Did Kentucky's Constitution bar the legislature from authorizing gambling beyond lotteries?

Plain-English summary

A Kentucky senator asked how far the state Constitution limited legislation expanding gambling. The Attorney General concluded that Section 226(3) prohibited lotteries and similar schemes in which people paid for a chance to receive a prize awarded purely by lot or chance, except for constitutionally authorized forms. It distinguished those schemes from other gambling, which the AG said the General Assembly could authorize or regulate by statute.

The opinion relied heavily on Commonwealth v. Kentucky Jockey Club, which upheld legislation permitting pari-mutuel horse-race betting under the lottery provision. It also discussed bingo and other games that fit the lottery definition despite different names. The AG expressly overruled earlier attorney general opinions to the extent they conflicted with this analysis. Its constitutional conclusion did not say that every other form of gambling was lawful under then-existing statutes.

Currency note

This opinion was issued in 2005. 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.

Common questions

Q: Did Kentucky's Constitution ban every form of gambling? A: The AG said no. It read Section 226(3) as targeting lotteries and similar paid prize schemes decided purely by chance, leaving other forms to statutory regulation.

Q: What made a game a prohibited lottery in this opinion?
A: The AG described a paid opportunity to share in prizes or things of value distributed purely by lot or chance. A different game name did not avoid that definition.

Q: Did the opinion treat horse-race pari-mutuel betting as a lottery? A: No. It relied on the Kentucky Jockey Club decision, which held that Section 226 itself did not outlaw that form of betting.

Q: Were bingo and keno outside the lottery prohibition because of their names? A: No. The opinion described bingo, beano, keno, and lotto as games that could carry the defining features of a lottery.

Q: Did the opinion legalize all gambling that was not a lottery? A: No. It addressed the constitutional limit on legislative power and recognized that other gambling remained subject to statutes.

Background and statutory framework

The opinion focused on Ky. Const. Section 226(3). It read the constitutional convention debates and the Kentucky Jockey Club decision as rejecting a proposal to include every species of gambling in that section. The opinion stated that lotteries were a distinct category and that statutory law remained the means for regulating other forms. It acknowledged express constitutional exceptions for a state lottery and charitable lotteries and gift enterprises.

Citations and references

Constitution: Ky. Const. Section 226(3).

Case: Commonwealth v. Kentucky Jockey Club, Inc., 238 Ky 739, 38 SW2d 987 (1931).

Source

• Landing page: https://kdla.access.preservica.com/uncategorized/IO_313c9ef3-dc36-4dfe-a01e-8bce40e29b26/
• Original PDF: https://kdla.access.preservica.com/download/file/IO_313c9ef3-dc36-4dfe-a01e-8bce40e29b26

Original opinion text

OAG 05-003
March 21, 2005
Subject:

Constitutional limits upon the authority of the General Assembly to pass statutes which expand gambling in Kentucky.

Requested by:

Mr. Ed Worley, State Senator, 34th Senatorial District

Written by:

Robert S. Jones, Assistant Attorney General

Syllabus:

Section 226(3) of the Kentucky Constitution prohibits
“lotteries” or “schemes” which distribute money or
other things of value purely by chance among persons who have paid for the chance to share in the distribution. Other forms of gambling were intentionally excluded from this prohibition.

Statutes construed:
OAGs cited:

Ky. Const. Section 226(3)

80-409, 92-127, 93-58, 99-8

Opinion of the Attorney General
Senator Ed Worley requests the Attorney General’s opinion on
the following questions:
1) Within the Constitution of Kentucky, are there limitations or prohibitions on the authority of the General Assembly to enact statutory language authorizing the expansion of gambling in Kentucky?

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Answer: Qualified Yes. Ky. Const. Section 226(3)1 would prohibit the General Assembly from sanctioning a “lottery”, defined as a species of gambling, and described as a scheme for the distribution of prizes or things of value, purely 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, except as specifically authorized by Ky. Const. Section 226(1) and (2). There is no constitutional prohibition which limits the General Assembly from authorizing and regulating other forms of gambling. 2) Further, does the Kentucky Constitution distinguish between the forms of expanded gambling to restrict the General Assembly in any specific area of such expansion? Answer: Yes. The framers of the Constitution clearly rejected the inclusion of other forms of gaming within the prohibition of “lotteries”, as defined above, when Ky. Const. Section 226 was passed. Hence, “lotteries” are constitutionally distinct from other forms of gambling. Introduction These questions touch directly upon issues addressed by four prior opinions of the Office of the Attorney General, 80-409, 92-127, 93-058 & 99-8, which interpret the prohibition Ky. Const. Section 226(3) places upon “lotteries”, “gift enterprises”, and “schemes for similar purpose”. Because those opinions differ materially as to the breath of this constitutional limitation upon the General Assembly’s authority to enact various gambling laws, analysis of inconsistent opinions of past Attorneys General is of no benefit. Instead, a fresh and reasoned review of the origins of Section 226(3) and the case law which interprets the section is necessary to answer the questions posed.

