                               ATTORNEYGENERAL OF TEXAS
                                        GREG       ABBOTT




                                         September 23,2003



The Honorable Frank J. Corte, Jr.                      Opinion No. GA-01 03
Chair, Committee on Defense Affairs
       & State-Federal Relations                       Re: Whether the legislature may authorize the
Texas House of Representatives                         state to operate video lottery terminals
P.O. Box 2910                                          (RQ-0039-GA)
Austin, Texas 78768-2910

Dear Representative   Corte:

        You ask whether the legislature may authorize the state to operate video lottery terminals in
the absence of a constitutional amendment permitting their operation.

I.      Background

         Article III, section 47 of the Texas Constitution requires the legislature to “pass laws
prohibiting lotteries and gift enterprises in this State other than those authorized by Subsections (b),
(d), and (e) of this section.” TEX. CONST. art. III, 4 47(a). Subsection (b) permits the legislature to
“authorize and regulate bingo games” conducted by religious, fraternal and other nonprofit
organizations. Id. 8 47(b). Subsection (d) declares that the legislature “may permit charitable raffles
conducted by a qualified religious society, qualified volunteer fire department, qualified volunteer
emergency medical service, or qualified nonprofit organizations.” Id. 8 47(d). Subsection (e) states
that “[tlhe Legislature by general law may authorize the State to operate lotteries and may authorize
the State to enter into a contract with one or more legal entities that will operate lotteries on behalf
of the State.” Id. 5 47(e).

         Pursuant to the constitutional directive to “pass laws prohibiting lotteries,” except as
specifically authorized by other provisions of article III, section 47, the legislature has adopted
numerous penal statutes that prohibit various aspects of gambling. See generally TEX. PEN. CODE
ANN. ch. 47 (Vernon 2003). Specifically, section 47.06(a) provides that “[a] person commits an
offense if, with the intent to further gambling, he knowingly owns, manufactures, transfers, or
possesses any gambling device that he knows is designed for gambling purposes or any equipment
that he knows is designed as a subassembly or essential part of a gambling device.” Id. 9 47.06(a).
“Gambling device” is defined as:

                any electronic, electromechanical, or mechanical contrivance not
                excluded under Paragraph (B) that for a consideration affords the
The Honorable Frank J. Corte, Jr. - Page 2                 (GA-0103)




                  player an opportunity to obtain anything of value, the award of which
                  is determined solely or partially by chance, even though accompanied
                  by some skill, whether or not the prize is automatically paid by the
                  contrivance. The term:

                           (A) includes, but is not limited to, gambling device versions
                  of bingo, keno, blackjack, lottery, roulette, video poker, or similar
                  electronic, electromechanical,    or mechanical games, or facsimiles
                  thereof, that operate by chance or partially so, that as a result of the
                  play or operation of the game award credits or free games, and that
                  record the number of free games or credits so awarded and the
                  cancellation or removal of the free games or credits . . . .

Id. 9 47.01(4).

         You state that “[clurrent legislation in the House and Senate, in essence, repeals this
prohibition, and either uses this definition or a very similar definition to authorize VLT’s [video
lottery terminals] .“l In addition, the Comptroller of Public Accounts has recently “issued an e-Texas
recommendation      . . . calling for Texas to implement a video lottery system.” Request Letter, supra
note 1, at 1. The Comptroller’s proposal states, in relevant part:

                  Video lottery terminals (VLTs) are centrally monitored game
                  machines that can offer a variety of games of chance. VLTs typically
                  pay out a much larger percentage of the “take” in the form of prizes
                  - about 90 percent - than other forms of lottery games. State lottery
                  agencies control these machines via a central computer system, just
                  as the Texas Lottery Commission does with its lotto terminals.

CAROLE KEETON STRAYHORN, TEXAS COMPTROLLEROF PUBLIC ACCOUNTS, SPECIAL REPORT
TO THE LEGISLATURE, ADDITIONAL E-TEXAS RECOMMENDATIONS, ED 18 (2003), available at
http://www.cpa.state.tx.us/specialrpt/etxaddnl/ed18.html.     You ask “whether the Texas Legislature
may authorize the operation of video lottery terminals without an amendment to the Texas
Constitution.”    Request Letter, supra note 1, at 2. Given your reference to the Comptroller’s
proposal, it appears that your request is limited to the legislature’s authority to permit the state to
operate video lottery terminals under article III, section 47(e) of the Texas Constitution.

