JACK CONWAY - ATTORNEY GENERAL
Subject: Video Lottery Termials at Kentucky’s Horse Race Tracks
Requested by: State Representative Jody Richards, 20th Legislative District
Written by: Jennifer Black Hans Assistant Attorney General
Syllabus: The General Assembly may authorize the Kentucky Lottery
Corporation to establish, license, reguate and tax video lottery
terminals at designated horse racing tracks under Ky. Const. § 226(1) without futher amendment to the Kentucky Constitution.
Statutes construed: Ky. Const. § 226, KR § 238.505, KR § 154A.010, KR §
154A.060, KR § 154A.063
GAGs cited: OAG 05-003, OAG 99-008, OAG 93-58, OAG 92.127 and
Opinion of the Attorney General
By letter dated May 7, 2009, State Representative Jody Richards requests
the Attorney General’s opinion concerning whether electronic games at Kentucky’s
race tracks are allowed under Section 226 of the Kentucky Constitution.
AN EQUAL OPPORTUNITY EMPLOYER M/F/D ~
A. Factual Context for Opinion
Pursuant to 40 KA 1:020 Section 3, official opinions of the Attorney General
must involve “an actual, current factual situation.” After receiving Representative
Richards’ initial request, the Office of the Attorney General sent two (2)
letters seeking additional information, particularly the specific draft legislation
upon which his inquiry was based. In response, on June 1, 2009, Representative
Richards wrote that the General Assembly was not in session, and, therefore, he
could not provide a specific bill draft. In lieu of a specific bill draft, Representative
Richards provided the following questions:
(1) Is a video lottery terminal whereby a patron wins by matching numbers,
pictures, or symbols considered to be a slot machine and therefore prohibited
under Section 226 of the Kentucky Constitution?
(2) Is it permissible for the Kentucky Lottery Corporation to allow one or
more vendors to have or operate several video lottery terminals at a single
location; several dozen terminals at the same location or several hundred
terminals at the same location?
While more specific, the foregoing questions still did not provide a specific bil
draft for legal analysis. Moreover, the additional questions presented are too
conclusory to be useful to a legal opinion concerning whether electronic games at
Kentucky’s race tracks are allowed under Section 226 of the Kentucky Constitution.
Therefore, this opinion wil squarely address the initial- non-conclusory
question presented by Representative Richards on May 7,2009.
Since the date of Representative Richards’ original request, additional
facts have been presented on this question. On June 3, 2009, Governor Steve
Beshear issued a Proclamation convening the General Assembly into Special
Session to begin on June 15, 2009, for the sole purpose of considering the
amendment of the Fiscal Year 2009-2010 state budgets and related budget reduction
plans. On June 4, 2009, the Governor amended his Proclamation to include
consideration of the following subjects:
(1) Enacting legislation authorizing the Kentucky Lottery Corporation to
establish, license, regulate and tax video lottery terminals at authorized
licensed racetracks in Kentucky.
(2) Amending or repealing only those provisions of the Kentucky Revised
Statutes specifically necessary to implement the subjects and provisions
of this amended Proclamation.
(3) Declaring an emergency thereby making any legislation enacted pursuant
to this amended Proclamation effective upon the signature of the
On June 9, 2009, the Office of the Governor issued a draft of the legislation
for which it seeks the General Assembly’s consideration during the Special
Session. This opinion will rely on the Governor’s draft of the video lottery terminals
gaming legislation 1 as the actual and current factual basis upon which its
legal analysis will rest.
B. Authority for Opinion
KR § 15.025 requires the Attorney General to furnish opinions when a
public question of law is submitted by any member of the Legislature. The
Attorney General possesses the authority to issue an opinion if the question
presented in writing “is of such public interest that the Attorney General’s
opinion on the subject is deemed desirable.” The question presented meets both
of the foregoing conditions.
This opinion will seek to reconcile five (5) prior opinions of the Attorney
General, which interpret Section 226 of the Kentucky Constitution. Specifically,
the prior opinions to be analyzed are OAG 80-409,92-127,93-058,99-008 and 05-
003. This will however be a new opinion that will offer a fresh review of the
relevant constitutional, statutory and case law addressing the issue.
This opinion is limited in scope to the constitutional question presented
and the factual context described above – specifically whether video lottery
termals at Kentucky’s race tracks are permitted under Section 226 of the Kentucky
Constitution. Policy considerations, such as long-term economic stability
1 See Draft of gaming bill at web page for Governor Steve Beshear.
and forecasts, the financial health of the horse racing industry, and societal
interests regarding gambling do not fall under the opinion authority of the
Attorney General and will not be considered. Instead, these policy matters are
appropriately left to legislative debate durng the Special Session or during
future Regular Sessions of the General Assembly.
