TO BE PUBLISHED IN THE OFFICIAL REPORTS
OFFICE OF THE ATTORNEY GENERAL
State of California
JOHN K. VAN DE KAMP
Attorney General
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:
OPINION :
:
of : No. 87-906
:
JOHN K. VAN DE KAMP : April 20, 1988
Attorney General :
:
JACK R. WINKLER :
Assistant Attorney General :
:
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THE HONORABLE THOMAS W. SNEDDON, JR., DISTRICT ATTORNEY
OF SANTA BARBARA COUNTY, has requested an opinion on the following
question:
May a charitable organization lawfully sponsor and
conduct a "casino night" event for which tickets are sold to the
general public where those attending would be given chips with
which to play roulette, twenty-one and similar casino games and the
chips won by the players would be used at the end of the event to
(1) acquire raffle tickets to be drawn for valuable merchandise or
(2) bid at auction for valuable merchandise?
CONCLUSION
A charitable organization may not lawfully sponsor or
conduct a "casino night" event for which tickets are sold to the
general public where those attending would be given chips with
which to play roulette, twenty-one, and similar types of games and
the chips won by the players would be used at the end of the event
to (1) acquire raffle tickets to be drawn for valuable merchandise
or (2) bid at auction for valuable merchandise.
ANALYSIS
We are informed that a charitable organization proposes
to sponsor a "casino night" dinner event to which it will sell
tickets to the general public. Each person attending would be
given chips with which to play roulette, twenty-one, and similar
types of "casino games." At the end of the evening the players
would use the chips they had won either to acquire raffle tickets
to be drawn for valuable merchandise or to bid at auction for
valuable merchandise. The merchandise would be donated to the
charitable organization by local merchants. The charitable
organization would use the ticket proceeds only for charitable
purposes. We are asked whether such an event would be lawful under
California's gambling laws. We conclude that it would not be
lawful.
Background
California's laws have always placed restrictions on
certain forms of gambling. Article IV, section 27 of the
California Constitution of 1849 provided that "No lottery shall be
allowed by this state, nor shall the sale of lottery tickets be
allowed." An act to license gaming passed March 14, 1851
prohibited "all banking games, and games having a percentage" and
made violations a misdemeanor and also prohibited, with the same
penalty, the playing of "the game known as 'French monte' or 'Three
card game,' or the game known as 'Loop' or 'String game,' or the
game known as 'Thimbles,' (a shell game) or the game known as
'Lottery.'" The same act authorized counties to license gaming
houses in which all but the games outlawed by name could be played.
The Constitution of 1879 continued the lottery
prohibition in article IV, section 26 which provided: "The
Legislature shall have no power to authorize lotteries or gift
enterprises for any purpose, and shall pass laws to prohibit the
sale in this State of lottery or gift enterprise tickets, or
tickets in any scheme in the nature of a lottery." The Legislature
enacted chapters in the Penal Code prohibiting lotteries and other
forms of gaming.
The Penal Code contains one chapter on lotteries (§§ 319
328), another on gaming (§§ 330-337s) and another on horse racing
(§§ 337.1-337.9). The chapter on lotteries makes many forms of
participation in a lottery a misdemeanor and section 3271 prohibits
endless chain schemes. The gaming chapter defines gaming in
section 330 and prohibits slot machines, bookmaking and fixing
sporting events among other things. The chapter on horse racing
prohibits touting among other things.
The California Constitution has been amended to allow
specified forms of gambling. Article IV, section 19 now provides:
"(a) The Legislature has no power to authorize
lotteries and shall prohibit the sale of lottery tickets
in the State.
1
Section reference are to the Penal Code unless otherwise
indicated.
2. 87-906
"(b) The Legislature may provide for the regulation
of horse races and horse race meetings and wagering on
the results. [Originally adopted June 27, 1933 as art.
IV, § 25a.]
"(c) Notwithstanding subdivision (a) the Legislature
by statute may authorize cities and counties to provide
for bingo games, but only for charitable purposes.
[Added June 8, 1976.]
"(d) Notwithstanding subdivision (a), there is
authorized the establishment of a California State
Lottery. [Added Nov. 6, 1984.]
"(e) The Legislature has no power to authorize, and
shall prohibit casinos of the type currently operating in
Nevada and New Jersey. [Added Nov. 6, 1984.]"
From the beginning of statehood, California statutes have
prohibited certain forms of gambling and allowed others. State
statutes on gambling leave considerable scope for local regulation
because the state has not preempted the whole field of gambling
regulations. ( Sullivan v. Fox (1987) 189 Cal.App.3d 673, 678.)
We assume that no local ordinance is applicable since none was
referred to in the question. Our task is to determine whether the
"casino night" event contemplated by the question involves any of
the forms of gambling prohibited by state law. Since the
description of the event provided us speaks of roulette, twenty-one
and similar types of "casino games" we assume that the event will
not involve slot machines, horse racing, sporting events, or bingo.
