Attorney
General Stumbo Finds Legislature Can Expand Gambling in Kentucky
Without a Constitutional Amendment
FRANKFORT, KY (March 21, 2005) –
Attorney General Greg Stumbo today released the attached
opinion, requested by State Senator Ed Worley (D-Richmond.)
Worley requested the Attorney General’s
opinion on the following question: Within the Constitution
of Kentucky, are there limitations or prohibitions on the
authority of the General Assembly to enact statutory language
authorizing the expansion of gambling in Kentucky?
In his response, Attorney General Stumbo
cited Section 226(3) of the Kentucky Constitution which
prohibits the General Assembly from sanctioning a “lottery”,
but stated that there is no constitutional prohibition which
limits the General Assembly from authorizing and regulating
other forms of gambling.
In his opinion request, Worley also asked
Stumbo if the Kentucky Constitution distinguished between
the forms of expanded gambling which would restrict the
General Assembly from expanding gambling into any specific
areas. Stumbo’s opinion states that only lotteries
are a prohibited form of gambling under the Kentucky Constitution.
Language from the Debates of the Constitutional
Convention of 1890, and later court cases, clearly indicates
that horse racing and other forms of gambling are not unconstitutional,
Stumbo found.
Four prior opinions of the Office of the
Attorney General interpret the prohibitions placed on “lotteries”,
“gift enterprises” and “schemes for similar
purpose” to include other types of gambling. However,
Attorney General Stumbo said, “It was time for a fresh
and reasoned review of case law and the origins of gambling
restrictions upheld in our Constitution in light of the
questions posed by Senator Worley. To the extent that past
opinions of this Office are in conflict with this opinion,
they are overruled.”
“There are a lot of questions as to
the Constitutional restrictions,” said Senator Worley.
“I posed the question to the Attorney General from
an informational standpoint. I believe that all of the members
of the General Assembly, as well as the public, need to
have an understanding as to what our Constitution permits
so we can make a decision on how we want to proceed on this
issue.”
OAG 05-003
March 21, 2005
Subject: Constitutional limits upon the
authority of the General Assembly to pass statutes which
expand gambling in Kentucky.
Requested by: Mr. Ed Worley, State Senator,
34th Senatorial District
Written by: Robert S. Jones, Assistant Attorney
General
Syllabus: Section 226(3) of the Kentucky
Constitution prohibits “lotteries” or “schemes”
which distribute money or other things of value purely by
chance among persons who have paid for the chance to share
in the distribution. Other forms of gambling were intentionally
excluded from this prohibition.
Statutes construed: Ky. Const. Section 226(3)
OAGs cited: 80-409, 92-127, 93-58, 99-8
Opinion of the Attorney General
Senator Ed Worley requests the Attorney
General’s opinion on the following questions:
1) Within the Constitution of Kentucky,
are there limitations or prohibitions on the authority of
the General Assembly to enact statutory language authorizing
the expansion of gambling in Kentucky?
Answer: Qualified Yes. Ky. Const. Section
226(3) would prohibit the General Assembly from sanctioning
a “lottery”, defined as a species of gambling,
and described as a scheme for the distribution of prizes
or things of value, purely by lot or by chance, among persons
who have paid, or agree to pay, a valuable consideration,
for the chance to share in the distribution, except as specifically
authorized by Ky. Const. Section 226(1) and (2). There is
no constitutional prohibition which limits the General Assembly
from authorizing and regulating other forms of gambling.
2) Further, does the Kentucky Constitution
distinguish between the forms of expanded gambling to restrict
the General Assembly in any specific area of such expansion?
Answer: Yes. The framers of the Constitution
clearly rejected the inclusion of other forms of gaming
within the prohibition of “lotteries”, as defined
above, when Ky. Const. Section 226 was passed. Hence, “lotteries”
are constitutionally distinct from other forms of gambling.
Introduction
These questions touch directly upon issues
addressed by four prior opinions of the Office of the Attorney
General, 80-409, 92-127, 93-058 & 99-8, which interpret
the prohibition Ky. Const. Section 226(3) places upon “lotteries”,
“gift enterprises”, and “schemes for similar
purpose”. Because those opinions differ materially
as to the breath of this constitutional limitation upon
the General Assembly’s authority to enact various
gambling laws, analysis of inconsistent opinions of past
Attorneys General is of no benefit. Instead, a fresh and
reasoned review of the origins of Section 226(3) and the
case law which interprets the section is necessary to answer
the questions posed.
The history of Section 226 of the Kentucky
Constitution
Historically, the prohibition of lotteries was seen as ethically
and morally distinct from other forms of gambling. In 1850
the U.S. Supreme Court wrote:
Experience has shown that
the common forms of gambling are comparatively innocuous
when placed in contrast with the widespread pestilence of
lotteries. The former are confined to a few persons and
places, but the lottery infests the whole community; it
enters every dwelling; it reaches every class; it preys
upon the hard earnings of the poor; it plunders the ignorant
and simple.”