II.     The Issue

        As we have noted, article III, section 47(a) of the Texas Constitution requires the legislature
to “pass laws prohibiting lotteries and gift enterprises.” TEX. CONST. art. III, 5 47(a). AS we will



         ‘Letter from Honorable Frank J. Corte, Jr., Chair, House Committee on Defense Affairs & State-Federal
Relations, to Honorable Greg Abbott, Texas Attorney General at 1 (Apr. 14, 2003) (on file with Opinion Committee)
[hereinafter Request Letter].
The Honorable Frank J. Corte, Jr. - Page 3              (GA-0103)




demonstrate, infra, this constitutional prohibition has existed for more than a century. In 1991,
Texas voters added an exception to article III, section 47, that permits the legislature to “authorize
the State to operate lotteries.” Id. 8 47(e). The fundamental issue before us is what the voters
intended in adopting that 199 1 amendment.

III.    Analysis

        A.       Meaning of “Lottery” under Article III, Section 47(a)

                  Texas courts have consistently held that the term “lottery” includes a wide range of
activities involving the distribution of something of value by chance in exchange for valuable
consideration.      This construction of the term “lottery” predates our current constitution.            The
constitution of 1845 and every subsequent constitution have included a prohibition against lotteries.
The constitutions of 1845,1861,1866,         and 1869 stated that “[n]o lottery shall be authorized by this
State; and the buying [or/and] selling of lottery tickets within this State is prohibited.” TEX. CONST.
of 1869, art. XII, 8 36; TEX. CONST. of 1866, art. VII, $j 17; TEX. CONST. of 1861, art. VII, 9 17; TEX.
CONST. of 1845, art. VII, 0 17. The constitutional convention of 1875 expanded this language in
response to activities authorized by the 1873 legislature to state that “[tlhe Legislature shall pass
laws prohibiting the establishment of lotteries and gift enterprises in this State, as well as the sale
of tickets in lotteries, gift enterprises or other evasions of the lottery principle, established or existing
in other States.” TEX. CONST. of 1876, art. III, 5 47(a). But even prior to the 1876 constitution, the
Texas Supreme Court had found

                [that] it makes not the slightest difference whether it be styled a “Gift
                Enterprise, ” “Book Sale, ” “Land Distribution, or “Art Association,”
                each and all are lotteries when the element of chance is connected
                with, or enters into the distribution of its prizes. . . . “Courts will
                inquire not into the name, but the game, to determine whether it is a
                prohibited game.”

Randle v. State, 42 Tex. 580 (Tex. 1874).

         As early as 1899, the Court of Criminal Appeals held that operation of a “slot machine,” as
described therein, constituted a “lottery.” Prendergast v. State, 57 S.W. 850,85 1 (Tex. Crim. App.
1899). Then, in 1936, the Texas Supreme Court considered whether a “bank night” held at a local
theater was a “lottery” under the constitution. City of Wink v. Gr$fj%hAmusement Co., 100 S.W.2d
695 (Tex. 1936). The court articulated the three elements necessary to constitute a lottery: (1) the
offering of a prize, (2) by chance, and (3) the giving of consideration for an opportunity to win the
prize. Of the three, the court declared that “chance” is the element that constitutes the very basis of
a lottery, and without which a game would not be a lottery. Id. at 701. For our purposes, it is
sufficient that the Supreme Court had by 1936 laid out the definitive elements that constitute a
“lottery” in the State of Texas: prize, chance, and consideration.
The Honorable Frank J. Corte, Jr. - Page 4              (GA-0103)




         In 197 1, the legislature amended article 654 of the Penal Code, the criminal statute that at
that time implemented article III, section 47, to permit certain “charitable organizations to conduct
lotteries for their benefit on property owned by the conducting agency” and allowing the “sale or
drawing of a prize at a fair held in this State for the benefit of a church, religious society, veteran’s
organization,” or similar entity. Act of May 30,1971,62d Leg., R.S., ch. 922,197 1 Tex. Gen. Laws
2823. As enacted, the amendment was intended to permit activities held under the aegis of a
particular class of charitable or quasi-charitable         institution, such as churches and veterans’
organizations, that were otherwise proscribed by the Penal Code. In Tussey v. State, 494 S. W.2d 866
(Tex. Crim. App. 1973), the court held that the language of article III, section 47, prohibited the
legislature from granting this exemption.       The court found that “any effort by the Legislature to
authorize, license or legalize lotteries is unconstitutional in light of the constitutional provision in
question. . . . Further, the Legislature is likewise prohibited from indirectly doing so by way of
exemption from criminal prosecution.” Id. at 869. It is thus clear that, for purposes of subsection
(a) of article III, section 47 of the Texas Constitution, the term “lottery” will be broadly construed
by the courts, and that any game newly sanctioned by the legislature must be carefully scrutinized
to determine whether it is a “lottery.” If it is, it cannot lawfully be operated without a constitutional
amendment.

