If Oregon voters approved Ballot Measure 75 to authorize a privately owned casino with 3,500 slot machines and Keno, would the State Lottery have to operate those games, and could the constitutional ban on casinos still apply?

Subject

Oregon State Lottery

Plain-English summary

Ballot Measure 75 in 2010 was a statutory initiative to authorize a privately owned destination resort casino in Oregon, with up to 3,500 electronic gaming devices, Keno, table games, and a $250 million minimum investment. A companion constitutional initiative that would have carved out an exception to Oregon's casino ban did not qualify for the ballot. The State Lottery asked what its role would be if voters approved Measure 75.

The AG worked through two questions. First, would the State Lottery itself have to operate the slots and Keno? Yes, said the AG, because Article XV, section 4(1) of the Oregon Constitution prohibits all lotteries except those run by charitable, fraternal, or religious organizations or by the State Lottery. Slot machines and Keno that turn wholly or predominantly on chance are "lotteries" under longstanding Oregon case law (Hendrix v. McKee, going back to a Multnomah County circuit court decision in 1871). Measure 75's gaming operator would not qualify as charitable, fraternal, or religious, so the games would have to be Lottery-operated.

Second, even if the State Lottery operated the games, did the 1984 constitutional ban on casinos still apply? Yes. Article XV, section 4(12) directs the legislature to prohibit casinos. The Oregon Supreme Court had already held in Ecumenical Ministries that voters intended to ban "establishments whose dominant use or dominant purpose, or both, is for gambling." The AG read the 1984 voters' pamphlet and the Ballot Title's "Bans casinos" language as conclusive: voters intended a complete prohibition. The voters could not authorize through a 2010 statute what they had constitutionally banned in 1984. Result: the State Lottery could not place enough machines at the Measure 75 resort to make it a casino, regardless of what Measure 75 authorized.

Currency note

This opinion was issued in 2010. 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

How can a slot machine be a "lottery"?

Oregon's constitutional definition of "lottery" is broader than what most people picture when they hear the word. The Oregon Supreme Court in Hendrix v. McKee defined a lottery as "any scheme whereby one, on paying money or other valuable thing to another, becomes entitled to receive from him such a return in value, or nothing, as some formula of chance may determine." That sweeps in slot machines, pull-tabs, and electronic gaming devices that turn predominantly on chance. The 1871 Multnomah County circuit decision in Fleming v. Bills already held that a dice-and-box game was a lottery, even without tickets.

What about games that mix skill and chance?

Oregon likely follows the "dominant chance" rule, meaning a game counts as a lottery if chance is the dominant factor in the outcome, even if some skill is involved. The AG noted that the Oregon Supreme Court had used both the "pure chance" and "dominant chance" rules at different times, but predicted the dominant-chance rule would prevail.

Why couldn't voters just override the casino ban with a statute?

Because a statute cannot rewrite the constitution. Article XV, section 4(12) was added by initiative in 1984 and bans casinos at the constitutional level. Measure 75 was only a statutory initiative. The AG noted that the 1984 voters' pamphlet explanation said the measure "Bans casinos" and Sen. Dell Isham's argument said it would "put a prohibition on casino gambling in our state constitution." The Oregon Supreme Court later read that ban as prohibiting "establishments whose dominant use or dominant purpose, or both, is for gambling." A 2010 statute could not unwind that constitutional bar.

Could the State Lottery still place some terminals at a smaller facility?

Possibly, depending on the dominant-use test. The AG's earlier 1995 opinion (48 Op Atty Gen 15) had concluded that 75 video lottery terminals at a single racing facility would likely violate the casino ban. The Measure 75 facility, with up to 3,500 devices and table games, was clearly a casino. The AG did not draw a precise line, but signaled that concentrated, gambling-dominant facilities trigger the constitutional limit.

Was there any way the proposal could have worked?

A constitutional amendment carving out an exception. The companion 2010 measure (Initiative Petition 76) would have done that, but it did not qualify for the ballot. Without a constitutional change, the AG's analysis foreclosed the project even if voters approved the statute.

What happened to the Lottery's existing video lottery terminals at bars and restaurants?

Those continued to operate. The AG's 2010 analysis was specifically about a destination resort casino. Earlier case law (Ecumenical Ministries) had upheld State Lottery video poker as not turning Oregon's bars into "casinos" because the gambling was not the dominant use of those establishments.

Background and statutory framework

The original 1859 Oregon Constitution prohibited all lotteries. Voters created the State Lottery by initiative in 1984 (Ballot Measure 4), narrowly carving out the lottery monopoly in Article XV, sections 4(3), 4(4), 4(10), and 4(11). Subsection 4(2) had earlier permitted charitable, fraternal, or religious bingo, lotto, and raffles. The 1984 measure also added the casino prohibition in subsection 4(12).

The interpretive method for original constitutional provisions follows Priest v. Pearce, 314 Or 411 (1992): specific wording, surrounding case law, and historical circumstances of creation. For initiated constitutional provisions, the method is from Pendleton School Dist. 16R v. State, 345 Or 596 (2009), and Ecumenical Ministries v. Oregon State Lottery Comm., 318 Or 551 (1994): voter intent through text, context, and (when text is unclear) history including the voters' pamphlet and contemporaneous reports.

