After the U.S. Supreme Court struck down PASPA, did Colorado need a constitutional amendment, or just a statute, to legalize commercial sports betting?

Plain-English summary

In May 2018, the U.S. Supreme Court struck down PASPA, the federal law that had blocked most states from legalizing commercial sports betting. Murphy v. Nat'l Collegiate Athletic Ass'n, 138 S. Ct. 1461 (2018). The Colorado Department of Revenue, which oversees the state's gaming, lottery, and racing divisions, asked the AG two questions:

1. Is sports betting blocked by Colorado's constitutional ban on "lotteries" in Article XVIII, § 2? If yes, a constitutional amendment would be needed.
2. Is sports betting blocked by Colorado's criminal-code ban on "gambling" in § 18-10-102? If yes, a new statute would be needed.

AG Cynthia Coffman answered no to the first and yes to the second. The constitutional analysis turned on Ginsberg v. Centennial Turf Club, 251 P.2d 926 (Colo. 1952), a 1952 Colorado Supreme Court case holding that wagering on horse and dog races is not a constitutional "lottery" because the bettor can apply skill in selecting bets based on available information. The AG saw no material difference between betting on horse and dog races and betting on other sports, so neither type of betting falls within Article XVIII, § 2's lottery prohibition.

The criminal-code analysis was simpler. Section 18-10-102(2) defines "gambling" to include risking value on the outcome of "an event, including a sporting event, over which the person taking a risk has no control." Sports betting fits that definition, and none of the five statutory exceptions (bona fide skill contests, business transactions, expressly authorized acts, social wagers, crane games) applies to commercial sports books. So under existing 2018 statutes, sports betting was illegal, and legalization required new legislation.

The opinion leaves the choice whether to change Colorado statutes to the General Assembly and voters. It also says policymakers should account for federal restrictions on interstate betting and other state gambling laws.

Currency note

This opinion was issued in 2018. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

The constitutional question turns on Article XVIII, § 2, which has been part of the Colorado Constitution since 1876 and bans "lotteries" with carve-outs for bingo, lotto, raffles (added 1958), and a state-supervised lottery (added 1980). The Colorado Supreme Court's Ginsberg decision defined a "lottery" as an activity in which "consideration is paid for the opportunity to win a prize awarded by chance," with chance as the "controlling factor in the award." In re Interrogatories of Gov. Regarding Sweepstakes Races Act, 585 P.2d 595, 598 (Colo. 1978).

Ginsberg held that horse-and-dog-race betting is not a lottery because bettors can review program information, past performance data, jockey records, and other facts before placing a wager. The element of skill in selecting the bet means chance is not "controlling." Coffman extended the same logic to other sports: today's bettors have schedules, team records, players' past performance data, head-to-head data, injury reports, facility conditions, and weather information available to them, even more information than the Ginsberg horse bettors had. So skill is involved, chance does not control, and sports betting is not a "lottery."

The criminal-code analysis ran on parallel tracks. Section 18-10-102(2) defines "gambling" to include risking value for gain "contingent in whole or in part upon lot, chance, the operation of a gambling device, or the happening or outcome of an event, including a sporting event, over which the person taking a risk has no control." Three points emerge:

• The phrase "in whole or in part" means even partial dependence on chance suffices, so the Ginsberg skill argument that defeats the lottery analysis does not save sports betting from the gambling statute.
• The statute expressly names "sporting event" as a covered category.
• Bettors have no control over the outcome of the game itself.

Coffman walked through the five statutory exceptions and concluded none applies to commercial sports betting:

• "Bona fide contests of skill, speed, strength, or endurance" applies only to actual participants, not bettors. Charnes v. Cent. City Opera House Ass'n, 773 P.2d 546 (Colo. 1989).
• "Bona fide business transactions" applies to securities, insurance, and indemnity contracts, not wagering.
• "Expressly authorized by law" applies to pari-mutuel horse and dog racing under § 12-60-501, but sports betting was not yet authorized.
• The "social relationship" exception (Houston v. Younghans, 580 P.2d 801) applies to friendly wagers, not commercial enterprises.
• "Crane game" (claw machines) is irrelevant.