Our analysis will therefore focus on whether the "casino night"
event violates California statutes prohibiting gaming and
lotteries.
Gaming
Penal Code Section 330 defining gaming provides:
"Every person who deals, plays, or carries on,
opens, or causes to be opened, or who conducts, either as
owner or employee, whether for hire or not, any game of
faro, monte, roulette, lansquenet, rouge et noire, rondo,
tan, fan-tan, stud-horse poker, seven-and-a-half, twenty-
one, hokey-pokey, or any banking or percentage game
played with cards, dice, or any device, for money,
checks, credit, or other representative of value, and
every person who plays or bets at or against any of said
prohibited games, is guilty of a misdemeanor, and shall
be punishable by a fine not less than one hundred dollars
($100) nor more than one thousand dollars ($1,000), or by
imprisonment in the county jail not exceeding six months,
or by both such fine and imprisonment."
3. 87-906
The crime defined in section 330 has two essential
elements: (1) The game must be one of those proscribed and (2) the
game must be played for money or representative of value. We will
examine each of these elements to determine their application to
the "casino night" described above.
Section 330 proscribes 12 games by name and two
categories of games denominated "any banking or percentage game
played with cards, dice, or any device," when played as described
therein. Two of the twelve games listed by name are mentioned in
the question, roulette and twenty-one. While many of the games
listed have fallen into disuse all of them are prohibited by
section 330 when played for money or representative of value. The
games listed by name are prohibited by section 330 whether or not
they are played as banking or percentage games. (People v. Gosset
(1892) 93 Cal. 641, 646.) Section 330 prohibits the named games
even though they are played with variations in the usual method of
play. In People v. Gosset, supra, at page 643, the court held
there was no error in refusing an instruction that "faro is played
with a full deck of fifty-two cards." The court stated:
". . . , when a prohibited game is played in all
other respects in the usual way, and according to its
established rules, the purpose of the law cannot be
thwarted by the simple devise of playing it with one or
two cards less than the number usually employed.
Otherwise no statute against a particular game would be
of any value."
A banking game is one where there is a fund against which
everybody has the right to bet, the bank taking all that is lost by
the bettors and paying out all that is won by them. (People v.
Carroll (1889) 80 Cal. 153, 157-158; People v. Ambrose (1953) 122
Cal.App.2d Supp. 966, 970.) "Banking game has come to have a fixed
and accepted meaning: the 'house' or 'bank' is a participant in the
game, taking on all comers, paying all winners, and collecting from
all losers." (Sullivan v. Fox (1987) 189 Cal.App.3d 673, 678.)
A percentage game encompasses "any game of chance from
which the house collects money calculated as a portion of wagers
made or sums won in play, exclusive of charges or fees for use of
space and facilities." ( Sullivan v. Fox, supra, at p. 679.) A
game may be a percentage game whether or not the house or bank
participates as a player in the game. (Walker v. Meehan (1987) 194
Cal.App.3d 1290, 1299-1301.)
If one of the similar types of "casino games" referred to
in the question is either a banking game or percentage game, as
those terms have been defined by the courts, which is played with
cards, dice, or any device it is prohibited by section 330 when it
is played for money or representative of value.
4. 87-906
Next we consider the requirement of section 330 that the
game must be "played for money, checks, credit, or other
representative of value." In People v. Carroll, supra, the
information charged the defendant with conducting a banking game
known as wheel of fortune in violation of section 330. The Supreme
Court reversed the conviction stating (at p. 155):
"The information charges no offense under this
section [section 330] of the code, or any other. To
constitute it an offense to conduct the game, it must be
'played for money, checks, credit, or any other
representative of value.' The information does not
charge that the game was played for money, but that
defendant conducted it for money. It may be that those
who were engaged in the game were playing for amusement,
and paid the defendant a fixed sum, in no way dependent
upon the result of the game, for conducting it. This
would be within the allegations of the information, but
it would not be a public offense or within the statute."
(Emphasis added by the court.)
Thus there is no violation of section 330 unless the players are
playing the game for money or representative of value, i.e., with
the expectation of winning money or representative of value. If
the game is played without any expectation of winning money or
representative of value there is no violation of section 330 even
though the players may have paid something "in no way dependent
upon the result of game" for the privilege.
