                             QBfficeof tip Bttqrnep @eneral
                                           &ate of IDexae
DAN MORALES                                 January 23,199s
 Al-r”RNEY
        CENERAL
   The Honorable David Sibley                      Opinion No. DM-466
   Chair, Senate Committee
    on Economic Development                       Re: Constitutionality of section 47.01(4)(B), Penal
   Texas State Senate                             Code, which excepts certain types of electronic
   P.O. Box 12068                                 contrivances from the detinition of “gambling
   Austin, Texas 787 11                           device,” and related questions (RQ-1060)

   Dear Senator Sibley:

          You have requested our opinion regarding the constimtionality of the legislature’s 1995
   amendment to the definition of “gambling device*’ to exclude from its ambit certain kinds of
   machines that, for consideration, award prizes to a player on the basis of chance.

          Section 47.06(a) of the Penal Code provides:

                  A person commits an offense if, with the intent to further gambling, he
              knowingly owns, manufacture, 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.

   In 1995, the legislature amended the Penal Code’s definition of “‘gambling device” to read:

                  “Gambling device” mesns any electronic, electromechanical, or
              mechanical contrivance not excluded under Psragraph (B) that for a
              consideration affords the player au opportunity to obtain snything of value,
              the award of which is de&mined solely or partially by chance, even though
              acmmpanied by some skill, whether or not the prize is automaticahy 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,
                  electromechsnical, or mechanical games, or facsimiles thereof, that
                  operate by chauce or partially so, that as a result of the play or operation
                  of the game award credits or free gamea, and that record the number of
                  t&e games or credits so awarded and the cancellation or removal of the
                  f&e games or credits, and

                    (B) doea not inchide any electronic, electromechanical, or mechsnicaJ
                  contrivance designed, made, and adapted solely for bona fide amusement
                  purposea if the contrivance rewards the player exclusively with noncaah
The Honorable David Sibley - Page 2               (DM-466)




                 merchandise prizes, toys, or novelties, or a representation of value
                 redeemable for those items, that have a wholesale value available from
                 a single play of the game or device of not more thau 10 times the amount
                 charged to play the game or device once or $5, whichever is less.

Penal Code $47.01(4). The substance of the 1995 amendment to the deiinition of gambling device
wasinitiallyadoptedin1993.SeeActofMay31,1993,73dLeg.,RS.,ch.774,§1,1993Tex.Gen.
Laws 3027, 3027. See genera& Attorney General Opinion DM-280 (1994) (history of 1993
amendments). Prior to 1993, a “gambling device” was defined as

             any contrivance that for a consideration affords the player an opportunity to
             obtain anything of value, the award of which is determined by chance, even
             though accompanied by some skill, whether or not the prize is automatically
             paid by the contrivance.

        Section 47(a) of article III of the Texas Constitution provides:

                  The Legislature shall pass laws prohibiting lotteries and gift enterprises
             in this State other than those authorized by Subsections (b), (d), and (e) of
             this section.’

You ash whether, in light of article III, section 47(a), the amended definitiorrof “gambling device”
invalidly authorizes the operation of certain “lotteries” not contemplated by the constitution.

         We must, of course, begin with the proposition that a statute must be upheld “if a reasonable
cmstmction can be ascabined, which will render the statute constitutional.” Ely v. State, 582
S.W.2d 416,419 (fex. Grim. App. [panel Op.] 1979). If, however, the amended definition of
“gambling device” authorizes the operation of slot machines, it cannot be upheld In Attorney
General Opinion DM-302, this office considered whether the legislature was empowered, in the
absence of a constitutional smendment, to authorize the operation of slot machines, either directly
or by amending the definition of “‘bet”in section 47.01(l) of the Penal Code. Attorney General
Gpiion DM-302 (1994). The opinion adopted the requestor’s chamcterization of a “slot machine”
as a device that for consideration awards cash or other prizes solely on the basis of chance and that
is not affkcted by any skill, judgment, or knowledge of a particular player. Id. at 11. A device that
fits this description, the opinion concluded, is “an unlawful lottery in contravention of article III,
section 47 of the Texas Constitution.” Id. The opinion noted that, although article III, section 47,




          ‘Subsection (II) permits the 1eSislahuc to authorize bingo games conducted by a church or other nonprofit
organization; subsection(d) does tbe same for charitableraffles; and subsection(e) permits the legislature to authorize
a state lottery.