- Legal Issues Presented
The Governor’s amended Proclamation convening a Special Session of the
General Assembly includes as one of its sole purposes amending the Kentucky
Revised Statutes to authorize the Kentucky State Lottery Corporation to establish,
license, regulate and tax video lottery games and video lottery terminal
(hereinafter “VL T”) at licensed horse racing tracks in the Commonwealth of
Kentucky. As discussed in the introduction to this opinion, the questions presented
by Representative Richards on June 1,2009, are not sufficiently detailed in
their legal presumptions and are ultimately too conclusory to be a useful starting
point for a legal analysis of the question regarding the constitutionality of VL Ts
at race tracks. It is also necessary for this opinion to step back and reassess the
prior opinions issued on this subject, in order to more fully answer the current
question before the General Assembly – may Kentucky’s legislators consider the
Governor’s proposal concerning VL Ts at Kentucky’s race tracks without a constitutional
Using the context of the Governor’s draft legislation concerning VLTs, this
opinion will seek to answer the following two (2) legal questions:
(1) Is VLT gaming a “lottery” as provided under Section 226(3) of the
Kentucky Constitution prohibiting “lotteries … (and) schemes for
similar purposes” unless otherwise exempted under Sections 226(1)?
(2) If VLT gaming is a lottery under Section 226(3), which would otherwise
be constitutionally prohibited, does VL T gaming as proposed
by the Governor’s draft gaming bill fall within the “state lottery”
exception contained in Section 226(1)?
B. History of Kentucky’s Constitutional Prohibition on Lotteries & Its Exceptions
The history of Section 226 of Kentucky’s Constitution of 1891 is significant
to this legal inquiry, and therefore, is provided in summary below. As adopted
by the 1891 Constitutional Convention, Section 226 of the Kentucky Constitution
included explicit language forbidding “lotteries and gift enterprises … (and)
schemes for similar purposes.”2 This language, currently codified as §226(3),
remained unchanged for nearly 100 years.
In 1988, Kentucky voters adopted a constitutional amendment, codified at
§226(1), permitting the General Assembly to establish a Kentucky state lottery
and a state lottery to be conducted in cooperation with other states. Soon thereafter,
former Governor Wallace Wilkerson convened the General Assembly in
Special Session. The 1988 Special Session of the Kentucky General Assembly
passed and Governor Wilkinson signed into law enabling legislation adopting
the Kentucky state lottery and creating the Kentucky Lottery Corporation, an
independent, de jure municipal corporation and political subdivision of the
Commonwealth of Kentucky. KR 154A.020. The Kentucky Lottery Corporation
was empowered to conduct and administer lottery games, which would result in
“the maximization of revenues” to the state. KR 154A.060. House Bill 1 as
enacted (1988 Ex. Sess.) provided that “‘Lottery’ mean(t) any game of chance
approved by the corporation and operated pursuant to this chapter.” KR §
154A.010(3) (1988 Ex. Sess.) (Emphasis supplied). Further, the HE 1 permitted the
Kentucky Lottery Corporation to specify “the tyes of games to be conducted,
including but not limited to, instant lotteries, on-line games and other games
traditional to the lottery…” Id. (Emphasis supplied).
This authority was revised in 1990, when the General Assembly amended
KR Chapter 154A to prohibit the Kentucky Lottery Corporation from (1) approving
or operating a lottery based on amateur athletics; (2) approving or
operating any casino or similar gambling establishment; or (3) approving or
2 This language, including the phrase “schemes for similar purposes,” was original to the 1891
Constitution. But d. Jeffery R. Soukup, Rolling The Dice On Precedent And Wagering On Legislation:
The Law Of Gambling Debt Enforceability In Kentucky After Kentucky Off-Track Betting, Inc. v. Mcburney and KRS § 372.005, 95 Ky. L.J. 529,534 (2006-2007) (stating that the 1992 amendment added the language “schemes for similar purposes,” thereby expanding the prohibition).
GAG 09-004 operating any game played with cards, dice, dominos, slot machines, roulette wheels, or where winners are determined by the outcome of a sports contest.
KR § 154A.063, 1990 Ky. Acts ch. 470 § 77 (eff. 1990). Since 1990, Kentucky’s
statutory law has banned casino. and casino-style gaming, including slot machines.
The significance of the 1990 amendment to the state lottery is highlighted
here for legal as well as factual reasons. As is discussed below in section F of this
opinion if casino-style games and slot machines were unconstitutional, why then
was there a need to ban these games by statute? Under a constitutional interpretation
contrary to this opinion, such a legislative action would have therefore
been superfluous. A universal tenant of statutory construction is that the General
Assembly is presumed to have intended to do what it attempts to do by statutory
enactment. See Reyes v. Hardin County, Ky., 55 S.W.3d 337 (2001), quoted in Liquor
Outlet, LLC v. Alcoholic Beverage Control Bd., Ky.App, 141 S.W.3d 378, 386 (2004).