In Ex parte Williams, (1906) 7 Cal.Unrep. 301 (Court of
Appeal, Third District), 87 P. 565, the defendant was convicted of
violating section 330 for conducting a banking game by means of a
slot machine which his customers played for cigars. The machine
was operated by dropping a nickel in the slot and pressing a lever
which would cause a cylinder to move and display a combination of
cards thereon. If the combination appearing was one of the
designated winning poker hands the player received a designated
number of cigars. For other combinations the player received
nothing. On habeas corpus the court discharged the prisoner
because the slot machine was played for cigars and not "for money,
checks, credits, or other representatives of value." The court
applied the rule of construction known as ejusdem generis to
construe the words "other representative of value" to be limited to
the same class of things as money, checks and credits. The court
said: "Neither is it plain that the Legislature had in mind any
kind of property other than money, the thing most common for use in
such games, and its representative such as checks and demands for
the payment of money." Finally the court said: "There is nothing
in section 330 which prohibits gambling for cigars."
In In re Lowrie (1919) 43 Cal.App. 564 the defendant was
charged with conducting a dice game known as Razzle Dazzle
5. 87-906
described in detail in the complaint. On habeas corpus the court
held that the game was not a lottery as the complaint charged but
that the facts alleged did constitute an offense defined in section
330 of the Penal Code and remanded the defendant to custody. The
complaint alleged that the game was played with five dice rolled
simultaneously from a cup. Each player would pay the defendant one
dollar and receive ten chips in return. Play began when a player
made a bet by putting one or more of his chips on the board and the
defendant then rolled the dice and counted the number of pairs he
rolled. The player then rolled the dice and counted the number of
pairs he rolled. If the player rolled more pairs or the same
number of pairs with higher numbers he won and the defendant gave
him the same number of chips he bet in addition to the chips he had
bet. If the player lost the defendant kept the chips that were
bet. Play then passed to the next player where the process was
repeated. When play was over the players purchased merchandise
with the chips they had with each chip valued at ten cents.
The court first concluded that the game was a banking
game and then stated that the game the defendant conducted "was not
played for cigars or other merchandise, but for chips, each of
which under the agreement and scheme represented the value of ten
cents and was redeemable at such value by the defendant as banker,
in merchandise selected by the winner of the chips, and hence they
were representative of the value of the merchandise so received in
exchange therefor." The court added that "the merchandise given in
exchange for the chips must be deemed of value and the value of the
goods which, in accordance with the scheme, were given in exchange
for the chips won was represented by the chips, possessing no
intrinsic value whatever. Hence, conceding the correctness of the
Williams case, wherein it was held that the cigars constituting the
stakes were not representative of value, it is distinguishable from
the facts in the present case in that the chips played for were,
under the scheme and agreement, intended to and did represent ten
cents each in value, to be paid for and redeemed in merchandise."
While Lowrie distinguished the Williams case we think the
distinction is illusory. If the merchandise for which the chips
were redeemed in Lowrie "must be deemed to have value" represented
by the chips we fail to see why the cigars in Williams did not also
have value which was represented by the winning combination of
cards on the cylinder of slot machine. In our view an appellate
court would now reject the ejusdem generis construction of Williams
and hold that when the game is played directly for valuable
merchandise that such merchandise is "representative of value"
within the meaning of section 330.
When we combine the lessons of the Carroll and Lowrie
cases we see that whether chips are representative of value within
the meaning of section 330 depends on whether the chips may be
redeemed for money or something of value and not on what, if
anything, was paid for the chips. If we assume that the player
6. 87-906
pays money for chips having no intrinsic value of their own which
he then uses to participate in the game and wins additional chips
in the process, unless he can redeem the chips he has won for money
or representative of value it cannot be said that he "played" the
game for money or representative of value as Carroll construed
section 330. This is the reason the Lowrie case focused on the
fact that the chips were redeemable for merchandise instead of the
fact that the players had paid ten cents each for the chips. As we
shall see this is in sharp contrast to the consideration element of
a lottery which focuses upon what the players have paid for the
chance to win.
Thus where the game is played for chips which may be
redeemed for merchandise the chips represent the value of such
merchandise and hence are "representative of value" within the
meaning of section 330. In the "casino night" described the chips
are not assigned a particular monetary value (like the ten cents in
the Lowrie case) but this does not detract from the fact that they
have the value of the merchandise for which they are redeemed and
are thus "representative of value". This is particularly true
where the chips are used to buy merchandise at auction at the end
of the event. When the chips are used instead to buy raffle
tickets a new factor is added to the scheme in that the redemption
of the chips for merchandise is conditioned upon winning the
raffle. In our view the fact that redemption of the chips for
merchandise is conditioned upon winning a raffle does not render
them valueless or prevent them from constituting a "representative
of value" within the meaning of section 330. In other words the
chance to win the raffle has a value which is represented by the
chips.
We conclude that when persons make a wager with chips
(whether acquired by gift or purchase) at a game of roulette or
twenty-one or any other game prohibited by section 330, when the
chips won may be used to (1) acquire raffle tickets to be drawn for
valuable merchandise or (2) bid at auction for valuable
merchandise, the chips are "representative of value" and section
330 is violated.