Common questions

Q: Why is sports betting "gambling" but not a "lottery"? A: Different definitions. A "lottery" under Colorado precedent requires chance to be the controlling factor in the outcome. Where bettors can apply meaningful skill in selecting wagers based on available information, chance is not controlling. The criminal code's "gambling" definition is broader: any wager whose outcome turns "in whole or in part" on chance counts, and a sporting event over which the bettor has no control is included by name. So skill defeats the lottery analysis but not the gambling analysis.

Q: Did fantasy sports get treated the same way?
A: No. Fantasy sports are separately regulated under the Fantasy Contests Act, § 12-15.5-101 through 112. The 2018 opinion expressly excluded fantasy sports from its analysis.

Q: Does this opinion legalize sports betting?
A: No. AG opinions interpret existing law; they do not legalize anything. The opinion concluded that as of August 2018, sports betting was illegal under Colorado's criminal code. The AG said new state legislation would be required to authorize commercial sports betting.

Q: What about social wagers among friends?
A: The opinion discusses the social-relationship exception but says it is irrelevant to the commercial betting at issue. It cites Houston v. Younghans for a poker game among friends and explains why a commercial operation would fall outside that exception.

Q: How did the U.S. Supreme Court strike down PASPA?
A: The Court used the anti-commandeering doctrine. Murphy, 138 S. Ct. 1461. PASPA forbade states from passing laws authorizing sports betting. The Court held that this controlled state legislative decisions in a way Congress is not permitted to do under federalism principles. Congress could regulate sports betting directly under the Commerce Clause, but it could not order state legislatures what to enact or not enact.

Citations and references

Statutes:

• § 18-10-102(2), C.R.S., "gambling" definition
• § 18-10-102(2)(a)-(f), C.R.S., exceptions to gambling
• Colo. Const. art. XVIII, § 2, lottery prohibition with carve-outs
• Colo. Const. art. XVIII, § 9, limited gaming
• 28 U.S.C. §§ 3701-3704, PASPA (struck down 2018)
• 18 U.S.C. § 1084(a), federal wire act
• 31 U.S.C. § 5363: unlawful internet gambling

Cases:

• Murphy v. Nat'l Collegiate Athletic Ass'n, 138 S. Ct. 1461 (2018), PASPA struck down
• Ginsberg v. Centennial Turf Club, 251 P.2d 926 (Colo. 1952), racing not a lottery
• In re Interrogatories of Gov. Regarding Sweepstakes Races Act, 585 P.2d 595 (Colo. 1978), controlling-factor test for lotteries
• Charnes v. Cent. City Opera House Ass'n, 773 P.2d 546 (Colo. 1989), partial chance suffices for gambling
• Wilson v. People, 84 P.2d 463 (Colo. 1938), pre-legalization horse-race bookmaking conviction

Source

• Landing page: https://coag.gov/attorney-general-opinions/
• Original PDF: https://coag.gov/app/uploads/2019/07/no-18-02.pdf

Original opinion text

CYNTHIA H. COFFMAN
RALPH L. CARR
Attorney General
COLORADO JUDICIAL CENTER
MELANIE J. SNYDER
1300 Broadway, 10th Floor
Chief Deputy Attorney General
Denver, Colorado 80203
LEORA JOSEPH
Phone (720) 508-6000
Chief of Staff
FREDERICK R. YARGER
STATE OF COLORADO
Solicitor General DEPARTMENT OF LAW Office of the Attorney General

FORMAL
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OPINION
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No. 18-02
of
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August 2, 2018
CYNTHIA H. COFFMAN
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Attorney General
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Michael Hartman, Executive Director of the Colorado Department of Revenue, requested this Formal Opinion under§ 24-31-lOl(l)(b), C.R.S.

This Formal Opinion analyzes state constitutional and statutory prov1s10ns to determine whether current law authorizes commercial sports betting in the State of Colorado. The Opinion concludes that although commercial sports betting is not subject to state constitutional restrictions, it falls within the definition of prohibited gambling under Colorado's criminal code, making it unlawful. Consequently, to legalize commercial sports betting in the State, a statutory change-but not a constitutional amendment-would be required.

QUESTIONS PRESENTED AND SHORT ANSWERS

Question 1: Is commercial sports betting subject to the prohibition on "lotteries" in Article XVIII, Section 2 of the Colorado Constitution, such that a state constitutional amendment would be required to authorize commercial sports betting in the State?