Finally, in 1992, Kentucky’s voters adopted a second constitutional
amendment permitting the General Assembly to authorize charitable lotteries
and charitable gift enterprises. Ky. Const. §226(2). In the next Regular Session in
1994, the General Assembly enacted legislation codified at KR Chapter 238
permitting charitable gaming. Included within the definition of “charitable
gaming” and “special limited charitable games” under this chapter were a broad
category of games, including bingos, raffles, roulette, blackjack, poker, and keno.
See KR § 238.505(2), (17). Just as it did in the 1990 amendment to the state lottery,
the General Assembly in its 1994 charitable gaming legislation prohibited
slot machines and electronic gaming by statute. KR § 238.505(2).
- Constitutional Principles
An analysis of the foregoing sections of the Kentucky Constitution must
rely on certai basic principles of constitutional law and construction. It is well
established that state government possesses al powers not otherwise denied to it
by the 1891 Constitution of Kentucky. Rouse v. Johnson, Ky. 28 S.W.2d 745 (1930).
Specifically, the lawmaking power for the Commonwealth is vested to the General
Assembly, which exists to exert the sovereign authority of state governent.
The Kentucky Supreme Court has specifically held that the General Assembly
may enact legislation on any subject uness otherwise prohibited by the Constitution of Kentucky. Legislative Research Commission v. Brown, Ky., 664 S.W.2d 907,
913 (1984); Brown v. Barkley, Ky., 628 S.W.2d 616 (1982).
Legislative enactments car a strong presumption of constitutionality.
Kentucky Sheriffs Assn Inc. v. Fischer, Ky., 986 S.W.2d 44, 447 (1999); Rose v.
Council for Better Education, Inc., Ky., 790 S.W.2d 186, 209 (1989). Doubts regarding
the constitutionality of a legislative enactment must be resolved in favor of
the sovereign authority of the Commonwealth of Kentucky, which is retained by
its citizens and vested in the lawmaking authority of Kentucky’s legislators,
who are as representatives of its citizenry. See, e.g., Kentucky Harlan Coal Company
v. Holmes, Ky., 872 S.W.2d 446 (1994); Walters v. Bindner, Ky., 435 S.W.2d 464, 467
(1968). In Kentucky Sheriffs, a state representative filed suit in Campbell County
challenging the constitutionality of legislation increasing the allowable compensation
for public officials. The Kentucky Supreme Court upheld the legislation
and the law making power of the General Assembly, stating:
Courts are obligated to If draw all reasonable inferences and implications”
from a legislative enactment as a whole in order to sustain its validity, if
possible. Graham v. Mils, Ky., 694 S.W.2d 698, 701 (1985). We will not disturb
a legislative enactment based upon a finding of the General Assembly
that is neither arbitrary nor capricious. See Kentucky Harlan Coal Co. v.
Holmes, Ky., 872 S.W.2d 446, 455 (1994).
Kentucky Sherifs Ass’n Inc. v. Fischer, supra at 447. Finally, the Kentucky Supreme
Court has recognized that governmental officers who rely upon an Attorney
General’s opinion would be acting in good faith. Babb v. Moore, Ky., 374 S.W.2d
D. The Meaning of Lottery”: Commonwealth v. Kentucky Jockey Club
In light of these constitutional principles, the decision of Kentucky’s highest
court in Commonwealth v. Kentucky Jockey Club, Ky., 38 S.W.2d 987 (1931) offers
a sound constitutional framework upon which to base our current analysis. In
Jockey Club, the Kentucky Court of Appeals upheld legislation authorizing pari-mutuel
wagering on horse races, holding that such wagering is not a prohibited
lottery. Representing the weight of authority among the states at the time, the
reasoning adopted in Jockey Club, still provides the best interpretation of state
constitutional provisions addressing the lottery prohibition. Contrary to the
conclusion opined in GAG 93-58, see infra, the Jockey Club decision is not an
anomaly of law, but rather represents the current and enforceable constitutional
interpretation on this point.
As stated in the historical section B above, Section 226(3) of the Kentucky
Constitution of 1891 provides that Except as provided in this section, lotteries and gift enterprises are forbidden, and no privileges shall be granted for such purposes,
and none shall be exercised, and no schemes for similar purposes
shall be allowed. The General Assembly shall enforce this section
by proper penalties. All lottery privileges or charters heretofore
granted are revoked.
Ky. Const. §226(3). The term “lotteries” is not defined by the Constitution. Rather,
Section 226(3) distinguishes “lotteries” from other forms of gaming as
prohibited, unless otherwise provided within one of the exceptions.