Lotteries
Since the "casino night" described in the question
includes a raffle and the playing of casino games which may be
lotteries we now consider the statutory definition of a lottery.
Section 319 provides:
"LOTTERY DEFINED. A lottery is any scheme for the
disposal or distribution of property by chance, among
persons who have paid or promised to pay any valuable
consideration for the chance of obtaining such property
or a portion of it, or for any share or any interest in
7. 87-906
such property, upon any agreement, understanding, or
expectation that it is to be distributed or disposed of
by lot or chance, whether called a lottery, raffle, or
gift enterprise, or by whatever name the same may be
known."
A lottery has three essential elements: (1) a prize; (2)
distributed by chance; and (3) consideration. (California Gasoline
Retailers v. Regal Petroleum Corporation (1958) 50 Cal 2d 844,
851.) The statutory definition refers to the prize as "property"
without any restrictive words and it has been held that the word
"property" in section 319 is used in its most general sense.
(People v. Settles (1938) 29 Cal.App.2d (Supp.) 781, 786.) It
includes real and personal property, money, goods, chattels, things
in action, evidence of debt and obligations. (Id.) The courts have
recognized the following kinds of property to satisfy the prize
element of a lottery: $500 in cash, People v. Gonzales (1944) 62
Cal.App.2d 274, 275; a Buick automobile, Holmes v. Saunders (1952)
114 Cal.App.2d 389, 390; five dollars worth of merchandise, People
v. Bardaty (1934) 139 Cal.App. (Supp.) 791, 793; a free trip to
Catalina, People v. Cardas (1933) 137 Cal.App. (Supp.) 788, 789
790; the right to play further games free, People v. Settles,
supra, at page 786. (Cf. Gayer v. Whelan (1943) 59 Cal.App.2d 255,
263 in which the court held that the amusement afforded by a free
game on a pinball machine was not a representative or thing of
value within the meaning of section 330a prohibiting possession of
a gambling device.) The valuable merchandise for which raffle
tickets are drawn referred to in the question would constitute a
prize under the lottery statute.
A prize must be distinguished from a bet between two
persons upon an uncertain future event. In People v. Postma (1945)
69 Cal.App.2d (Supp.) 814 the defendants were engaged in bookmaking
on horse races. The court held that the defendants were not
operating a lottery because there was nothing put up as a prize.
(We hasten to add that bookmaking is outlawed by § 337a.) At page
818 the court stated:
"When two persons bet with each other, it cannot be
said that either of them, or the stakeholder, if there is
one, has offered any property for disposal or
distribution to persons who have paid a consideration for
the chance of obtaining it. Each bettor has put up his
own property on a venture and at risk of losing it, but
has not paid for the chance of winning that of the other
bettor. This is true at least where but two persons or
two opposing sets of persons are concerned in the bet, as
here. In the case of a pari-mutuel pool to which many
persons contribute, there are, perhaps (eliminating the
question of chance), more persuasive reasons for
considering the scheme a lottery than we find here."
(Citing cases.)
8. 87-906
The second element of a lottery requires that the prize
be distributed by chance. Whether the distribution of a prize is
distributed by chance is to be determined from the perspective of
the players. Where the person conducting the scheme arbitrarily
selects the winner the chance element of a lottery is present
because "as to the purchaser it is uncertain, it is chance that
luck and good fortune will give a large return for a small outlay."
(People v. Hecht (1931) 119 Cal.App. (Supp.) 778, 787.) On the
other hand where the persons conducting the scheme remove all
element of chance in determining the winner by fraudulently
contriving to have one of themselves selected as the winner the
scheme is not a lottery. ( People v. Carpenter (1956) 141
Cal.App.2d 884, 888.) A trading stamp scheme is not a lottery
because redemption of the stamps does not depend on chance. ( Ex
Parte Drexel (1905) 147 Cal. 763, 768.)
Distribution of the prize may depend on skill rather than
chance. Competitive shooting at a target is a game of skill and
the fact that an entry fee is charged to compete for a prize at
such a game does not convert the sport into a game of chance. (See
Brown v. Board of Police Commissioners (1943) 58 Cal.App.2d 473,
477.) Frequently a game will have elements of both skill and
chance. A game is not one of skill merely because that element
enters into the result in some degree, or one of chance solely
because chance is a factor in producing the result. ( People v.
Settles, supra, at p. 787.) It is the character of the game rather
than a particular player's skill or lack of it that determines
whether the game is one of chance or skill. The test is not
whether the game contains an element of chance or an element of
skill but which of them is the dominating factor in determining the
result of the game. (In re Allen (1962) 59 Cal.2d 5, 6.) Whether
skill or chance dominates a particular game can be a difficult
question of fact. (See People v. Settles, supra, at pp. 787-788.)