                                                          p. 2619
The Honorable David Sibley - Page 3          @M-466)




‘is not self-enacting, and, had the legislature never enacted any implementing legislation, suit would
not lie to compel enactment” it is also the case that

           where there is a history of penal statutes implementing the constitutional
           prohibition, repeal of one of those prohibitions is not a neutral act, and, in our
           opinion, such repeal would contravene the constitutional proscription of
           subsection (a) of section 47 of article III.

         Prior to 1993, the definition of “gambling device” contained no exception for contrivances
that at present fit within the scope of paragraph (J3) of article 47.01(4). The pm-1993 definition is
of long standing. Thus, there exists a ‘history of penal statutes implementing the wnstitutional
prohibition,” and as a result, the amendment of section 47.01(4)‘s definition of “gambling device”
in paragraph (B) to exempt tiom its proscription a limited class of contrivances, like the similar
situation in Attorney General Opinion DM-302, “is not a neutral act.” The constitution allows no
exception for lotteries whose prizes are small, even those that some might call de minimis. We w
compelled to conclude that the exception from the definition of “gambling device” in section
47.01(4)(B) of the Penal Code invalidly authorizes the operation of certain “lotteries” not
contemplated by the constitution.

         You also ask whether chapter 47 of the Penal Code prohibits the use of machmea known as
“‘eight liners,’ which are video versions of slot machines, and other machines that operate wholly
or partially by chance, reward players with prizes, and are not ‘adapted solely for bona fide
amusement purposes. “‘2 This question is prompted by your concern about the growth of the “eight-
liner” industry since the amended definition of “gambling device” was first adopted in 1993. You
advise:

                 This amendment essentially legalized machines that pay off in wupons
            redeemable for non-cash memhandise valued at no more than five dollars.
            In practice, these machinea have been used to permit acoumulation of credits
            so that players have obtained winnings well in excess of the statutory limit.
            However, because of the exception’s inherent ambiguity, law enforcement
            authorities have enwuntered great difficulty in succeastirl prosecution. That
            difiiculty prompted the 75th Legislature to propose an smendment that would
            have clarified the exception, thus enhancing prosecutions.             Despite
            widespread support r%ornthe law enforcement wmmunity, that proposal
            failed to become law?

                . . . .




       ‘Letter from Senator David Sibley, Chfdr, Ecomxnic Development Committ~, Texas State Senate, to tbe
Honorable Dan Morales, Attorney Geoeml, Office of Texas Attorney General (Jan. 4.1998).



                                                   p.   2620
The Honorable David Sibley - Page 4             @M-466)




                   It is clear that the illegal use of “eight liners” in Texas wntinues to grow
               at a rapid pace. This growth has been fueled by a vague and potentially
               wnstitutionalIy defective amendment to the Penal Code’s gambling device
               definition.’

        Although, as we have concluded, the 1995 exception to the definition of “gambling device”
in paragraph (B) of section 47.01(4) is void because it wntravenes the Texas Constitution’s
proscription of “lotteries,” the rest of the definition remains intact. The 1995 act that enacted the
present version of article 47.01(4) wntains neither a severability clause nor a nonseverability clause.5
Section 3 11.032(c) of the Government Code provides:

                   In a statute that does not contain a provision for severability or
               nonseverability, if any provision of the statute or its application to any person
               or circumstance is held invalid, the invalidity does not a&t other provisions
               or applications of the statute that csn be given effect without the invalid
               provision or application, and to this end the provisions of the statute are
               severable.

The present version of the defmition of “gambling device ” “can be given effect without the invalid
provision’* simply by placing a period after “credits” and before the semicolon in paragraph (A), by
deleting the phrase “not excluded under Paragraph (El)”in the first paragraph of article 47.01(4), and
by severing paragraph (B).