The authoritative and binding opinion issued by the Court in Jockey Club
squarely addresses this point and defines “lotteries” narrowly. In Jockey Club,
supra, the former Court of Appeals concluded that the prohibition against lotteries
was not understood by those adopting the 1891 Constitution to outlaw other
forms of gaming. Id. at 994. The Court carefully examined the proceedings of the
1890 Constitutional Convention to elucidate its interpretation:
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 form, 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.
Jockey Club, 38 S.W.2d at 993 (Emphasis supplied) (citing 1 Constitutional Proceedings
& Debates in the 1890 Convention 1172-1175.) The Court went on to explain its
reliance on the Debates:
The debates of a Constitutional Convention are not conclusive of
the meaning of the Constitution, but it is proper to resort to them in
order to ascertain the purpose sought to be accomplished by a particular
provision … (t)he debates by individual members may be
equivocal, but the decisions of the Convention itself are authoritative
as to what it intended.
ld. Therefore, the Court in Jockey Club relied upon the authoritative action of the
Convention as a whole as evidenced by the Debates.
The specific definition adopted by the Court distinguished games of pure
chance from games determined by any element of skill:
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. Based on this interpretation of lotteries, the Court held that pari-mutuel
wagering on horse racing did not fall within the general prohibition
again lotteries. The Court opined that while chance may be essential to the
result, a horse race depends on more than mere chance, as distinguished from a
traditional concept of a lottery. Id. at 992.
Subsequent to the Jockey Club decision, lower court decisions in Kentucky’s
appellate courts have generally followed the reasoning that Section 226′ s
lottery prohibition applies to games of pure chance. See, e.g., Otto v. Koso/sky, 476
S.W.2d 626, 629 (Ky. App. 1972) (Bingo Lottery Act permiting cities to authorize
bingo fell within Section 226′ s lottery prohibition because, like a .traditional
lottery, the outcome was determined “purely by lot or chance”) (emphasis
supplied); Commonwealth v. Malco-Memphis Theatres, Inc., 169 S.W.2d 596 (Ky.
App. 1943) (Section 226 prohibited promotional drawing by theater). The appellate
courts have consistently referenced the test set forth in Jocke Club, defining
lottery as an activity which includes the following elements: (1) chance, (2) a
prize and (3) consideration. Malco-Memphis Theatres, supra at 598. This “pure
chance” rule is also referred to as the “English Rule.” Similarly, other state courts
have followed the Jockey Club opinion in holding that pari-mutuel wagering is
not a prohibited lottery but rather a form of gaming that does not depend on
mere chance. Jockey Club, supra at 992; see also Barnes v. Bailey, 706 S.W.2d 25, 32
(Mo. 1986); Opinion of the Justices No. 205, 251 So.2d 751, 753 (Ala. 1971); State ex
rel. Gavalac v. New Universal Congregation of Living Souls, 379 N.W.2d 242, 244
Deviating but not completely departing from the Jockey Club decision are
Kentucky Supreme Court cases adopting a broader interpretation of the constitutional lottery
prohibition. See A.B. Long Music Co., Ky., 429 S.W.2d 391, 394 (1968)
(the word ‘lottery’ is a generic term embracing all schemes for the distribution of
prizes by chance for consideration); Commonwealth v. Allen, Ky., 404 S.W.2d 464
(1966) (following Washington state precedent holding that a referral sellng plan
was a lottery). These cases follow more closely decisions from other states that
prohibit as “lotteries” games that distribute a prize predominantly by chance.
This is sometimes referred to as the” American Rule.”
Kentucky case law may then be viewed as a hybrid with cases adopting
both the English and American Rules regarding the meaning of lottery as used in
Ky. Const. § 226(3). Under ths hybrid precedent, games whereby a patron wins
by matching numbers, pictures, or symbols are lotteries subject to the constitutional
prohibition unless otherwise exempted. The electronic nature of the proposed
gaming in the form of VLTs does not alter this conclusion. See, e.g., Opinion
of the Justices, 795 So.2d 630, 642 (Ala. 2001) (holding that video poker games are
“lotteries” since “no amount of skill will ever determine the ultimate outcome of
a video game … and the programmed gaming device will, ‘over continuous
play/ always prevail”)
A prior opinion of former Attorney General Steve Beshear supports our
reliance on the reasoning adopted in the Jockey Club case. Also relying on the
decision in Jockey Club and interpreting Section 226 of the Kentucky Constitution
prior to the 1988 and 1992 amendments, OAG 80-409 opined that “there are
games of chance which are not lotteries … (and) a distinction at law and in fact
between gaming and lotteries which calls for a difference in treatment of the
two.” Id. OAG 80-409 concluded that certain games may be permitted by the
General Assembly without violating Section 226. Id.