The courts have held the following methods to be
distribution by chance. Drawing the winning ticket from a
container; People v. Cardas (1933) 137 Cal.App. (Supp.) 788, 789
790. Spinning wheels to determine winning number; People v.
Gonzales (1944) 62 Cal.App. 274, 277. Playing tango 2; Einzig v.
Board of Police Commissioners (1934) 138 Cal.App. 664; People v.
Babdaty (1934) 139 Cal.App. (Supp.) 791. Adding dart throwing to
qualify winners of tango game presented question on which the jury
might reasonably have found either way as to whether skill or
2
"Tango" is a game similar to bingo using bingo like cards in
which the players participate in the selection of the letter-
numbers drawn by taking turns throwing a rubber ball into a table
of wooden pockets containing a pocket for each possible letter-
number combination. As a rule the ball bounces around a lot before
settling in a pocket.
9. 87-906
chance was the dominant factor in determining the result. (People
v. Settles, supra, 29 Cal.App.2d (Supp.) 781, 787.) Picking winners
of five successive horse races in betting in a "5-10" pool3 was
held to be a lottery as a matter of law. (Finster v. Keller (1971)
18 Cal.App.3d 836.) A contest in which participants paying one
dollar each selected the most appropriate captions for six cartoons
in which prizes were awarded the best by a panel of judges was held
to be a distribution by chance, because the elements of a bona fide
contest of skill were not present. ( People v. Rehm (1936) 13
Cal.App.2d (Supp.) 755, 757.) The game of Ringo consisting of a
bingo game in which players paid 25 cents for each card or got a
free card if they tossed a small ring over a peg and the winner, to
qualify for the prize had to toss a larger ring over a larger peg
was held to be a game in which the game of bingo, one of pure
chance, dominates. ( People v. Shira (1976) 62 Cal.App.3d 442,
462.)
In In re Allen (1962) 59 Cal.2d 5 the court held that the
game of bridge was a game in which skill predominated and thus was
not a game of chance. Draw poker is a game of chance. (Lavick v.
Nitzberg (1948) 83 Cal.App.2d 381, 382-383.) Roulette has been
described as "a banking and a percentage game." (Vasey v. Campbell
(1906) 4 Cal.App. 451, 453.) Rolling the ball into the groove
above a spinning roulette wheel would appear to involve little
skill, and none which would affect the place on the wheel on which
the ball finnaly comes to rest. Shooting craps and other games in
which the result depends on a throw of dice are generally held to
be games of chance. (38 Am.Jur.2d, § 40; 66 Ops.Cal.Atty.Gen. 276,
283 (1983).) Keno is a game of chance. (64 Ops.Cal.Atty.Gen. 114,
116 (1981).) Twenty-one, or blackjack as it is sometimes called,
is a game of chance. ( Jacques v. State Board of Equalization
(1957) 155 Cal.App.2d 448; 65 Ops.Cal.Atty.Gen. 123, 128; 66
Ops.Cal.Atty.Gen. 276, 280.) In Tooley v. U.S. (D.Nev. 1955) 134
F. Supp. 162, 166-167, the court observed:
"No one will question the fact that craps, twenty-
one and roulette are games of chance with percentages
heavily loaded in favor of the house, yet there are some
expert players, cross-roaders, who can outplay and break
the house even on these admitted gambling games. But
that does not convert these games from games of chance to
games of skill."
3
While skill may dominate successful performance of a single
event chance rapidly overtakes skill when one wagers on the
successful repetition of that event. Thus a basketball player who
sinks 2 free throws out of 3 for the season has less than an even
chance (2/3x2/3=4/9) to sink two in a row, less than one chance in
three (2/3x2/3x2/3=8/27) to sink three in a row and less than one
chance in five (16/81) to sink four in a row.
10. 87-906
Applying the distribution by chance element of a lottery
to the "casino night" described in the request, we note that both
roulette and twenty-one are games of chance, not of skill. Both
games therefore constitute lotteries when played for prizes by
players who have paid a consideration for the chance to win.
Similar "casino games" of chance, such as craps, would also
constitute lotteries when played in like manner. It is assumed
that the "drawing" of the winning raffle tickets referred to in the
question will be selected at random from a container holding all
the eligible raffle tickets. Thus the distribution of the
merchandise as prizes would be by chance making the a raffle a
lottery if the players paid a consideration for the chance to win.
The third element of a lottery is consideration. The
question of consideration is to be determined from the standpoint
of the holders of the tickets who might win the prize, not from the
standpoint of those who are conducting the event. ( People v.
Cardas (1933) 137 Cal.App. (Supp.) 788, 791; Cal. Gas Retailers v.