Answer 1: No, a state constitutional amendment would not be required. While Article XVIII, Section 2 imposes various restrictions on "lotteries," commercial sports betting does not qualify as a lottery. The Colorado Supreme Court has ruled that betting on horse and dog races is not a lottery, and there is no material difference between betting on horse and dog races and betting on other types of sporting events.
Commercial sports betting therefore falls outside the restrictions in Article XVIII, Section 2.

Question 2: Is commercial sports betting "gambling" under Section 18-10-102(2), C.R.S., such that new legislation would be required to authorize it in the State of Colorado?

Answer 2: Yes, commercial sports betting is currently prohibited as illegal gambling under Colorado's criminal code. New legislation would be required to authorize commercial sports betting in Colorado.

BACKGROUND
Beginning in 1992, a federal law known as the Professional and Amateur Sports Protection Act, or "PASPA," prohibited most States from enacting laws to license or authorize commercial sports betting. Pub. L. No. 102-559, § 2, 106 Stat. 4227 (1992) (codified at 28 U.S.C. §§ 3701-3704)).1 While four States were exempt from the prohibition, the majority-including Colorado-were not. See 28 U.S.C. § 3704 (setting forth enumerated exemptions); see also Andrew Brandt, Professional Sports Leagues' Big Bet: ''Evolving" Attitudes on Gambling, 28 STAN. L. & PoL'Y REV. 273, 277 (2017) (discussing States that authorized commercial sports betting before PASPA and were grandfathered under PASPA's enumerated exemptions). Recently, however, PASPA's prohibition against commercial sports betting came to an end. In May, the United States Supreme Court struck down PASPA in its entirety, ruling in favor of the State of New Jersey in its attempt to legalize commercial sports betting in selected locations within the State. Murphy v. Nat'l Collegiate Athletic Ass'n, 138 S. Ct. 1461, 1468, 1485 (2018).

When PASPA was first enacted, New Jersey was given the option of authorizing commercial sports betting in Atlantic City, a tourist destination that offers legalized casino gambling. Murphy, 138 S. Ct. at 1471 (discussing PASPA's history). New Jersey chose not to take advantage of this feature of PASPA, however, and consequently became subject to the full extent of PASPA's prohibition on commercial sports betting. Id. Decades later, in 2012, New Jersey policymakers had a change of heart, passing legislation to allow Atlantic City's casinos to operate sports betting books. Id. In response, the National Collegiate Athletic Association and various professional sports leagues, including the National Basketball Association and the National Football League, filed a lawsuit under P ASPA. Id.

1 Specifically, PASPA prohibited States from enacting laws that licensed or authorized "a lottery,

sweepstakes, or other betting, gambling or wagering scheme based directly or indirectly, ... on one or more competitive games in which amateur or professional athletes participate, or are intended to participate, or on one or more performances of such athletes in such games." 28 U.S.C. § 3702(1).

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A panel of the Third Circuit Court of Appeals ultimately invalidated New Jersey's 2012 law. But the court determined that PASPA included a loophole: while PASPA prohibited States from enacting new laws to authorize commercial sports betting, it did not prohibit States from repealing old laws that outlawed commercial sports betting. Murphy, 138 S. Ct. at 1471-72 (discussing Nat'l CollegiateAthleticAss'n v. Christie, 730 F.3d 208 (3d Cir. 2013)). Relying on the panel's decision, New Jersey repealed its prohibition on commercial sports betting as applied to certain parts of the State, including Atlantic City. Murphy, 138 S. Ct. at 1472. This new "repealer" law was once again challenged. And once again the Third Circuit-despite the language in its earlier decision seeming to approve of "repealer" laws-ruled against New Jersey. Id. (discussing Nat 'l Collegiate Athletic Ass'n v. Gov. of N .J., 832 F.3d 389 (3d Cir. 2016) (en bane)).