Unlike the facts presented in OAG 80-409, no part has currently proposed
permitting certain games of chance, which are not lotteries. Rather, even
those interests promoting expanded gambling concede for purposes of this
inquiry that VLTs would be considered a lottery under §226(3), unless exempted
under the state lottery as provided under §226(1).
E. The I/State Lottery” Exemption
During the Regular Election of 1988, Kentucky voters approved a constitutional
amendment, codified at Ky. Const. §226(1) permitting legislation for and
the operation of a state lottery:
The General Assembly may establish a state lottery to be conducted
in cooperation with other states… (and) operated by or on behalf of
the Commonwealth of Kentucky.
§226(1). During the course of the debates that resulted in §226(1), the legislature
defeated language that would have constitutionally limited the state lottery to
“weekly lotteries or drawings.” HFA 3 to HB 1 (1988 Regular Session), Ky. H.R.
Jour, 1988 Reg. Sess. at p. 2109. This House Floor Amendment sponsored by State
Representative Louis Johnson was an explicit attempt to exclude games that
could eventually be played on electronic devices or slot machines. The debate,
which was captured on video by Kentucky Educational Television, demonstrates
both the intent of Rep. Johnson in offering the amendment and the intent of the
House in rejecting it. . See Tapes of the proceedings of the General Assembly, HB 1,
HFA 3, March 11, 1988. Since §226(1) did not define “lottery,” the framers’ intent
may be ascertained by reviewing the constitutional debates. See, e.g., Barker v.
Stearns & Lumber Co., 152 S.W.2d 953, 956 (Ky. 1941).
Representative Johnson offered his amendment by referencing a newspaper
article about the confusion that occurred in New York and New Jersey
concerng what was and was not intended by lottery amendments in those
states. Representative Johnson expressed that his amendment was intended to
insure that electronic gaming and slot machines would not be the “logical next
step” for the state lottery. In response, State Representative William Donnermeyer
told the House that the amendment would have the opposite result, only
generating confusion, and urged the House to vote agait it. Representative
Donnermeyer’s comments included a statement, quoted in OAG 99-008, explaining
that the language of the amendment itself did not include slot machines.
House Amendment 3 was defeated on a roll call vote of 37-48. Tapes of the proceedings,
It is authoritative that the legislature defeated the amendment. Why the
amendment was rejected is another matter entirely. In opining that §226(1)
prohibited VLT’s, OAG 99-008 relied upon the comment of Representative
Donnermeyer out of context and concluded that the legislature specifically relied
on this “assurance” when rejecting the amendment. This conclusion in OAG 99-
008 is highly speculative. To presume that the entire General Assembly voted on
the amendment based entirely on a single comment is inconsistent with Kentucky
law. It is the determination of the legislative body as a whole and not the
comment of a single legislator that is controlling. This point was recently articulated
by the Kentucky Supreme Court in a criminal case involving a question of
Interpretations of Constitutions by rules of implication are most
hazardous, and, if ever employed at all, it ought to be done in those
instances only where the subject-matter and language leave no
doubt that the intended meaning of the clause which may be under
investigation may be reached in that way only, and be reached that
way with approximate certainty.
Posey v. Commonwealth, 185 S.W.3d 170, 190 (Ky. 2006).
Once again, the Jockey Club case is illustrative: “The debates by individual
members may be equivocal- but the decisions of the Convention itself are authoritative
to what is intended.” Jockey Club, 38 S.W. 2d at 993. Therefore, Kentucky’s
highest court guides us that while we may rely upon the authoritative action
evidenced by a vote in legislative history, a comment made by a single representative
during legislative debate cannot be controlling.
By squarely rejecting the Johnson floor amendment, the General Assembly
adopted a broader scope for the term “state lottery,” supporting a conclusion
that §226(1) permits the General Assembly to authorize electronic gamg under
the auspices of the Kentucky Lottery Corporation without need for a constitutional
amendment. Once again, it is a universal rue of statutory construction that
the legislature is presumed to have intention for its acts. Reyes, 55 S.W.3d at 34.
More specifically, Kentucky precedent provides that “(a)ll statutes are presumed
to be enacted for the furtherance of a purpose on the part of the legislature
and should be construed so as to accomplish that end rather than to render
them nugatory.” Commonwealth ex rei. Martin v. Tom Moore Distillery Co., 287 Ky.
125, 152 S.W.2d 962, 967 (1939).