1

In 1988 Ky. Const. Section 226 was amended to allow a “Kentucky state lottery” and

“charitable lotteries and charitable gift enterprises”. These amendments became subsections (1) and (2) respectively. The original language in Section 226 was designated subsection (3) and was amended only to add “Except as provided for in this section” in deference to the two exceptions which had been created. Throughout this opinion the terms “Section 226” and “Section 226(3)” are used interchangeably because the case law which interprets the language now found in Section 226(3) predates the 1988 amendments. Where subsections of Section 226 other than subsection (3) are addressed in this opinion they are cited with specificity.

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The history of Section 226 of the Kentucky Constitution
Historically, the prohibition of lotteries was seen as ethically and morally distinct from other forms of gambling. In 1850 the U.S. Supreme Court wrote: Experience has shown that the common forms of gambling are comparatively innocuous when placed in contrast with the widespread pestilence of lotteries. The former are confined to a few persons and places, but the lottery infests the whole community; it enters every dwelling; it reaches every class; it preys upon the hard earnings of the poor; it plunders the ignorant and simple.” Phalen v. Virginia, 8 Howard 163, 12 L Ed 1030, 1033 (1850). Thirty years later, the Court reflected on that statement and said: They [lotteries] are a species of gambling, and wrong in their influences. They disturb the checks and balances of a well-ordered community. Society built on such a foundation would almost of necessity bring forth a population of speculators and gamblers, living on the expectation of what, 'by the casting of lots, or by lot, chance, or otherwise,' might be 'awarded' to them from the accumulations of others. Stone v. Mississippi, 101 US 814, 818, 25 L Ed 1079 (1880). In the early 1890s, when the current Kentucky Constitution was drafted and adopted, it is clear that the drafter’s understanding of a lottery was a system in which players wager that a particular number will be selected in a random drawing. At the time it was still the practice of the Commonwealth “to grant privilege to certain gentlemen to raise money by lottery…” This authority was conferred by the “act of 1838, and the amendatory act of 1869.” Commonwealth v. Douglas, 100 Ky. 116, 24 S.W. 233 (1893). In Douglas, supra, the Court of Appeals of Kentucky considered a challenge under the “contracts clause” of the U.S. Constitution to Section 226 of the newly written Kentucky Constitution by those who had purchased licenses to operate lotteries. The breath of the prohibition was not in question since the license holders clearly operated “lotteries” as the term was contemplated in

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the law of the time; however, language within the opinion provides a contemporaneous view of the people and practices Section 226 was intended to address: We have, for instance, at this day, men confined in the state penitentiary for setting up and carrying on gambling shops whose tendencies are not much more demoralizing, if any, than the licensed lottery operator, who goes free under the protection of the law. Id. at 234. Hence, the operation of “gambling shops” was seen as distinct from the gaming operated by the licensed lottery operator. The legal issue of the scope of the prohibition in Section 226 was not squarely presented to Kentucky's Court of Appeals until 1931 in the case of Commonwealth v. Kentucky Jockey Club, Inc., 238 Ky 739, 38 SW2d 987 (1931). The Court drew directly upon the Debates of the Constitutional Convention and found: 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 forms, 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.” Id. at 993. The Court approached the issue by adopting a textbook definition of “lottery”:

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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. Consequently, the Court refused to strike down laws allowing parimutuel betting on horse races. In doing so the parameters of legislative authority were delineated as follows: That all forms of gambling are evil and characterized by vicious tendencies does not alter the fact of the individuality of each type. We are unable… to declare that the section of the Constitution condemning lotteries was understood by the people who adopted it as itself outlawing betting upon horse races, by the pari-mutual system, or the other forms of betting. It was then understood, as has been the accepted opinion, that the subjects of betting and gaming were within the absolute control of the police power, possessed by the legislature. It is the duty and function of the legislature to discern and correct evils, and evils within that power are not limited to some definite injury to public safety or morals, but embrace the removal of obstacles to a greater public welfare. (emphasis added) Id. at 994. Subsequent Case law Since the Kentucky Jockey Club opinion, Kentucky’s highest court has addressed questions compelling it to define “lottery” under Section 226 on four occasions. In two of those cases, Worden v. City of Louisville, 279 Ky. 712, 131 S.W.2d 923 (1939), and Commonwealth v. Malco-Memphis Theatres, Inc., 293 Ky. 531, 169 S.W.2d 596 (1943), the court faced factual situations which clearly implicated the conduct of a “lottery” as that term was traditionally defined. The Worden opinion addresses a tailor shop which provided chances to win a weekly drawing. The Malco-Memphis Theatres case dealt with a ticket drawing to win a prize. In both, the court relied on the definition of a “lottery” identified in the Kentucky Jockey Club opinion and held the practices violated the law. In fact, the defense in Malco-Memphis Theatres