The Supreme Court of the United States heard New Jersey's appeal from the Third Circuit's 2016 decision and, in an opinion issued on May 14, 2018, concluded that PASPA is unconstitutional. Murphy, 138 S. Ct. at 1485. The Court based its decision on the anti-commandeering doctrine, a constitutional principle that preserves the balance between state and federal power by, among other things, prohibiting Congress from regulating what laws States must or must not enact. Id. at 1475-78. Under this doctrine, although Congress may directly regulate an activity such as commercial sports betting and preempt state laws that contradict federal regulation, it may not "command state legislatures to legislate." New York v. United States, 505 U.S. 144, 178-79 (1992).

The Court concluded that PASPA violated this anti-commandeering principle . P ASP A directly controlled the policy decisions of state legislators, "as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals." Murphy, 138 S. Ct. at 1478. The Court therefore struck down PASPA's prohibition against state legislation authorizing commercial sports betting, regardless of whether the legislation comes in the form of a new authorizing statute or a so-called "repealer." See id. The Court then determined that PASPA's remaining provisions could not stand on their own, and it therefore declared PASPA unconstitutional in its entirety. Id. at 1478, 1482-85.

Following the Murphy decision, there has been heightened interest in commercial sports betting among the States. Ben Nuckols, A look at where legal sports betting is headed in the U.S. , DENVER POST, May 15, 2018, at 6b. 2 The Department of Revenue, which houses the Division of Racing Events, the State Lottery Division, and the Division of Gaming, has received inquiries regarding the legality of commercial sports betting in

2An updated version of this article is available at https://www .denverpost.com/2018/05/14/w h ere-legal - sports-betting-is-headed/ (last visited July 30, 2018).

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Colorado and possible prospective legislative changes authorizing commercial sports betting in Colorado. Those inquiries led the Department to request this Formal Opinion.

ANALYSIS

P ASP A has not been the only potential impediment to legalized commercial sports betting in the State of Colorado. Colorado's constitution has always included a prohibition on lotteries. Colo. Const. art. XVIII, § 2. Colorado's criminal code, meanwhile, prohibits various forms of "gambling."§§ 18-10-101 through 108, C.R.S.3

This Formal Opinion focuses on whether commercial sports betting would fall within either the constitutional restrictions in Article XVIII, Section 2, or the statutory restrictions in Sections 18-10-101 through 108. 4 For purposes of this Formal Opinion, commercial sports betting means wagering money or anything of value on the outcome of a sporting event, or a portion of a sporting event, for the chance of a monetary gain or an item of value, where the bettor has the opportunity to exercise skill in selecting the wager. This includes, among other activities:

• betting on the winner of a sporting event, such as a college basketball game, or a series of sporting ·events, Sl.lch as a college basketball tournament;
• betting on the difference in points participating teams will earn in an event, such as the "point spread" in a professional football game; and • betting on the outcome of a portion of a sporting event, such as a quarter of a basketball game or a down of a football game.

3 Other federal laws also criminalize certain sports betting activities that cross state lines, including, under specific circumstances, Internet gambling. See 18 U.S .C. § 1084(a) (prohibiting the use of a "wire communication facility" for -the interstate transmission of wagers or information about wagers on any sporting event, among other things); 31 U.S.C. § 5363 (prohibiting a wagering business from accepting certain types of funds in furtherance of "unlawful Internet gambling"); see also Mem. for the Asst. Att'y Gen., Criminal Div., from Virginia A. Seitz, Asst. Att'y Gen., Off. of Legal Counsel (Sept. 20, 2011), at 5, 7, available at https://www.justice.gov/file/18341/download (regarding application of 18 U.S.C.
§ 1084 to gambling on sporting events). This Formal Opinion does not analyze those laws or the extent to which they would restrict the State of Colorado from a uthorizing affected commercial sports betting.

4 These provisions, in conjunction with other statutes that rely on the definition of gambling, are the main potential prohibitions on commercial sports betting under state law. A number of other state- law restrictions are specific to pari-mutuel wagering on horse and dog racing but do not apply more broadly to other typ es of sporting events. See§§ 12-60-101 to -803, C.R.S. Additionally, Colorado voters have approved "limited gaming" in the cities of Central, Black Hawk, and Cripple Creek. Colo. Const. art. XVIII, § 9. "Limited gaming" is a narrow, defined term that includes only blackjack, poker, and slot machines. Id. § 9(4)(b). Because commercial sports betting, as contemplated in this Formal Opinion, is not "limited gaming," this constitutional provision is not relevant.