Regal Petroleum Corp. (1958) 50 Cal.2d 844, 860.) This follows
clearly from the statutory definition that it is the distribution
of property by chance "among persons who have paid or promised to
pay any valuable consideration for the chance of obtaining such
property or a portion of it." ( Cal. Gas Retailers v. Regal
Petroleum Corp., supra, at p. 860.)
The kind of consideration necessary for a lottery is not
as extensive as the consideration necessary for a contract. Civil
Code section 1605 provides that "any benefit conferred, or agreed
to be conferred, upon the promisor, by any other person, to which
the promisor is not lawfully entitled, or any prejudice suffered,
or agreed to be suffered, by such person, other than such as he is
at the time of consent lawfully bound to suffer, as an inducement
to the promisor, is a good consideration for a promise." The
benefit conferred language will not suffice as consideration for a
lottery because it is what is paid by the ticket holder that
determines consideration for a lottery, not what benefit is
conferred on the sponsor. Thus the fact that the sponsor's
business is enhanced does not provide the consideration necessary
to make a promotion a lottery. ( Cal. Gas Retailers v. Regal
Petroleum Corp., supra, at p. 862.)
The question to be answered on the consideration element
was stated three ways by the court in People v. Cardas, supra, at
pages 790-791: Was a valuable consideration paid for the chance of
winning the prize by those who stood to win? Was anything of value
hazarded upon the chance by them? Did the holders of the prize
tickets pay a valuable consideration for the chance? Since the
statutory definition requires that the consideration necessary is
a "valuable one" paid, or promised to be paid by the one receiving
the ticket, the fact that a ticket holder must go to the place of
business of the sponsor of the scheme to deposit the ticket stub
11. 87-906
cannot be considered the necessary consideration. ( Cal. Gas
Retailers v. Regal Petroleum Corp., supra, at pp. 861-862.)
The consideration to make a transaction a lottery need
not be paid exclusively for the chance to win the prize. It is
sufficient that the consideration be paid for something else and
the chance to win the prize. ( People v. Gonzales (1944) 62
Cal.App.2d 274, 279-280; Holmes v. Saunders (1952) 114 Cal.App.2d
389, 390-391; Cal. Gas Retailers v. Regal Petroleum Corp., supra,
at p. 859.)
A game does not cease to be a lottery because some are
admitted to play without paying for the privilege, so long as
others paid for their chances. ( People v. Shira (1976) 62
Cal.App.3d 442, 460.)
Where, in a business promotion plan, there is a general
and indiscriminate distribution of free prize tickets whether or
not the recipients have made a purchase and valuable prizes are
awarded to those holding winning tickets selected by chance, the
plan is a gratuitous distribution of property, not a lottery
because the ticket holders did not pay a valuable consideration for
their tickets. ( People v. Cardas, supra; People v. Carpenter,
supra; and Cal. Gas Retailers v. Regal Petroleum Corp., supra.)
While it is simple to state the foregoing rules announced
by the courts to determine the consideration element of a lottery
their application to particular cases can be difficult. One reason
is the difficulty in choosing which rules apply. Where prize
tickets are given both to those who have made a purchase and those
who have not, does the rule that the consideration need not be paid
exclusively for the chance to win apply so the purchase price paid
is not only for the merchandise but also for the chance to win?
Does the rule that the game does not cease to be a lottery because
some play free while others must pay apply? Or it this just a
business promotion with a gratuitous distribution of property? The
key to which of these rules apply lies in whether the distribution
of free tickets has been "general and indiscriminate". Only when
the court concludes that the distribution of free tickets is such
that it can realistically be said that the person who bought
merchandise did not pay for his ticket because he could have got
one free without making the purchase will it be concluded that the
person did not pay a valuable consideration for the chance to win
the prize. (People v. Shira, supra, at pp. 459-460.)
In Cal. Gas Retailers v. Regal Petroleum Corp., supra, at
page 859, the court rejected any mechanical application of rules to
determine whether a scheme is a lottery. Quoting from 34 American
Jurisprudence 650 the court said:
". . . that no sooner is the term 'lottery' defined
by a court, than ingenuity evolves some scheme within the
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mischief discussed, although not quite within the letter
of the definition given; but an examination of the many
cases on the subject will show that it is very difficult,
if not impossible, for the most ingenious and subtle mind
to devise any scheme or plan, short of a gratuitous
distribution of property, which has not been held by the
courts of this country to be in violation of the lottery
laws. . . . The court will inquire, not into the name,
but into the game, however skillfully disguised, in order
to ascertain if it is prohibited."
Thus the courts will cut to the heart of the scheme to determine
whether the players paid a valuable consideration for the chance to
win the prize however that consideration may be disguised. An
examination of six cases which have considered the element of
consideration in a lottery will provide some insight on how
California courts have applied the rules discussed above.