Phalen v. Virginia, 8 Howard 163, 12 L
Ed 1030, 1033 (1850).
Thirty years later, the Court reflected
on that statement and said:
They [lotteries] are a species
of gambling, and wrong in their influences. They disturb
the checks and balances of a well-ordered community. Society
built on such a foundation would almost of necessity bring
forth a population of speculators and gamblers, living on
the expectation of what, 'by the casting of lots, or by
lot, chance, or otherwise,' might be 'awarded' to them from
the accumulations of others.
Stone v. Mississippi, 101 US 814, 818, 25
L Ed 1079 (1880).
In the early 1890s, when the current Kentucky
Constitution was drafted and adopted, it is clear that the
drafter’s understanding of a lottery was a system
in which players wager that a particular number will be
selected in a random drawing. At the time it was still the
practice of the Commonwealth “to grant privilege to
certain gentlemen to raise money by lottery…”
This authority was conferred by the “act of 1838,
and the amendatory act of 1869.”
Commonwealth v. Douglas, 100 Ky. 116, 24
S.W. 233 (1893).
In Douglas, supra, the Court of Appeals
of Kentucky considered a challenge under the “contracts
clause” of the U.S. Constitution to Section 226 of
the newly written Kentucky Constitution by those who had
purchased licenses to operate lotteries. The breath of the
prohibition was not in question since the license holders
clearly operated “lotteries” as the term was
contemplated in the law of the time; however, language within
the opinion provides a contemporaneous view of the people
and practices Section 226 was intended to address:
We have, for instance, at this day, men
confined in the state penitentiary for setting up and
carrying on gambling shops whose tendencies are not much
more demoralizing, if any, than the licensed lottery operator,
who goes free under the protection of the law. Id. at
234.
Hence, the operation of “gambling
shops” was seen as distinct from the gaming operated
by the licensed lottery operator.
The legal issue of the scope of the prohibition
in Section 226 was not squarely presented to Kentucky's
Court of Appeals until 1931 in the case of Commonwealth
v. Kentucky Jockey Club, Inc., 238 Ky 739, 38 SW2d 987 (1931).
The Court drew directly upon the Debates
of the Constitutional Convention and found:
At the time section 226
was being considered in the convention that framed the Constitution,
an amendment was proposed forbidding every species of gambling.
Volume 1. Debates of Constitutional Convention p.1172. The
delegate who proposed the amendment was asked whether his
proposition embraced the prohibition of betting upon the
speed of horses, to which he responded that it was his purpose
to forbid all species of gambling and all games of chance
in every conceivable form. He argued that all gambling was
equally wrong, and that it was unfair to denounce gambling
in the form of a lottery and to countenance it in other
forms, such as betting upon horse races, and the like. The
delegate from Lexington argued that it was not the appropriate
place to deal with pooling privileges upon race courses,
and other forms of gambling, because lotteries theretofore
had been licensed by the Legislature, and the object of
the pending section was not to deal with any other species
of gambling, but to prohibit the Legislature from granting
licenses to lotteries. The amendment was rejected, thus
indicating that it was the intention of the Convention not
to include in section 226 anything but lotteries of the
type familiar at the time.” Id. at 993.
The Court approached the issue by adopting
a textbook definition of “lottery”:
A lottery, it is said, is
a species of gambling, described as a scheme for the distribution
of prizes or things of value, by lot or by chance, among
persons who have paid, or agree to pay, a valuable consideration,
for the chance to share in the distribution… Id. at
992.
Consequently, the Court refused to strike
down laws allowing pari-mutuel betting on horse races. In
doing so the parameters of legislative authority were delineated
as follows:
That all forms of gambling
are evil and characterized by vicious tendencies does not
alter the fact of the individuality of each type. We are
unable… to declare that the section of the Constitution
condemning lotteries was understood by the people who adopted
it as itself outlawing betting upon horse races, by the
pari-mutual system, or the other forms of betting. It was
then understood, as has been the accepted opinion, that
the subjects of betting and gaming were within the absolute
control of the police power, possessed by the legislature.
It is the duty and function of the legislature to discern
and correct evils, and evils within that power are not limited
to some definite injury to public safety or morals, but
embrace the removal of obstacles to a greater public welfare.
(emphasis added)
Id. at 994.
Subsequent Case law
Since the Kentucky Jockey Club opinion,
Kentucky’s highest court has addressed questions compelling
it to define “lottery” under Section 226 on
four occasions. In two of those cases, Worden v. City of
Louisville, 279 Ky. 712, 131 S.W.2d 923 (1939), and Commonwealth
v. Malco-Memphis Theatres, Inc., 293 Ky. 531, 169 S.W.2d
596 (1943), the court faced factual situations which clearly
implicated the conduct of a “lottery” as that
term was traditionally defined. The Worden opinion addresses
a tailor shop which provided chances to win a weekly drawing.