F. Construction of Legislative Authority for Gaming under the State Lottery
Further supporting the conclusion that the General Assembly possesses
the constitutional authority to expand the state lottery is the General Assembly’s
own legislative construction of the 1988 and 1992 Amendments. A primary rule
of statutory construction directs courts to “look to the history of the ties and
the state of existing things to ascertain the intention of the framers of the Constitution
and the people adopting it, and a practical interpretation wil be given to
the end that the plain manifested purpose of those who created the Constitution,
or its amendments, may be carried out.” Keck v. Manning, Ky., 231 S.W.2d
604,607 (1950). Legislative construction of constitutional provisions contemporaneous
to the adoption of the provisions is persuasive. Shamburger v. Duncan, Ky.,
253 S.W.2d 388, 392 (1952).
Legislative construction of the state lottery exemption, supports the conclusion
that the term “lottery” has the same meaning under Ky. Const. § 226(1) as
it does under Ky. Const. § 226(3). A canon of construction holds that identical
terms within a single act are intended to have the same meaning. See, e.g., Estate
of Cowart v. Nicklos Drilling Co., 505 U.s. 469,479, 112 S.Ct. 2589, 120 L.Ed.2d 379
(1992); Sullvan v. Stroop, 496 U.s. 478, 484, 110 S.Ct. 2499, 110 L.Ed.2d 438 (1990).
Contemporaneous to the adoption of the 1988 state lottery constitutional exemption,
then-Governor Wallace Wilkinon called a special session of the General
Assembly to enact House Bil 1 creating the state lottery and establishing the
Kentucky Lottery Corporation. House Bil 1 defied lottery as “any game of
chance” not otherwise disapproved by statute. KR § 1S4A.010(3) (1988 Ex. Sess.)
The original language adopted in HB 1 (1988 Ex. Sess.) also empowered the
Kentucky Lottery Corporation to conduct games “including but not limited to,
instant lotteries, on-line and traditional games.” KR 154A.060 (1988 Ex. Sess.),
HB 1 at Section 5(1)(d)(1) (emphasis supplied). The provisions adopted and
codified in 1988 clearly demonstrate that the General Assembly did not interpret
the State Lottery Amendment as listing the types of games the Kentucky Lottery
Corporation Could operate. The plain language of HE 1 – “including but not
limited to” –expressly recognizes that other games may be adopted.
In 1990, the General Assembly withdrew via statute some of the breadth
granted to the state lottery when it passed HE 814 codified at KR 154A.063, in
which it disapproved games based on sporting contests and casino and casino type
gamg. Subsequent to the 1990 statutory limits imposed by the legislature,
the Attorney General issued an opinion considering whether a new Kentucky
Lottery-Pick 7 Game, based on the Breeder’s Cup qualified as a permissible
lottery. OAG 92-127 adopted the definition of lottery adopted by the Courts
under Section 226(3) (lottery prohibition) to define lottery under Section 226(1)
(state lottery exemption). As such, the Attorney General opined that the new
game, which included all the Jockey Club elements? was a lottery authorized by
Section 226(1) and KR Chapter 154A to be conducted on behalf of the Commonwealth
G. Reconciling the Prior Opinions
In 1993, former Attorney General Chris Gorman considered the question
of expanded gambling under the State Lottery. Proposed at that time was the
question of whether casino gambling could be authorized by the General Assembly
without a constitutional amendment. OAG 93-58. Relying on cases from
other states, particularly Indiana, see State v. Nixon, 384 N.E.2d 152 (1979), the
Attorney General opined that Kentucky’s Jockey Club case was an aberration and
limited the case to its facts. Further, the opinion wrongly concluded that Kentucky
case law adopts the” dominant factor” or American rule in interpreting the
term “lottery.” Further, it concluded that although “lottery” under §226(3) – the
prohibition language – was broad enough to encompass casino-style gaming, the
term “lottery” under §226(1) – within the context of the state lottery – was not.
3 A “lottery” is a game of chance that distributes a prize for valuable consideration; whether a
game qualifies as a “game of chance” depends on whether “chance permeates the entire scheme.” OAG 92-127 at 3-.
Therefore, it concluded that the General Assembly could not authorize the
Kentucky State Lottery to adopt casino gaming.
OAG 93-58 and a subsequent opinion, OAG 99-08 relying on the same,
were fundamentally flawed. First, reliance on the Nixon decision from Indiana is
misplaced, since Indiana’s constitutional language and history is not the same.as
Kentucky’s and since the Nixon decision is directly contrary to Kentucky’s own
precedent – Jockey Club. Further, both OAG 93-58 and 99-08 present a strained
reading of the term “lottery” and ignore that even the General Assembly believed
in 1988 that it possessed the authority to allow the Kentucky Lottery
Corporation to market any game of chance under the umbrella of the state lottery.
These opinons also ignored the basic canon of legislative construction that
presumes that the General Assembly has intention and purpose for its actions,
Reyes, 55 S.W.3d at 342, for to presume otherwise would render legislative action
superfluous or a nugatory. Tom Moore Distillery Co., 152 S.W.2d at 967 (1939).
