Thursday, June 24, 2004

Gambling on a Wink and a Nod

There's a fear that slot machines will soon become a reality in Pennsylvania.

What does that mean for the State of Delaware?

It could be detrimental to the State's budget. Delaware receives a decent sum of money every year from slot machines placed at three horse tracks in the State. Except, they aren't slot machines. They're "video lottery" machines.

What's the difference? I'm not sure. The last time I stuffed one of the machines with quarters and pulled down a handle, I didn't see anything about it that reminded me of a video lottery. It seemed to be a slot machine. If it looks like a slot machine, and plays like a slot machine, and pays like slot machine, I'd suspect that it is one.

But slot machines are unconstitutional in Delaware. Section 2, dealing with the legislature states the following:

17. Lotteries and other gambling.

Section 17. All forms of gambling are prohibited in this State except the following:

(a) Lotteries under State control for the purpose of raising funds,

(b) Lotteries (other than slot machines, roulette, craps and baccarat games) provided that each is sponsored and conducted under the limitations of Section 17B by companies, organizations or societies which have been in existence for at least 2 years; provided, however, that no person who shall not have attained the age of 18 years shall participate in any lottery (where money is the prize) otherwise authorized by the article,

(c) Wagering or betting by the use of pari-mutuel machines or totalizators on horse races conducted at racetracks within or without the State, provided that such wagering or betting may be conducted only either:

(1) within the enclosure of any racetrack licensed under the laws of the State to conduct a race meeting, or

(2) within the enclosure of any racetrack licensed under the laws of the State to receive and accept wagers or bets on electronically televised simulcasts of horse races.

(d) Bingo games as conducted under the limitations of Section 17A.

The General Assembly shall enforce this Section by appropriate legislation.

While the language is a little confusing above, it does allow for scratch off and drawing styled lotteries by the state, horse racing at licensed tracks, and other lotteries (not including slot machines) organized by the types of groups listed in the next section:

17B. Lotteries not under State control; organizations authorized to conduct; submission to referendum; districts; regulation; penalties.

Section 17B. Lotteries not under State control shall be lawful when sponsored and conducted by volunteer fire companies, veterans organizations, religious or charitable organizations, or by fraternal societies provided that said company, organization or society has been in existence a minimum of 2 years and provided the net receipts or profits arising from the conducting or operating of such lotteries by the aforementioned companies, organizations or societies are used solely for the promotion or achievement of the purposes of such companies, organizations or societies, and provided further that the aforementioned companies, organizations or societies are operated in a manner so as to come within § 170 of the United States Revenue Code and regulations promulgated thereunder by the United States Secretary of the Treasury.

1. The General Assembly shall provide by law for the submission to the vote of the qualified electors of the several districts of the State, or any of them, mentioned in paragraph 2 of this section at the general election held in 1984, the question whether the playing of lotteries not under State control shall be licensed or prohibited within the limits thereof; and in every district in which there is a majority against license, no organization, mentioned in this section, shall thereafter sponsor or permit lotteries not under State control, within said district, until at a subsequent submission of such question a majority of votes shall be cast in said district for license. Whenever a majority of all the members elected to each House of the General Assembly by the qualified electors in any district named in paragraph 2 of this section shall request the submission of the question of license or no license to a vote of the qualified electors in said district, the General Assembly shall provide for the submission of such question to the qualified electors in such district at the next general election thereafter.

2. Under this article, Sussex County shall comprise 1 district, Kent County shall comprise 1 district, the City of Wilmington, as its corporate limits now are or may hereafter be extended, 1 district, and the remaining part of New Castle County, 1 district.

3. The General Assembly shall enact comprehensive legislation providing for licensing for all organizations conducting and regulating the conduct of lotteries under this section and may provide such penalties as may be necessary to enforce such legislation.

Nothing in there appears to give the State the right to allow slot machines at race tracks, or anywhere else. So, what's the story? notes that seven per cent of Delaware's budget from last year was from "video lotteries" yet notes a legislator's concern that gambling in neighboring states might take away that source of revenue. The First State pockets a nice chunk of change from the non-video video lotteries.

The Albany Law School Program on Racing and Wagering Law has an excellent page on definitions of the machines titled What Is a Video Lottery Terminal, Anyway? They look at the statutes that have been passed to authorize video lotteries in a number of states, including Delaware. The definitions' section of the Delaware Code Chapter on Lotteries defines the machines as follows:

(i) "Video lottery machine" shall mean any machine in which bills, coins or tokens are deposited in order to play in a game of chance in which the results, including options available to the player, are randomly and immediately determined by the machine. A machine may use spinning reels or video displays or both, and may or may not dispense coins or tokens directly to winning players. A machine shall be considered a video lottery machine notwithstanding the use of an electronic credit system making the deposit of bills, coins or tokens unnecessary.

The National Conference of State Legislatures has a great chart which looks at the status of all the states when it comes to gambling laws. pinpoints Middle America as the nation's betting hotbed.

What should Delaware's reaction be to the possibility that Pennsylvania might permit slot machines at 12 establishments around the State, and Maryland's legislature will probably discuss the issue next week? Should there be an expansion of slots to a Casino on the Wilmington Riverfront? Another casino in Southern Delaware in Georgetown?

Delaware's video lotteries may be some of the most recent efforts in a long history of governments earning money on games of chance. It's now ten years since the Horse Racing Preservation Act helped save the race tracks of Delaware. The law was passed in 1994, and it turned some run-down tracks into some of the most profitable racing venues in the United States.

But, I'll confess that I've only been to the local track twice to pull back a slot machine's handle. And, I'm not sure I really care if another couple of casinos are added to Delaware. And, I suspect that basing the economic health of a State on games of chance is a little like building a foundation for good government with a house of cards (no pun intended.)

And the thing that bugs me most is that we've been letting people gamble for a decade on slot machines, while with a nod and a wink, we've been calling them video lottery machines. I'm a little tired of the lie, and I think it's long overdue to actually amend the State constitution to conform to reality. You can call it a video lottery, but the more common name is a "one-armed bandit." The fraudulent name the legislature has given it has robbed them of their dignity and integrity.

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