The Malco-Memphis Theatres case dealt with a ticket drawing
to win a prize. In both, the court relied on the definition
of a “lottery” identified in the Kentucky Jockey
Club opinion and held the practices violated the law. In
fact, the defense in Malco-Memphis Theatres conceded the
drawings were lotteries, and argued instead that the participants
had not paid consideration to enter insofar as the cost
of the tickets did not exceed the normal cost for services.
The most recent case to address the lottery
provision within Section 226 is Otto v. Kosofsky, Ky., 476
S.W.2d 626 (1971). That opinion addressed the constitutionality
of a statute known as the “Bingo Licensing Act.”
The court found that bingo fit the traditional definition
of a “lottery” as envisioned by the drafters.
But, despite the basic holding which reiterated the definition
of lottery as “consisting of a scheme for distribution
of prizes or things of value purely by lot or chance,”
the opinion also cites to an ambiguous quote from A. B.
Long Music Company v. Commonwealth, Ky., 429 S.W.2d 391
(1968), which could be interpreted as defining a “lottery”
more broadly. A. B. Long Music Company is the sole opinion
in the line of Kentucky precedent on the issue which suggests
that the term “lottery” might be interpreted
as a generic term which extended beyond the intention expressed
by the drafters of the Constitution.
In A. B. Long Music Company, supra, the
Commonwealth had impounded pinball machines pursuant to
KRS 436.280. Impoundment was the enforcement mechanism for
KRS 436.230 which prohibited “setting up, keeping,
managing, operating or conducting a keno bank, faro bank
or other machine or contrivance used in betting.”
These statutes clearly authorized the actions taken by the
Commonwealth and ultimately constitute the legal basis for
the decision. Nevertheless, in dicta, the court addressed
the definition of the word “lottery” as used
within Section 226. Citing to a number of out of state cases,
the court referenced the fact that bingo, beano, keno and
lotto are simply variations upon the same game which fall
under the generic term “lottery.” Indeed, this
is true, but this fact is not relevant to the determination
that the pinball machines were a “machine or contrivance
used in betting” thereby supporting the State enforcement
action under KRS Chapter 436.
Since the A. B. Long Music Company opinion
fails to account for existing legal precedent surrounding
Section 226, the only wisdom which should be drawn from
the opinion is that regardless of its name, if the game
meets the traditional test of a “lottery”, as
bingo, beano, keno and lotto do, then those games would
be forbidden under Section 226 as “similar schemes.”
It is this language which the Otto, supra, opinion draws
upon in finding that the Bingo Licensing Act was unconstitutional,
and not the language which addresses the possibility that
the term “lottery” may encompass a meaning beyond
that intended by the framers of the Constitution.
Conclusion
Although more than 65 years have passed
since the Kentucky Jockey Club, Inc. opinion was entered,
it still provides the most thoughtful and relevant analysis
of the questions at hand. Case law on the issue since that
time, and up to the most recent published decision in 1971,
has continued to recognize that the prohibition of “lotteries”
under Section 226(3) of the Kentucky Constitution applies
only to that subcategory of gaming traditionally identified
as “lotteries”. Such “lotteries”
are generally characterized by the purchase of a card or
ticket which entitles the holder to a prize should, purely
by chance or lot, the numbers, letters, or symbols on the
ticket match a winning combination. These types of games
are known by many names, bingo, beano, keno and lotto, as
well as in slang references such as “numbers games”,
yet they each carry the recognizable indicia of a “lottery”
and therefore fall within the prohibition in Section 226(3).
Opinions of past Attorneys General have
attempted to define “lottery” by analyzing the
nature of “chance” employed by various games
by weighing the relative significance of skill or luck necessary
to win. However, the case law is clear; to be a “lottery”
the winner must be chosen “purely by chance.”
Other OAG opinions have questioned whether the traditional
definition of a “lottery” will be sufficient
the carry out the intention of the framers as new games
are invented using new technology. Yet, this has not been
a problem over the past 113 years. Moreover, the debates
between the framers of the Constitution lay bare their intention
to address a specific and easily identifiable problem, the
sale of lottery licenses, when they drafted Section 226.
They were aware that existing statutory laws made other
types of gambling illegal when they rejected the amendment
offered to broaden the lottery prohibition to all forms
of gambling. It is therefore reasonable to conclude the
framers of the Constitution were confident gambling would
continue to be effectively regulated by statute, and further
that statutory law, which is inherently more flexible than
the dictates of a constitution, was the best way to regulate
other forms of gambling in the future.
To the extent that past OAG opinions are
in conflict with this opinion they are overruled.
GREGORY D. STUMBO
ATTORNEY GENERAL
ROBERT S. JONES
ASSISTANT ATTORNEY GENERAL
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