In Holmes v. Saunders, supra, a numbered ticket was
provided to each person who paid $1 for a six months subscription
to a publication in a subscription drive. The holder of the
winning ticket to be drawn on a specified date at the Oakland
Auditorium Arena would receive a Buick automobile. The court held
this was a lottery stating that "the consideration to make such a
transaction a lottery need not be paid exclusively for the chance
to win the prize. It is sufficient that the consideration, as
here, be paid for something else and the chance to win the prize."
In People v. Cardas, supra, a theater owner advertised
that free trips to Catalina would be given to the holders of
winning prize tickets. Five thousand prize tickets were
distributed with programs in the neighborhood of the theater and
2000 others were distributed to passing motorists. Others were
handed out in front of the theater to patrons and non-patrons
alike. No prize tickets were given by the cashier who sold
admission tickets and it was not necessary to buy an admission
ticket to secure a prize ticket. The prize ticket stubs were
deposited in a receptacle outside the theater. The drawing was
held on the stage but the winning numbers were announced both
inside and outside the theater. A person with a winning ticket
could enter the theater to claim the prize without paying an
admission. The court held that this was not a lottery because
"those who purchased admission tickets and received prize tickets,
. . . could not be said to have paid a consideration for the prize
tickets since they could have received them free."
People v. Gonzales, supra, was another theater promotion
involving five theaters. Every two weeks $500 was awarded in a
"cash night" drawing to the holder of the winning ticket. The
winning number was determined by spinning wheels and announcing it
simultaneously over the public address systems in all five
theaters. One minute was given for the holder of the winning
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ticket to claim the prize. One prize ticket was given for each
admission ticket bought at the time of purchase and another was
handed to each patron as they left the theater. No ticket was
given to anyone who had not paid for an admission. There were no
announcements or participation outside the theater. The court held
the cash night to be a lottery. The court distinguished People v.
Cardas, supra, at page 281 by "the fact that there was a general
and indiscriminate distribution of the drawing tickets irrespective
of whether admission was paid; that attendance inside the theater
was not a prerequisite to participation in the drawing; and
announcement was made outside the theater for the benefit of non-
customers."
Cal. Gas Retailers v. Regal Petroleum Corp., supra,
involved an advertising and merchandising plan by the operators of
several gas stations. Prize tickets were given away free to anyone
who asked for them, and to many who did not ask for them both at
and away from the stations. Receipt of the tickets was not
dependent on any purchase. Ticket stubs had to be deposited at one
of the stations. Winning ticket numbers were drawn periodically
and posted at each station. The winner had a week to claim his
prize. In some cases the scheme was financed by adding a cent to
the price of the gasoline which was passed on to the customers.
The court held there was no lottery because it clearly appeared
from the record that any person could have received a ticket, free
for the asking, without making any kind of purchase.
In Polonsky v. City of South Lake (1981) 121 Cal.App.3d
464 the court held that where the city issued a limited number of
building permits to those applicant lot owners selected by lot, the
fact that the city charged a fee to the applicants to pay for the
cost of notifying all lot owners of the plan did not constitute
consideration necessary to make the plan a lottery.
People v. Shira, supra, involved a game called "Ringo"
played in an amusement zone in Long Beach. The defendant had a
city license for his "Amusement-Skill" business. The game
consisted of a regular bingo game, preceded by a small ring toss
phase to qualify those who would play the bingo game, and followed
by large ring toss to qualify the bingo winner for the prize. In
the small ring toss each person was given small red ring free of
charge. If he succeeded in tossing it over a small peg he would
get two bingo cards free and could participate in the bingo game
without charge. If he missed the toss he could buy a small white
ring for 25 cents and receive two bingo cards with it. Those who
succeeded in tossing the white ring over the peg got their 25 cents
back but not if they missed. In either case they played the bingo
cards. Only 12 percent of those playing bingo got their cards free
by successfully tossing the small rings. After winning at bingo
the person won the prize only if he succeeded in tossing a larger
ring over a larger peg. The court held that Ringo was an illegal
lottery because the vast majority of the bingo players must pay a
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valuable consideration (25 cents) for the chance to win and the
game of bingo, one purely of chance, dominated over the skill
involved in the ring tosses. The court analyzed the Cardas,
Gonzales, Carpenter, and Regal cases at great length. The court
stated (at p. 459):
"We construe the implicit holdings of those four
cases to be, as they pertain to the presence or absence
of the element of consideration, that in order for a
promotional giveaway scheme to be legal any and all
persons must be given a ticket free of charge and without
any of them paying for the opportunity of a chance to win
the prize. Conversely, a promotional scheme is illegal
where any and all persons cannot participate in a chance
for the prize and some of the participants who want a
chance to win must pay for it."