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conceded the drawings were lotteries, and argued instead that the participants had not paid consideration to enter insofar as the cost of the tickets did not exceed the normal cost for services. The most recent case to address the lottery provision within Section 226 is Otto v. Kosofsky, Ky., 476 S.W.2d 626 (1971). That opinion addressed the constitutionality of a statute known as the “Bingo Licensing Act.” The court found that bingo fit the traditional definition of a “lottery” as envisioned by the drafters. But, despite the basic holding which reiterated the definition of lottery as “consisting of a scheme for distribution of prizes or things of value purely by lot or chance,” the opinion also cites to an ambiguous quote from A. B. Long Music Company v. Commonwealth, Ky., 429 S.W.2d 391 (1968), which could be interpreted as defining a “lottery” more broadly. A. B. Long Music Company is the sole opinion in the line of Kentucky precedent on the issue which suggests that the term “lottery” might be interpreted as a generic term which extended beyond the intention expressed by the drafters of the Constitution. In A. B. Long Music Company, supra, the Commonwealth had impounded pinball machines pursuant to KRS 436.280. Impoundment was the enforcement mechanism for KRS 436.230 which prohibited “setting up, keeping, managing, operating or conducting a keno bank, faro bank or other machine or contrivance used in betting.” These statutes clearly authorized the actions taken by the Commonwealth and ultimately constitute the legal basis for the decision. Nevertheless, in dicta, the court addressed the definition of the word “lottery” as used within Section 226. Citing to a number of out of state cases, the court referenced the fact that bingo, beano, keno and lotto are simply variations upon the same game which fall under the generic term “lottery.” Indeed, this is true, but this fact is not relevant to the determination that the pinball machines were a “machine or contrivance used in betting” thereby supporting the State enforcement action under KRS Chapter 436. Since the A. B. Long Music Company opinion fails to account for existing legal precedent surrounding Section 226, the only wisdom

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which should be drawn from the opinion is that regardless of its name, if the game meets the traditional test of a “lottery”, as bingo, beano, keno and lotto do, then those games would be forbidden under Section 226 as “similar schemes.” It is this language which the Otto, supra, opinion draws upon in finding that the Bingo Licensing Act was unconstitutional, and not the language which addresses the possibility that the term “lottery” may encompass a meaning beyond that intended by the framers of the Constitution. Conclusion Although more than 65 years have passed since the Kentucky Jockey Club, Inc. opinion was entered, it still provides the most thoughtful and relevant analysis of the questions at hand. Case law on the issue since that time, and up to the most recent published decision in 1971, has continued to recognize that the prohibition of “lotteries” under Section 226(3) of the Kentucky Constitution applies only to that subcategory of gaming traditionally identified as “lotteries”. Such “lotteries” are generally characterized by the purchase of a card or ticket which entitles the holder to a prize should, purely by chance or lot, the numbers, letters, or symbols on the ticket match a winning combination. These types of games are known by many names, bingo, beano, keno and lotto, as well as in slang references such as “numbers games”, yet they each carry the recognizable indicia of a “lottery” and therefore fall within the prohibition in Section 226(3). Opinions of past Attorneys General have attempted to define “lottery” by analyzing the nature of “chance” employed by various games by weighing the relative significance of skill or luck necessary to win. However, the case law is clear; to be a “lottery” the winner must be chosen “purely by chance.” Other OAG opinions have questioned whether the traditional definition of a “lottery” will be sufficient the carry out the intention of the framers as new games are invented using new technology. Yet, this has not been a problem over the past 113 years. Moreover, the debates between the framers of the Constitution lay bare their intention to address a specific and easily identifiable problem, the sale of lottery licenses, when they drafted Section 226. They were aware that existing statutory laws made other types of gambling illegal when they rejected the amendment offered to broaden the lottery prohibition to all forms of gambling. It is therefore reasonable to conclude the framers of the Constitution were confident gambling

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would continue to be effectively regulated by statute, and further that statutory law, which is inherently more flexible than the dictates of a constitution, was the best way to regulate other forms of gambling in the future. To the extent that past OAG opinions are in conflict with this opinion they are overruled.

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GREGORY D. STUMBO
ATTORNEY GENERAL

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ROBERT S. JONES
ASSISTANT ATTORNEY GENERAL