        B.      Meaning of ‘LLottery” under Article III, Section 47(e)

                 Subsequent to the court’s decision in Tussey, the legislature proposed, and the
electorate approved, a series of amendments to article III, section 47. A 1980 amendment - the
present subsections (b) and (c) of article III, section 47 - excepted “bingo games conducted by a
church, synagogue, religious society, volunteer fire department, nonprofit veterans organization,
fraternal organization, or nonprofit organization supporting medical research or treatment programs.”
TEX. CONST. art. III, 5 47(b)-(c) (added by Tex. S.J. Res. 18,66th Leg., R.S. (1979)). Subsection
(d) was added in 1989 to permit “charitable raffles” held by those entities that were already
authorized to conduct bingo games. TEX. CONST. art. III, 8 47(d) (added by Tex. H.R.J. Res. 32,7 1st
Leg., R.S. (1989)). The most recent amendment, subsection (e), permits the legislature to “authorize
the State to operate lotteries and [to] authorize the State to enter into a contract with one or more
legal entities that will operate lotteries on behalf of the State.” TEX. CONST. art. III, 9 47(e) (added
by Tex. H.R.J. Res. 8,72d Leg., 1st C.S. (1991)). Each of these amendments is an exception to the
historical prohibition against “lotteries” set forth in subsection (a).

          Courts “rely heavily on the literal text” of a constitutional amendment and will “give effect
to its plain language.” Doody v. Ameriquest Mortgage Co., 49 S.W.3d 342,344 (Tex. 2001). Article
III, section 47(a) requires the legislature to “pass laws prohibiting lotteries and gift enterprises in this
State other than those authorized by Subsections (b), (d), and (e) of this section.” TEX. CONST. art.
III, 5 47(a). Subsection (e) declares that the legislature may “authorize the State to operate lotteries
and may authorize the State to enter into a contract with one or more legal entities that will operate
lotteries on behalf of the State.” Id. 8 47(e). If the term “lotteries” as used in subsection (e) has the
same meaning as the use of the term in subsection (a), i.e., the expansive meaning promulgated by
Texas courts from 1874 to 1973, then the legislature may, under the former provision, authorize the
state to operate any game included within the ambit of subsection (a), i.e., any “game of chance.”
The Honorable Frank J. Corte, Jr. - Page 5             (GA-0103)




Under that construction, the legislature could permit the state, or an entity with which it contracts,
to establish casino gambling within the State of Texas. But the two sections are not identical.
Subsection (a) broadly requires the prohibition of “lotteries and gift enterprises” whereas subsection
(e) permits the legislature to authorize the state to operate lotteries. The language of subsections (a)
and (e) is sufficiently different that it is not plain from the face of section 47 whether subsection (e)
permits everything that subsection (a) prohibits.

         In addition to considering constitutional provisions’ plain language, courts also construe the
words of an amendment “as they are generally understood.” Spradlin v. Jim Walters Homes, Inc.,
34 S.W.3d 578, 580 (Tex. 2000). The fundamental rule that courts follow when interpreting a
constitutional amendment is to give effect to the intent of the legislators who proposed it and the
people who adopted it. See Gragg v. Cayuga Indep. Sch. Dist., 539 S.W.2d 861,866 (Tex. 1976);
see also Stringer v. Cendant Mortgage Corp., 23 S.W.3d 353,355 (Tex. 2000) (“We strive to give
constitutional provisions the effect their makers and adopters intended.“); City of El Paso v. El Paso
Cmty. Coil. Dist., 729 S.W.2d 296,298 (Tex. 1986) (“In construing a constitutional amendment, we
look to the intent of the framers and the voters who adopted the amendment.“).          Furthermore, in
determining that intent, “[clonstitutional provisions, like statutes, are properly to be interpreted in
the light of conditions existing at the time of their adoption, the general spirit of the times, and the
prevailing sentiments of the people.” Mumme v. Marrs, 40 S.W.2d 3 1,35 (Tex. 193 1). Moreover,
“in determining the meaning, intent and purpose of a constitutional provision, the history of the time
out of which it grew and to which it may be rationally supposed to have direct relationship, the evils
intended to be remedied and the good to be accomplished, are proper subjects of inquiry.”
Markowsky v. Newman, 136 S.W.2d 808,813 (Tex. 1940). See also Dir. ofDep ‘t ofAgric. & Env’t
v. Printing Indus. Ass ‘n of Tex., 600 S.W.2d 264,267 (Tex. 1980). Finally, courts will give weight
to a contemporaneous     construction given by the legislative or executive branches of government.
See Walker v. Baker, 196 S.W.2d 324,327 (Tex. 1946).                 .