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This Formal Opinion assumes that informational materials would be available to a bettor that would be relevant to the outcome of the sporting event, allowing the bettor to exercise an element of skill in placing a bet. This Formal Opinion does not apply to games where the bettor exercises no independent control over the selection of the wager-for example, when selections are made or bets are placed at random. This Formal Opinion also does not apply to fantasy sports.5 Additionally, this Formal Opinion assumes that commercial sports betting is conducted as part of a commercial enterprise; other forms of sports betting, such as social wagers among friends, are beyond the scope of this Formal Opinion.

This Formal Opinion concludes that while Article XVIII, Section 2 of the Colorado Constitution does not restrict commercial sports betting in Colorado, commercial sports betting is "gambling" as defined in Colorado's criminal code and is currently prohibited by Colorado law. Therefore, new legislation would be required to authorize commercial sports betting before it could lawfully occur in the State.

I. A state constitutional amendment would not be required to authorize commercial sports betting in Colorado, because commercial sports betting is not a "lottery" that is subject to the restrictions in Article XVIII, Section 2 of the Colorado Constitution.

Article XVIII, Section 2 has always been part of the Colorado Constitution, since its adoption in 1876. Initially, Article XVIII, Section 2 broadly prohibited the General Assembly from authorizing lotteries for any purpose. It also required the enactment of laws prohibiting lotteries. See Bills v. People, 157 P .2d 139, 141 (Colo. 1945) (quoting Colo. Const. art. XVIII, § 2 (1876)).

Today, Article XVIII, Section 2 continues to prohibit most lotteries, but it now authorizes specific types of lotteries, which are described in subsections (2) through (4) and (7). Subsections (2) through (4), added in 1958, permit certain non-profit organizations to operate "bingo," "lotto," and "raffles." See LEG. COUNCIL OF THE COLO. GEN. ASSEMBLY, AN ANALYSIS OF BALLOT PROPOSALS 11-13 (1958). Subsection (7), added in 1980, authorizes a state-supervised lottery. See LEG. COUNCIL OF THE COLO. GEN. ASSEMBLY, AN ANALYSIS OF BALLOT PROPOSALS 5-8 (1980). The relevant question here is whether commercial sports betting is a "lottery," "bingo," "lotto," or "raffle" subject to Article XVIII, Section 2's various restrictions.

5 Fantasy sports are separately regulated under the Fantasy Contests Act.§§ 12-15.5-101 through 112, C.R.S .

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A. Commercial sports betting is not a "lottery" under Article XVIII, Section 2 because participants are able to exercise sufficient skill in selecting their wagers such that chance is not the "controlling factor" in an award.

A "lottery," according to the Colorado Supreme Court, is an activity in which "consideration is paid for the opportunity to win a prize awarded by chance." In re Interrogatories of Gov. Regarding Sweepstakes Races Act, 585 P.2d 595, 598 (Colo. 1978); see also Ginsberg v. Centennial Turf Club, 251 P.2d 926, 929 (Colo. 1952) (holding that a lottery requires valuable consideration "paid, directly or indirectly, for a chance to draw a prize by lot" (quoting Cross v. People, 32 P. 821, 822 (Colo. 1893)) (emphasis in Ginsberg)). Whether a game is a lottery turns on the role that chance plays in the outcome. See, e.g., Morrow v. State, 511 P.2d 127, 128-30 (Alaska 1973); Braddock v. Family Fin. Corp., 506 P.2d 824, 826 (Idaho 1973); Sherwood & Roberts-Yakima, Inc. v. Leach, 409 P.2d 160, 163 (Wash. 1966). "[I]f chance is the controlling factor in the award," the game is a lottery. Sweepstakes Races, 585 P.2d at 598.

Wagering on a sporting event falls outside this definition. Ginsberg, 251 P .2d at

929. In Ginsberg, the Colorado Supreme Court concluded that chance does not control
     wagering on horse and dog races because the bettor can select a bet based on a review of information about a race and the prior records of its participants.6 Id. "_W hile an element of chance no doubt enters into horse and dog races, it does not control them." Id. The Court emphasized the availability of relevant information for a bettor's review, including race programs that provide post position, approximate odds, jockey's name, and class of race. Id. at 928-29. Past performance and physical statistics for both animals and jockeys are also typically available to bettors before they place their wagers. Id.; see also Sweepstakes Races, 585 P.2d at 597-98 (holding that Article XVIII, Section 2 is not implicated where "winning players are determined by the outcome of the race and the accuracy of each player's selection," whereas a random drawing for a money prize among winning players violates Article XVIII, Section 2 because "no skill is exercised by players who participate in the drawing").