        If the contrivances described as “eight-liners’* fit the Penal Code’s definition of “gambling
device,” Iieed of the unwnstitutional 1995 exception in paragraph (B), their possession is
prvscribed. In State v. Mendel, 871 S.W.2d 906 (Tex. App.-Houston [14th Dist.] 1994, no writ),
the wurt, m&wing an attack on the wnstitutionality of article 47.01(4) on grounds of vagueness,
wnsidered a particular kind of machine that is virtually identical to the device you have described
as an %igh-lmer.” The court said

               At the hearing on the motions to quash the indictments, the court heard
               testimony from Officer Templeton of the Houston Police Depsrtment about
               the Lucky 8 Liner vidw slot machinea possessed by appelleea. Appelleea are
               the owners of the club in which the video slot machines were found. The
               machines will accept anything from a quarter to a one hundred dollar bill.
               Depending on the amount of money that is put in the machine, it gives the
               player a set number of credits. A player wagers the number of credits he
               chooses, pushes a button, and then an electronic display depicts lines of tiuit
               and numbers, much like a traditional slot machine. After accumulating
               credits, employees of the club paid the player in cash at the rate of one dollar



        ‘Id.

        ‘See Act of May 27, 199574th Leg., R.S., ch. 318, 1995 Tex. Gen. Laws 2734,2734.


                                                     p.   2621
The Honorable David Sibley - Page 5         (DM-466)




            per four credits. The employee then touched a “knockoff switch,” which
            would reset the credits at zero. Officer Templeton testified that this “knock-
            off switch along with the “accounting memo@ of the machine, the number
            of credits bet on each play, and the absence of any skill involved in its play,
            tended to establish the machine’s character as a gambling device.

Merdel, 871 S.W.2d at 907-08.

         The three elements necessary to wnstitute a prohibited “lottery” are: 1) the offering of a
prize, 2) by chance, and 3) the giving of wnsideratLn for an opportunity to win the prize. City of
Winkv. Gntth AmusementCo., 100 S.W.2d 695,701 (Tex. 1936); see Attorney General Gpinion
DM-302 (1994); Letter Opinion No. 97-008 (1997) (and cases cited therein). As the wurt found in
MenaX, an “eight-liner” functions solely on the basis of “chance” and its operation obviously
requires the payment of consideration in order to play. Furthermore, we have been advised that,
while most eight liners do not pay off directly in cash, coupons are redeemable for, interah, g$t
cxatificatea from a variety of reputable merchants. Thus, the three elements necessary to wnstitute
a prohibited “lottery” appear to be present in the case of “eight-liners.” We believe it likely that a
court would tind, as did the Mendel court, that an eight-liner is a “gambling device” within the
statutory defiuition.

       Finally, you ark whether the Texas Lottery Commission and the Texas Alcoholic Beverage
Commission ‘possess the statutory enabling authority to pass rules permittirqthe agencies to
suspend or revoke a license if a regulated entity owns or operatea an ‘eight-liner.“’

         In order to sell tickets offered by the state lottery, a person must be licensed as a “sales
agent.‘” The Lottery Commission is required, after a heating, to “suspend or revoke a license” of
a sales agent if it Suds, in&r aliu, that the individual ‘has been convicted of a felony, aiminal fraud,
gambling or gambling-related offense, or a misdemeanor involving moral turpitude, if leas than 10
years has elapsed since the mrmmation of the sentence, parole, maudatory supervision, or probation
saved for the ~ffense.‘~ Ifan “‘eight-liner” or similar machine is a “‘gambling device” under section
47.01(4) of the Penal Code, conviction for owning or possessing such a device under section
47.06(a) is au offense for which the Lottery Commission may suspend or revoke the license of a
sales agent. The Lottery Commission also has rulemaking authority to consider the conduct of an
applicsnt or licensee with respect to gambling.8




        6Gov’t Code 5 466.151.

        ‘Id. 8 466.155(a)(l)(A).

        ‘Id.$5 466.015,.I54

                                                 p.   2622
The Honorable David Sibley - Page 6                     @M-466)




        Likewise, the Lottery Commission is authorized to issue licenses for “‘theconduct of bingo;‘*
to manufacture “bingo supplies;“rO to sell, distribute, or supply “biio equipment, devices, or
supplies for use in bingo games in this state;“” and to sell or supply “automated bingo services for
the use of licensed authorized orga&ations.“‘2 None of these licenses may be issued to any person
who has been convicted of a “gambling offense,“” and the Lottery Commission, after a hearing, may
suspend or revoke any license for failure to comply with the act, “for any reason that would allow
or require the commission to retbse to issue or renew a license of the same clas~.“‘~ Just as is the
case for lottery sales agents, conviction for owning or possessing a “gambling device” under section
47.06(a) of the Penal Code is an offense for which the Lottery Commission may suspend or revoke
the license of any individual licensed to participate in various bingo activities.