In 2005, the Attorney General considered an opinion request from the legislature
regarding the question of expanded gambling. OAG 05-003. In response,
the Attorney General opined that gaming that fell with the definition of a
lottery could not be authorized by the legislature, except within one of the two
constitutional exceptions provided under Section 226(1) and (2). However, the
opinon also explained that the constitutional history of the lottery prohibition
coupled with the “pure chance” line of cases suggested that gaming, which does
not fall within the traditional definition of a lottery, may be permitted by statute,
“which is inherently more flexible than the dictates of the (C)constitution.” Id.
OAG 05-003, while departing from the 1993 and 1999 opinions, was in fact
consistent with prior opinions, including OAG 92-127, supra, which permitted the
Kentucky state lottery to market a game based on the Breeder’s cup and OAG 80-
409, supra, which adopted the Jockey Club reasoning as its own.
Therefore, OAG 05-003, OAG 92-127 and OAG 80-409 are consistent and
offer reconciling views. Each of these prior opinions construes the term “lottery”
to have the same meaning in both §226(1) and §226(3). Each of the above opinions
adopts the reasoning of the Jockey Club decision at its binding definition of
“lottery.” Further, the consensus of these opinions supports our conclusion that
the General Assembly may constitutionally authorize electronic gaming in the
form of VLTs within its law making power, consistent with constitutional and
legislative history, and without the need for a constitutional amendment.
The two (2) opinions that have reached a contrary conclusion are simply
not consistent with the relevant case law and are flawed in their constitutional
and legislative construction. As such, we agree with OAG 05-003, which questioned
the continuing validity of the prior inconsistent opinions.
Expanding on the reasoning of OAG 05-003, this opinion intends to offer
the binding constitutional principles and legislative history that offers the necessary
underpinning for the conclusion that VL Ts may be permitted by statute.
What the General Assembly may do withi its lawmaking power, it may similarly
un-do. Boone County v. Town of Verona, Ky., 227 S.W. 804, 805 (1921); Rouse v.
Johnson, Ky., 28 S.W.2d 745 (1930). “The General Assembly is not dependent
upon the provisions of the Constitution to give it power to legislate upon a
subject. Its powers of legislation extend into every zone wherein it is not prohibited
by a provision of the Constitution, or, in other words, it may do whatever
the Constitution does not prohibit its doing.” Lakes v. Goodloe, Ky., 242 S.W. 632,
G. Case Law from Other States
Other states with constitutional provisions and histories that are similar to
Ky. Const. § 226 offer support for the opinion that the Kentucky General Assembly
can authorize VLTs as proposed under the state lottery exception of Ky.
Const. § 226(1). In State of West Virginia ex rel Cities of Charleston, et al. v. West
Virginia Economic Development Authority, 588 S.E.2d 655 (W. Va. 2003), the West
Virginia Supreme Court upheld as constitutional a statutory enactment closely
tracking the VL T legislation proposed by Governor Beshear in his draft gaming
bill. In the West Virginia case, the question presented was whether legislation
authorizing VLTs at race tracks was constitutional pursuant to West Virginia’s
constitutional amendment authorizing that state’s lottery. Id.
Expanded gaming opponents as petitioners argued that the Racetrack
Video Lottery Act of 1994 and the Limited Video Lottery Act of 2001 violated
West Virginia’s constitutional provision prohibiting lotteries. At the outset, the
court indicated that petitioners had a high bar to overcome, specifically that
legislative enactments carry a presumption of constitutionality. Id. at 664. The
court then conducted a thorough overview of the constitutional history regarding
gaming, which was virtually identical to Kentucky’s, with an original prohibition
against lotteries that was amended by the electorate in 1984 to permit a
state lottery. Id. at 665
The court also directly considered and summarily rejected the petitioners’
contention that the voters adopting the state lottery amendment never intended
to amend the constitution to permit VLTs. Id. at 667. The court deferred to its
own precedent, concluding that the term lottery had the same meaning when
used in both constitutional provisions – the prohibition and the state lottery
exemption. Id. Finally, the court turned to the legislature’s own findings to
support this conclusion, and granted them great deference. Id. at 669.
The West Virginia Supreme Court concluded:
that the video lottery created pursuant to the Racetrack Video Lottery
Act, W.Va.Code §§ 29-22A-1, et seq., is a lottery which is regulated,
controlled, owned and operated in the manner provided by
general laws enacted by the West Virginia Legislature so that it
properly and lawfully may be conducted in accordance with the
exception to the prohibition against lotteries set forth in article VI,
section 36 of the West Virginia Constitution. Further, we hold that
the video lottery created pursuant to the Limited Video Lottery
Act, W.Va.Code §§ 29-22B-101, et seq., is a lottery which is regulated,
controlled, owned and operated in the manner provided by
general laws enacted by the West Virginia Legislature so that it
properly and lawfully may be conducted in accordance with the
exception to the prohibition against lotteries set forth in article VI,
section 36 of the West Virginia Constitution.