        A number of factors indicate that the voters who adopted subsection         (e) did not intend to
authorize the state to operate video lottery terminals.

                    1. The Common Understanding         of ‘&Lottery”in 1991

                        In Armbrister v. Morales, 943 S. W.2d 202 (Tex. App.-Austin 1997, no writ),
the court considered the meaning of the term “apportionment” as used in article III, section 3 of the
Texas Constitution. The court observed that, “[i]n interpreting the constitution, we give words their
natural, obvious, and ordinary meanings as they are understood by the citizens who adopted them.”
Id. at 205. Then the court proceeded to define the term by reference to two dictionaries, Webster’s
Third New International Dictionary and Black’s Law Dictionary. Id. Because the intent of the
electorate that adopts a constitutional amendment is more likely to agree with the meaning of a term
as defined in a recent dictionary than with its technical meaning as construed by courts of old, it is
instructive to consider the modem common meaning of the term “lottery.”

         Dictionary definitions of the term “lottery” indicate that the “natural, obvious, and ordinary,”
see id., meaning of the term, as understood by the voters who adopted subsection (e), does not accord
The Honorable Frank J. Corte, Jr. - Page 6            (GA-0103)




with the broadly expansive legal meaning of the term as used in subsection (a) and construed by
Texas courts from the late nineteenth century through the Tussey case in 1973. Webster’s Third New
International Dictionary defines “lottery” as “[a] scheme for the distribution of prizes by lot or
chance; esp., a scheme by which prizes are distributed to the winners among those persons who have
paid for a chance to win them, usually as determined by the numbers on tickets as drawn at random
from a lottery wheel.” WEBSTER’STHIRDNEW INTERNATIONAL               DICTIONARY1338 (1969). Other
recent popular dictionaries accord with this definition. See, e.g., AMERICANHERITAGE      DICTIONARY
 1034 (4th ed. 2000) (“lottery” is “[a] contest in which tokens are distributed or sold, the winning
token or tokens being secretly predetermined or ultimately selected in a random drawing”); NEW
OXFORDAMERICANDICTIONARY1010 (1st ed. 2001) (“lottery” is “a means of raising money by
selling numbered tickets and giving prizes to the holders of numbers drawn at random”). Black’s
Law Dictionary defines “lottery” as “a method of raising revenues, especially state-government
revenues, by selling tickets and giving prizes (usu. large cash prizes) to those who hold tickets with
winning numbers that are drawn at random.” BLACK’SLAW DICTIONARY959 (7th ed. 1999). These
definitions reflect the common public understanding of the term “lottery” as it was considered by
the voters in 199 1. The expansive legal definition espoused in judicial decisions from 1874 to 1973
does not. The legal definition may encompass any kind of game of chance, including slot machines
and a variety of casino games. The popular definition, on the other hand, is restricted to a narrow
and particular form of state-operated game sanctioned by the legislature and the voters in 199 1. The
ballot proposition presented to the voters fully supports this more restrictive construction.

                    2.   The Ballot Proposition

                        Although article III, section 47(e) authorizes “the State to operate lotteries,”
the language of the ballot proposition was worded somewhat differently. The joint resolution that
placed the lottery amendment on the ballot read as follows:

                SECTION2.       This proposed constitutional    amendment shall be
                submitted to the voters at an election to be held on November 5,
                 1991. The ballot shall be printed to provide for voting for or against
                the proposition: “The constitutional amendment authorizing a state
                lottery. ”

Tex. H.R.J. Res. 8, 72d Leg., 1st C.S. (1991) (emphasis added). The Analysis of Proposed
Constitutional Amendments prepared in October 199 1 by the Texas Legislative Council states, in
relevant part: “If the constitutional amendment is approved, the legislature may, but is not required
to, adopt a law authorizing a state lottery.” TEXASLEGISLATIVE   COUNCIL,ANALYSISOFPROPOSED
CONSTITUTIONAL      AMENDMENTS,      NOVEMBER   5,1991, ELECTION (Oct. 1991) (emphasis added). The
analysis continues:

                The amendment specifically provides that all or part of the operation
                of the Zottery may be delegated to private firms. House Bill 54,
                passed by the 72nd Legislature, 1st Called Session, establishes a
                Zottely to be administered by a division of the office of the
The Honorable Frank J. Corte, Jr. - Page 7            (GA-0103)




                comptroller of public accounts. Under H.B. 54, proceeds from the
                sale of Zottery tickets will be used to pay prizes, administrative costs,
                and ticket sales agent commissions, with the balance going into the
                state’s general revenue fund. H.B. 54 will take effect only if the
                constitutional amendment authorizing a Zottery is approved.