While Ginsberg focused on racing events, the Court's analysis and holding apply equally to commercial sports betting. Sports bettors can use skill to choose who they believe will win a sporting event or whether some sub-event will occur (such as a point spread or the outcome of a particular portion of an event). In selecting their

6In Ginsberg, the Court focused on bettors' opportunity to exercise skill, not whether they actually did so in placing bets: 251 P.2d at 929 (noting that in choosing a bet a bettor "has available the previous records of the animal and the jockey, and various other facts which he may take into consideration in choosing the animal upon which he places a wager" (emphasis added)).

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bets, today's sports bettors have far more information available than the bettors in Ginsberg did. This information includes schedules; team records; players' past performance data (amateur and professional); past head-to-head data; injury reports; facility conditions; weather conditions; and more. See Christian Frodl, Commercialisation of Sports Data: Rights of Event Owners Over Information and Statistics Generated About Their Sports Events, 26 MARQ. SPORTS L. REV. 55, 57-59 (2015) (discussing types of data available). Under Ginsberg, because a bettor can exercise skill in reviewing this information and selecting a wager, the element of chance is not the controlling factor in commercial sports betting. 251 P.2d at 929. Thus, there is no material difference between betting on the horse racing events at issue in Ginsberg and betting on other sporting events, and certainly none that would render the Court's conclusion regarding the definition of a lottery distinguishable. 7

Other States have similarly concluded that commercial sports betting is not a lottery because chance is not the controlling factor in the outcome of a bet. See Bureau of State Lottery-Authority to Institute Sports Wagering Game, 1989-1990 Mich. A.G. 367, 1990 WL 525920 (Aug. 17, 1990) (concluding that sports betting is not a lottery and relying on cases with similar holdings regarding horse racing); 64 W. Va. A.G. No. 8, 1991 WL 628003 (Jan. 8, 1991) (concluding that sports betting is not a lottery and relying on cases with similar holdings regarding horse racing, including Ginsberg). Contrary authority exists in other jurisdictions, see In re Request of Governor for Advisory Opinion, 12 A.3d 1104 (Del. 2009), but Colorado law controls this analysis. Ginsberg holds that betting on horse and dog races is not a "lottery," and betting on other sporting is not materially different. Therefore, commercial sports betting is not subject to the restrictions in Article XVIII, Section 2.

B. Commercial sports betting does not fall within the definition of "bingo," "lotto," or "raffles," which are types of "lotteries" subject to special restrictions under Article XVIII, Section 2.

Article XVIII, Section 2 includes an exception for "the conducting of such games of chance as provided in subsections (2) to (4)." The games of chance addressed in those subsections are "bingo," "lotto," and "raffles." If commercial sports betting qualified as one of these games, it would be subject to certain restrictions. See Colo. Const. art. XVIII, § 2(4).

Article XVIII, Section 2 specifically defines these games. "Bingo" and "lotto" are games where "prizes are awarded on the basis of designated numbers or symbols on

7 Ginsberg's holding also applies to different types of bets, including bets on multiple events. The Court

specifically approved of bets to win, place, or show, as well as games like "Quinella" and "Daily Double," which involved the selection of successful animals in more than a single race. Ginsberg, 251 P.2d at 927-29.

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a card conforming to numbers or symbols selected at random." Colo. Const. art. XVIII,
§ 2(3). "Raffles" are games "conducted by the drawing of prizes or by the allotment of prizes by chance." Id.

Commercial sports betting does not satisfy either of these definitions. Sports bettors are not given a card or a ticket at random and then awarded a prize based on a later, random drawing. Additionally, the exception for these particular "games of chance" operates as a carve-out from the general prohibition on lotteries. Thus, "bingo," "lotto," and "raffles" are types of "lotteries" and, logically, fall within the definition of lottery set out in Ginsberg. See 251 P.2d at 929. It would be illogical to conclude that commercial sports betting is not a lottery under the Ginsberg analysis but that it nevertheless falls within one of these subcategories.