         The Alcoholic Beverage Commission is specifically authorized to “prescribe and publish
rules necessary to carry out the provisions of this wde.“r5 The commission is t%rther authorized to
“supervise and regulate licensees and permittees and their places of business in matters affecting the
public,” and this “authority is not limited to matters specifically mentioned in [the] [Alcoholic
Beverage Code]. “I6 Finally, “a license or permit issued under [the] code is a purely personal
privilege and is subject to revocation or suspension if the holder is found to have violated a provision
of this code or a rule of the commission.“”

        The authority of the Alcoholic Beverage Commission with regard to licensees or permittees
charged or convicted of misdemeanor gambling offenses is very extensive. An original or renewal
application for a retail dealer’s license shall be denied if the applicant has within the past three years
been convicted of an offense involving “‘gambling or gaming.“‘s Additionally, an original or renewal
license shall be denied under section 61.42(a)(3) or 61.42(a)(7) and may be denied under section
61.43(a)(l), 61.43(a)(3). or 61.43(a)(9). An original or renewal application for a permit may be
denied under section, 1 l&(a)(l), 11.46(a)(3), 11.46(a)(6), or 11.46(a)(S).



        9v.T.C.S. art. 1794 3 13(c).

        “Id. 5 134a).

        “Id. 5 13b(a).

        ‘Vd. 5 1344).

        “Id. 85 13(c)(2), (4); 13a(c), 13b(c), 134~).

        “Id. $ 16(d).

        “Alco. Bev. Code 0 5.3 1.

        ‘Vd. 5 5.33.

        “Id. 5 6.01(b).

        “Id. 8 69.06(a)(4),   (c)(l),   (2); see also id. 0 25.06(a)(4),   (c).


                                                                p.   2623
The Honorable David Sibley - Page 7                    @M-466)




        In our opinion, the Alcoholic Beverage Commission could reasonably conclude that a person
charged with or convicted of a misdemeanor gambling offense under the Penal Code had “wnducted
his business in a place or manner which wsrrants the cancellation or suspension of a licenseI [or
permit]2o based on the general welfare, health, peace, morals, safety, and sense of decency of the
people.‘*’ Such a conclusion would then furnish sufficient grounds for a suspension for up to sixty
days or a cancellation of the individual’s retail dealer on- or off-premises license or permit.
Furthermore, we believe that the Alcoholic Beverage Commission is authorized to enact a rule
prohibiting the presence of “eight-liners” in facilities licensed by the Alcoholic Beverage Commis-
sion, and it could then revoke the license or permit of an individual found, after notice and hearing,
to have violated the rule. Both the Alcoholic Beverage Code and the enabling statntes of the Lottery
Commission offer means for the commissions to significsntly halt the intrusion of these machines
upon an unsuspecting public.




        191d. 5 61.71(@(17).

        =9d. $5 11.61(b)(7), .612(a).

        *‘Id. 5 61.71(a)(l7); seeoh     id. $ 11.61.


                                                          p.   2624
The Honorable David Sibley - Page 8        (DM-466)




                                       SUMMARY
               The amended definition of “gambling device” in paragraph (B) of section
           47.01(4) of the Penal Code invalidly authorizes the operation of certain
           “lotteries” proscribed by article III, section 47 of the Texas Constitution. The
           Lottery Commission has statutory and mlemskiig authority to consider the
           conduct or activities of an applicant or licensee with respect to gambling.
           Additionally, the Alcoholic Beverage Commission has mlemaking and
           statutory authority to regulate permittees and licensees who have been found,
           after proper notice and a hearing, to have engaged in a gambling offense as
           defined in the Penal Code.




                                               DAN MORALES
                                               Attorney General of Texas

JORGE VEGA
First Assistant Attorney General

SARAH J. SHIRLEY
Chair, Opiion Committee

Prepared by Rick Gilpin
Assistant Attorney General




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