Id. at 670.
The decision in West Virginia was followed by cases in Kansas and New
York, which upheld expanded lottery acts regulated by and benefitting the state
without further amendments to their respective state constitutions. See, e.g.,
Dalton v. Pataki, 835 N.E.2d 1180 (N.Y. 2005); State ex rel Six, v. Kansas Lottery, 186
P.3d 183 (Kan. 2008).
The New York Court of Appeals, interpreting amendments to the Indian
Gaming Regulatory Act, held that video lottery gaming was a “lottery” within
meaning of state constitution and that legislation permitting use of VLTs at
designated racetracks was constitutional. Dalton v. Pataki, 835 N.E.2d at 1192-
1193. The Court did distinguish VLTs operated from a central processing device
from slot machines, which permit a single player to play against an individual
machine. Id. This latter form of electronic gaming was compared by the Court to
casino-style gaming (blackjack, poker or roulette), which the Court held would
require a constitutional amendment. Id.
Even among favorable court opinions, such as Dalton, there is a distinction
between slot machines and VLTs. The legislation proposed by Governor Beshear
to be considered during the Special Session proposes the establishment of a
central communication system to receive auditing programming information and
to be used by the state to activate and disable VL Ts. See Draft of gaming bil at
Section 27. Therefore, as proposed, the VLTs contemplated by Kentucky would
be consistent even under New York’s analysis.
In Kansas, the Attorney General fied an original action challenging the
constitutionality of the Expanded Lottery Act of 2007. State ex rel Six, v. Kansas
Lottery, 186 P.3d 183. The factual circumstances considered by the Kansas Supreme
Court were nearly identical to the circumstances presented now in Kentucky:
This appeal asks us to resolve tension among the historical ban on
lotteries contained in the Kansas. Constitution, later amendments to
the constitution that permit lotteries under certain circumstances,
and recent legislative action seeking to increase state revenues by
establishing supervised gambling venues.
Kansas Lottery, 186 P.3d at 186. The court upheld the statute enactig expanded
gamg, which provided for gaming in casinos and at pari-mutuel racetracks in
designated zones. Id. at 187.
The Kansas cour relied on its own precedent, Kansas ex rel. Stephan v. Finney,
867 P.2d 1034 (Kan. 1994), which held that the state lottery amendment was
sufficiently broad to encompass casino gaming. The court in Kansas Lottery (2008)
therefore followed this precedent, and held that the language of the Kansas state
lottery amendment permitted its legislature to adopt casino gambling without
further constitutional amendment. Id. at 190.
Unlike Kansas’ case law, there is no specific Kentucky case holding that
casino gaming is a lottery. While disagreeing with OAG 92-127 regarding the
expanded gaming under the state lottery, OAG 93-58 (invalidated by OAG 05-
003), does opine that casino-style gaming in the form of slot machines would
constitute a “lottery” within the meaning of Section 226(3). However, the Governor’s
proposal does not seek to expand the Kentucky State Lottery to alow
casinos, and this opinion does not and cannot consider such a hypothetical
proposal. See 40 KA 1:020 (3).
Other illustrative cases from other states had similar results. The Oregon
Supreme Court upheld legislation authorizing the Oregon Lottery Commission
to install VLTs in establishments previously licensed to sell alcohoL. Ecumenical
Ministries of Oregon v. Oregon State Lottery Commission, 871 P.2d 106 (Ore. 1994).
In Pennsylvania, the state’s highest court upheld the Race Horse Development
and Gaming Act, which authorized gaming licenses to allow the installation and
operation of slot machines to assist Pennsylvania’s horse racing industry. Pennsylvanians
Against Gambling Expansion Fund v. Pennsylvania, 877 A.2d 383 (Pa.
2005). Finally, in Tichenor v. Missouri State Lottery Commission, 742 S.W.2d 170
(Mo. 1988), the Missouri Supreme Court rejected the contention of petitioners
that the state lottery exemption should be narrowly construed due to the historic
prohibition on lotteries. Rather, the Missouri court adopted a liberal construction
holding that it “should hesitate to imply restrictions which are not expressly
stated.” Id. at 174.
This opinion does not mean to suggest that the Kentucky courts are
obligated to follow any precedent other than Kentucky’s own decisions. Specifically,
the foregoing cases from other states offer direct and tangible support for
Kentucky courts to follow the binding precedent offered in the Jockey Club decision.
In sum, it is the opinion of the Attorney General that the General Assembly
may authorize the Kentucky Lottery Corporation to operate video lottery
terminals at designated horse racing tracks under Ky. Const. § 226(1) without
further amendment to the Kentucky Constitution.