For the reasons set out in this Section I, commercial sports betting is not a "lottery" subject to the restrictions of Article XVIII, Section 2. Therefore, a state constitutional amendment would not be required to authorize commercial sports betting in Colorado.

II. Because commercial sports betting is prohibited "gambling" under Colorado's criminal code and does not fall within any of the code's exceptions, new legislation would be required to authorize commercial sports betting in the State.

Colorado's criminal code prohibits "gambling." §§ 18-10-102(2) & -103(1), C.R.S. Generally, "gambling" includes "risking any money, credit, deposit, or other thing of value for gain contingent in whole or in part upon lot, chance, the operation of a gambling device, or the happening or outcome of an event, including a sporting event, over which the person taking a risk has no control." § 18-10-102(2), C.R.S. (emphasis added). Under this definition, commercial sports betting clearly qualifies as gambling. In commercial sports betting, (1) a participant risks money for gain; (2) the gain is contingent on the outcome of a sporting event, as the statute specifically contemplates; and (3) the bettor has no control over the outcome of the event.

This conclusion is consistent with Colorado case law. For example, in Wilson v. People, 84 P.2d 463 (Colo. 1938), the Colorado Supreme Court held that two defendants could be convicted of engaging in gambling as a livelihood when the evidence demonstrated that they were taking bets on the outcome of horse races. 84 P.2d at 465-66. 8 Similarly, in Leichliter v. State Liquor Licensing Authority, 9 P.3d

8 Wilson predates Colorado's legalization of pari-mutuel betting on horse racing, which occurred in 1949. See Centennial Turf Club v. Colo. Racing Comm'n, 271 P.2d 1046, 1046 (Colo. 1954). It therefore illustrates how specific forms of prohibited "gambling"-and, in particular, betting on sporting events-may be authorized by legislation in Colorado.

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1153 (Colo. App. 2000), a state agency suspended a bar's liquor license, claiming that it was permitting gambling on the premises in the form of a basketball pool. 9 P.3d at 1154. The bar argued that the basketball pool was incidental to a bona fide social relationship-a recognized exception to the gambling definition. See id. The Court of Appeals, in analyzing this argument, noted that "the critical inquiry is whether the participants here came together for any shared purpose other than gambling." Id. at 1155 (emphasis added). Implicit in this phrasing is the conclusion that participating in a basketball pool is gambling; if that were not true, it would have been unnecessary to consider the "bona fide social relationship" argument.

Thus, in light of the clear language of the statute and consistent with Wilson and Leichliter, commercial sports betting is impermissible gambling unless it qualifies for one of the five exceptions to the statutory definition of gambling. Those exceptions are as follows:

• bona fide contests of skill, speed, strength, or endurance in which awards are made only to entrants or the owners of entries;
• bona fide business transactions which are "valid under the law of contracts";
• other acts or transactions "expressly authorized by law";
• any game, wager, or transaction which is "incidental to a bona fide social relationship"; or
• any use of or transaction involving a "crane game."

§ 18-10-102(2)(a)-(f), C.R.S.9

Three of these exceptions may be quickly removed from consideration.
Commercial sports betting is not a "crane game,"10 and it therefore does not qualify for the crane-game exception. See § 18-10-102(2)(£), C.R.S. Similarly, commercial sports betting is not authorized elsewhere in statute with the exception of pari- mutuel betting on horse and dog races. See § 18-10-102(2)(c), C.R.S. (stating the exception); see also § 12-60-501, C.R.S. (authorizing the licensing and regulation of race meets with pari-mutuel wagering). Finally, because this Formal Opinion

9 Section 18-10-102(2)(e), C.R.S., no longer contains an exception to the definition of gambling; this subsection was repealed in 1984. 1984 Colo. Sess. Laws, ch. 95, § 2 at 437.

10A "crane game" is defined as "an amusement machine that, upon insertion of a coin, bill, token, or similar object, allows the player to use one or more buttons, joysticks, or other controls to maneuver a crane or claw over a nonmonetary prize, toy, or novelty, none of which shall have a cost of more than twenty-five dollars, and then, using the crane or claw, to attempt to retrieve the prize, toy, or novelty for the player." § 12-47.1-103(5.5), C.R.S.