"In Cardas, Carpenter, and Regal the schemes lacked
the element of consideration and were legal because there
was a general and indiscriminate system of distribution
of the drawing tickets and the money paid by the patrons
for the admission ticket to the theater or for gasoline
was no more than consideration for viewing the movie or
for the gasoline itself. The element of consideration in
the promotional scheme in Gonzales and the scheme were
illegal because there was not a general and
indiscriminate distribution of the drawing tickets and
money paid for an admission ticket to the theater also
constituted consideration paid for the chance at the
prize."
In the "casino night" described in the question we are
advised that the chips are "given" to those buying tickets to the
event. There is no indication that any of the chips to be used at
the games would be given away free to those who did not buy
tickets. Thus there is no general and indiscriminate distribution
of free chips to make this a gratuitous distribution of property.
Instead we believe the courts would find that a portion of the
price paid for the "casino night" tickets paid for the chips and
thus provided the consideration requisite for a lottery.
The players use the chips first to play the casino games
at which they would either lose some or all of their chips or win
more of them. Some of the "casino games", including roulette,
would constitute lotteries in that the players paid valuable
consideration for the chips for the chance to win a prize. After
the games are over we are advised that the players would use the
chips they had left or had won to buy raffle tickets for valuable
merchandise. As section 319 indicates, a raffle is another name
for a lottery. The valuable merchandise (the prize) is distributed
by chance (drawing the winning ticket) to those who have paid a
valuable consideration (for the chips) for the chance to win.
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The other use of the chips referred to in the question is
their use in bidding at an auction for valuable merchandise. Since
the auction comes at the end of the event most of the chips used at
the auction will be those which have been won at the gaming tables.
The auction provides the means of converting those chips into
valuable merchandise, making them "representative of value" and an
essential element making the playing of such games a violation of
section 330.
Participation
In addition to the elements discussed above a person must
participate in a prohibited game or lottery in a manner specified
by statute to violate the gaming and lottery laws. Merely being a
spectator does not violate either law.
Section 330 provides that "every person who deals, plays,
or carries on, opens, or causes to be opened, or who conducts,
either as owner or employee, whether for hire or not" a game
prohibited therein and "every person who plays or bets at or
against any of said prohibited games" is guilty of a misdemeanor.
Anyone who carries on or conducts a prohibited game played for
money violates section 330 whether or not he is an employer or
employee. (People v. Sam Lung (1886) 70 Cal. 515, 517.) Applying
this language to the "casino night" described, those who deal,
play, or bet at or against a prohibited game as well as those who
open, cause to be open, carry on or conduct a prohibited game would
violate section 330.
Section 320 provides that "Every person who contrives,
prepares, sets up, proposes, or draws any lottery, is guilty of a
misdemeanor." Section 321 provides that "Every person who sells,
gives, or in any manner whatever, furnishes or transfers to or for
any other person any ticket, chance, share, or interest, or any
paper, certificate, or instrument purporting or understood to be or
to represent any ticket, chance, share, or interest in, or
depending upon the event of any lottery, is guilty of a
misdemeanor." Section 322 provides that "Every person who aids or
assists, either by printing, writing, advertising, publishing, or
otherwise in setting up, managing, or drawing any lottery, or in
selling or disposing of any ticket, chance, or share therein, is
guilty of a misdemeanor." Section 326 provides that "Every person
who lets, or permits to be used, any building or vessel, or any
portion thereof, knowing that it is to be used for setting up,
managing, or drawing any lottery, or for the purpose of selling or
disposing of lottery tickets, is guilty of a misdemeanor."
Applying this language to the "casino night" described,
those who propose, prepare, set up, furnish chips with the "casino
night" tickets, transfer raffle tickets for chips, assist in the
raffle drawing, or in some other manner participate in a lottery in
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a manner prohibited by the above quoted sections are guilty of a
misdemeanor.
The question states that the "casino night" will be
sponsored and conducted by a charitable organization. Of course
this will be done by individuals who are acting on behalf of the
organization. If any of these individuals do any of the acts
prohibited by the gaming or lottery statutes the fact that they
acted on behalf of a charitable organization will not provide any
defense to such violations. Nor will the fact that the proceeds of
the "casino night" will be used only for charitable purposes
provide any defense to their violations. (See 64 Ops.Cal.Atty.Gen.
114, 117 (1981).) The only exception in California's gambling laws
for charities is that provided in section 326.5 authorizing cities
and counties to authorize certain organizations to conduct bingo
games for charitable purposes only.
We conclude that a charitable organization may not
lawfully sponsor or conduct a "casino night" event for which
tickets are sold to the general public where those attending would
be given chips with which to play roulette, twenty-one, and similar
types of games and the chips won by the players would be used at
the end of the event to (1) acquire raffle tickets to be drawn for
valuable merchandise or (2) bid at auction for valuable
merchandise.
* * * * *
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Untitled California Attorney General Opinion
Combined Opinion