Id. at 39 (emphasis added). The wording of the ballot proposition provides further evidence that the
legislators who proposed subsection (e) intended to authorize only a “state lottery” and that the
voters who adopted subsection (e) were approving a “state lottery” rather than the extensive variety
of games of chance prohibited under subsection (a). Near-contemporaneous            construction of
subsection (e) by the attorney general also supports this conclusion.

                    3. Contemporaneous      Administrative   Construction

                          Shortly after its adoption, the Attorney General considered whether subsection
(e) of article III, section 47 could be read to permit the state itself to operate slot machines, and
concluded that it could not be so construed. “No evidence has been presented that any portion of the
electorate believed that, in approving the amendment for a ‘state lottery,’ it was thereby sanctioning
slot machines. And . . . a great deal of evidence suggests that the voters who adopted the lottery
amendment intended thereby to authorize only the traditional form of ‘state lottery.“’ Tex. Att’y
Gen. Op. No. DM-302 (1994) at 10. On the basis of the “plain and definite” language of the
constitutional amendment, including the omission of the term “slot machines” from the amendment
or the ballot proposition, as well as extrinsic evidence, the opinion concluded that “[w]e should
construe the language of the exception [to article III, section 471 in light of our contemporary
situation, by limiting the meaning of the term ‘lottery’ as approved by the voters in 1991 to its plain
meaning. . . . If the proposition passed by the legislature and presented to the voters had been
intended and understood to authorize state-operated casinos, it would have been a simple matter for
the language to reflect that intention.” Id. at 9. In summary, “it is self-evident that voters presumed
from the ballot language that they were voting for or against the common perception of a ‘state
lottery,’ as denoted by the clear language of the ballot proposition, rather than a broad spectrum of
games which embody the ‘lottery principle,’ as articulated by City of Wink, Tussey, and numerous
other judicial decisions.” Id. at 7. Thus, the meaning of the term “lottery” in the constitutional
provision adopted as subsection (e) in 1991 differs significantly from the historical meaning it has
been accorded in subsection (a). See TEX. CONST. art. III, 5 47(a), (e).

         Attorney General Opinion DM-302 was issued less than three years after the adoption of the
constitutional amendment authorizing a state lottery. As we recently noted in Attorney General
Opinion GA-0054 (2003), “[tlhe construction placed upon statutes and constitutional amendments
soon after their enactment or adoption is entitled to substantial weight.” Tex. Att’y Gen. Op. No.
GA-0054 (2003) at 4; see also id. (“contemporaneous exposition of a constitutional provision is of
substantial value in constitutional interpretation,” citing Am. Indem. Co. v. City ofAustin, 246 S.W.
1019, 1023 (Tex. 1922)). Because Attorney General Opinion DM-302 (1994) was issued so soon
after the adoption of subsection (e) of article III, section 47, it may be accorded the status of a
contemporary administrative construction.
The Honorable Frank J. Corte, Jr. - Page 8            (GA-0103)




IV.     Summarv and Conclusion

         To summarize, in approving the addition of subsection (e) to article III, section 47 of the
Texas Constitution, Texas voters in 1991 did not intend to authorize the state to operate, or to
contract for the operation of, “lotteries” in the broad sense that it has been construed by the courts
since the adoption of the 1876 constitution. “Lotteries” under subsection (a) means any game that
contains the elements of prize, chance, and consideration. In 199 1, voters approved a “state lottery”
based on the common understanding of the term at that time, as evidenced by popular dictionaries
and the ballot proposition presented to Texas voters. Moreover, Attorney General Opinion DM-302
(1994) issued less than three years after the adoption of article III, section 47(e), is a
contemporaneous     administrative construction of that amendment which concludes that voters in
 199 1 approved a narrow construction of the term “lottery” that cannot be read to authorize the state
to operate slot machines. On the basis of all these factors, we conclude that article III, section 47(e)
of the Texas Constitution does not permit the legislature to authorize the state to operate video
lottery terminals.
The Honorable Frank J. Corte, Jr. - Page 9          (GA-0103)




                                       SUMMARY

                       Article III, section 47(e) of the Texas Constitution does not
               permit the legislature to authorize the state to operate video lottery
               terminals.




BARRY R. MCBEE
First Assistant Attorney General

DON R. WILLETT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Rick Gilpin
Assistant Attorney General, Opinion Committee
