always the case because

    9  The  definition   of  consideration   under the   lottery
subsection is merely a lottery-focused gloss on this ordinary
definition of consideration.    See Wis. Stat. § 945.01(5)(b)1.
("anything which is a commercial or financial advantage to the
promoter or a disadvantage to any participant").     That's not
surprising.    Quick Charge's argument that the same word
generally has the same meaning is usually correct.       But as
explained above, that does not mean an exception written into
one subsection should be copied and pasted into a different
subsection where the exception does not appear.

                                          12
                                                                       No.    2018AP947

customers   can    play    the       kiosk's   video   game    without       inserting

their own money.          Although neither has ever been used, Quick

Charge offers two methods of free play.                  Customers can mail a

form and self-addressed envelope to Quick Charge, and receive in

return a certificate that can be exchanged at a retail location

for one dollar to insert into a kiosk.                        Customers can also

request a Quick Charge employee play a dollar's worth of credits

on their behalf and mail out any resulting winnings.

    ¶21     Free play option or not, Quick Charge's argument does

not overcome the reality that its kiosks can be used as gambling

machines.        Wisconsin       Stat.    § 945.01(3)     does    not        define   a

gambling machine as a contrivance whose sole use is gambling.

It says the opposite, namely, that a "gambling machine is a

contrivance      which    for    a    consideration    affords    the    player       an

opportunity to obtain something of value, the award of which is

determined by chance."               § 945.01(3) (emphasis added).               Quick

Charge's kiosks afford such an opportunity when a customer pays

to play the video game.              And when paying for the chance to win
something   of    value,    the      consideration     element    is    undoubtedly

                                          13
                                                                      No.    2018AP947

met.        Simply   because     a    kiosk     has   uses   other   than    illegal

gambling does not negate that reality.10

       ¶22    In sum, because customers can pay to play a video game

that awards cash prizes based on chance, Quick Charges' kiosks

are gambling machines under Wis. Stat. § 945.01(3)(a).                           This

conclusion is not affected by the definition of consideration

for lotteries under § 945.01(5), or that subsection's exclusion

of   in-pack     chance   promotions          under   Wis.   Stat.   § 100.16(2).

Likewise, the kiosks are no less gambling machines just because

they    can   also   be   used       for   non-gambling      purposes,      including

       Other jurisdictions have similarly concluded that a free
       10

play option alone is not decisive evidence regarding whether
something constitutes a form of illegal gambling.     See, e.g.,
Barber v. Jefferson Cty. Racing Ass'n, 960 So. 2d 599, 612-15
(Ala. 2006) ("Thus, the readers are slot machines as to those
who pay to play them.      Are they any less so because a few
patrons play for free? We think not. . . . Gratuitous entries
obtained by mail or at the race track do not legitimize the
high-stakes MegaSweeps any more than some opportunity for free
plays could render innocuous a conventional slot machine."); see
also 38 Am. Jur. 2d Gambling § 2 ("The opportunity for free
plays does not negate the element of 'consideration' or obviate
an inquiry into the purpose and effect of the operation as the
final proof of consideration.").

     The case Quick Charge cites for countervailing free play
authority did not actually find a lack of consideration based on
the availability of such an option.       See Mid-Atl. Coca-Cola
Bottling Co., Inc. v. Chen, Walsh & Tecler, 460 A.2d 44 (Md.
1983). At issue there was a Coca-Cola promotion based on bottle
caps that could be obtained for free or through the purchase of
various Coca-Cola products.    Id. at 104.    The Maryland court
concluded the promotion was not an illegal lottery because there
was no consideration for the chance to win a prize. Id. at 108.
But that was so because no one paid for a chance as the price of
Coca-Cola products stayed constant before, during, and after the
promotion——i.e., every chance to win was a gift. Id. The same
cannot be said for Quick Charge's kiosks.

                                           14
                                                                   No.   2018AP947

cellphone charging and limited gratuitous use of their video

game   function.       Therefore,   Quick      Charge's   action     seeking    a

declaration that its kiosks are not illegal gambling machines

was correctly denied, and the circuit court properly granted

summary judgment in the Attorney General's favor.

       By   the   Court.—The   decision   of    the   court   of    appeals    is

affirmed.

                                     15
    No.   2018AP947

1