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considers only commercial sports betting, the social-gaming exception is not relevant. See § 18-10-102(2)(d), C.R.S. (exempting wagers that are "incidental to a bona fide social relationship" under certain circumstances); see also Houston v. Younghans, 580 P.2d 801 (Colo. 1978) (holding that a poker game among friends was permissible social gambling). As a commercial enterprise, commercial sports betting would not be part of a bona-fide social relationship, would likely be participated in by corporate entities, and would likely involve entities engaged in "professional gambling," as defined in Section 18-10-102(8), C.R.S. Any one of those conditions is sufficient to take commercial sports betting outside of the social-gaming exception.

The two remaining exceptions also do not apply. Section 18-10-102(2)(a), C.R.S., contains an exception for "[b]ona fide contests of skill, speed, strength, or endurance in which awards are made only to entrants or the owners of entries." As contemplated by this Formal Opinion, commercial sports bettors do not themselves participate in a bona fide contest of speed, strength, or endurance. And, although skill is involved in selecting a wager, the ultimate outcome is "contingent 'in part' upon chance," taking it outside the exception. Charnes v. Cent. City Opera House Ass'n, 773 P.2d 546, 551 (Colo. 1989) (citing Ginsberg, 251 P.2d at 929) (holding that even though poker and "other wagering games" might involve skill, they still constitute "gambling"). 11 This exception is inapplicable to commercial sports betting.

Finally, Section 18-10-102(2)(b), C.R.S., contains a separate exception for "[b]ona fide business transactions which are valid under the law of contracts." While Colorado law does not specifically define "bona fide business transactions," other States with similar exceptions apply them to securities contracts, insurance contracts, and indemnity contracts. See ARIZ. REV. STAT. ANN. § 13-3301(4); KAN. STAT. ANN. § 21- 6403(a)(l); OKLA. STAT. ANN. tit. 21, § 981(1)(a); WIS. STAT. § 945.0l(l)(a). Federal law includes the same concepts. 31 U.S.C. § 5362(1)(E) (excluding from the term "bet or wager" insurance contracts, indemnity contracts, and activities governed by the Securities Exchange Act of 1934). The Colorado statute's reference to validity "under the law of contracts" suggests a similar focus. Additionally, to conclude that commercial sports betting qualifies for the "bona fide business transaction" exception would render the reference to wagering on the outcome of a sporting event in the general gambling definition superfluous. Colorado law requires courts avoid such an outcome. Lombard v. Colo. Outdoor Educ. Ctr. , 187 P.3d 565, 569 (Colo. 2008) (noting statutes should be given effect in their entirety). Commercial sports betting thus does not qualify for the bona fide business transaction exception.

11 Taken together, Charnes and Ginsberg establish that a lottery exists where the outcome is wholly controlled by chance, while gambling exists even when the outcome is only partially contingent on chance. Charnes, 773 P.2d at 551; Ginsberg, 251 P.2d at 929. Thus, all lotteries are gambling, but not all gambling involves a lottery.

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For the reasons set out in this Section II, commercial sports betting is prohibited "gambling" within the meaning of Colorado's criminal code, and none of the exceptions to the gambling definition apply. New legislation would be required to authorize commercial sports betting in Colorado.

CONCLUSION

The Colorado Constitution does not prohibit or otherwise restrict commercial sports betting, but commercial sports betting is impermissible gambling under Colorado's criminal code. New legislation, but not a state constitutional amendment, would be required to authorize commercial sports betting in Colorado.

Whether or not to amend state statutes to authorize commercial sports betting is a policy question for the General Assembly and the voters of this State. If policymakers wish to legalize commercial sports betting operations, they should take into account all relevant legal considerations, including federal laws that impose restrictions on interstate sports betting, see, e.g., 18 U.S.C. § 1084(a); 31 U.S.C.
§ 5363, and other state laws that currently implicate or restrict gambling activities, see, e.g., § 16-13-303, C.R.S. (defining as a "public nuisance" property "used ... as gambling premises").

Issued this 2nd day of August, 2018.

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