Measure 75 defined an "electronic gaming device" as any device delivering cash, tokens, merchandise, or other value upon payment, "by reason of skill or the element of chance or both." The AG mapped that against the constitutional definition of lottery to find a clear overlap.

Citations

• Oregon Constitution, Article XV, section 4 (subsections 1, 2, 4(c), 12)
• Oregon Constitution, Article II, section 18(8)
• Ballot Measure 75 (2010), §§ 6, 7
• Priest v. Pearce, 314 Or 411, 840 P2d 65 (1992)
• Ecumenical Ministries v. Oregon State Lottery Comm., 318 Or 551, 871 P2d 106 (1994)
• Hendrix v. McKee, 281 Or 123, 575 P2d 134 (1977)
• State v. Schwemler, 154 Or 533, 60 P2d 938 (1936)
• Fleming v. Bills, 3 Or 286 (Cir Ct 1871)
• Mult. Co. Fair Ass'n v. Langley, 140 Or 172, 13 P2d 354 (1932)
• 17 Op Atty Gen 250 (1935); 48 Op Atty Gen 15 (1995)

Source

• Landing page: https://www.doj.state.or.us/oregon-department-of-justice/office-of-the-attorney-general/attorney-general-opinions/
• Original PDF: https://www.doj.state.or.us/wp-content/uploads/2010/10/op2010-6.pdf

Original opinion text

JOHN R. KROGER

MARY H. WILLIAMS

Attorney General

Deputy Attorney General

DEPARTMENT OF JUSTICE
GENERAL COUNSEL DIVISION

October 21, 2010

Larry Niswender, Interim Director
Oregon State Lottery
500 Airport Road, SE
Salem, OR 97301

Re: Opinion Request OP-2010-6

Dear Mr. Niswender:

Ballot Measure 75 (2010) is a statutory initiative (Initiative Petition 77, 2010) that proposes to authorize a privately-owned casino that could operate up to 3,500 electronic gaming devices and Keno, as well as other forms of gambling. The measure appears on the November 2, 2010 general election ballot. A companion constitutional initiative (Initiative Petition 76, 2010) that proposed an exception to Article XV, subsection 4(12), the Oregon constitutional provision that provides the legislature may not authorize casinos and directs it to ban them, did not qualify for the ballot. As the exclusive constitutional provider of lotteries in Oregon (other than charitable, fraternal, or religious raffles, bingo, or lotto), the Oregon State Lottery seeks advice as to its potential involvement in the operation of the casino's 3,500 electronic gaming devices and Keno game if the people approve Measure 75.

FIRST QUESTION PRESENTED

If Ballot Measure 75 is approved by the people, would the electronic gaming devices or Keno referred to in the measure have to be operated by the State Lottery in order to comply with Article XV, subsection 4(1), of the Oregon Constitution?

SHORT ANSWER

Yes, to the extent the electronic gaming devices or Keno operate wholly or predominantly upon elements of chance.

SECOND QUESTION PRESENTED

If the answer to the first question is yes or partially yes, would the number of games or devices that the Oregon State Lottery could place at the facility referred to in Measure 75 potentially be restricted by the casino limitations established by Article XV, subsection 4(12), of the Oregon Constitution?

SHORT ANSWER

Yes.

DISCUSSION

1. Constitutional Provisions at Issue and Methods of Interpretation

a. Lottery Prohibition – Dates from Original Oregon Constitution

The original Oregon Constitution prohibited all lotteries. Or Const, Art XV, § 4 (1859). After several amendments to section 4, subsection 4(1) of Article XV still prohibits lotteries generally, subject only to certain narrow exceptions:

Except as provided in subsections (2), (3), (4), (10) and (11) of this section, lotteries and the sale of lottery tickets, for any purpose whatever, are prohibited, and the Legislative Assembly shall prevent the same by penal laws.

Subsection (2) of section 4 permits the "Legislative Assembly [to] provide for the establishment, operation, and regulation of raffles and the lottery commonly known as bingo or lotto by charitable, fraternal, or religious organizations." Subsections (3), (4), (10) and (11) of section 4 concern only the State Lottery. Thus, the net effect of current subsection 4(1) is to prohibit lotteries in Oregon that are neither operated by the State Lottery nor qualify as charitable gaming under subsection 4(2).

In interpreting an original provision of the Oregon Constitution, such as the lottery prohibition in Article XV, section 4, the Oregon Supreme Court considers its "specific wording, the case law surrounding it, and the historical circumstances that led to its creation." Priest v. Pearce, 314 Or 411, 415-17, 840 P2d 65 (1992).

b. Limitation on Casinos – Amendment by Initiative

Subsection 4(12) of Article XV is the constitutional provision that limits casinos. It was added to the Oregon Constitution through an initiative petition approved by the people in 1984. Subsection 4(12) provides:

The Legislative Assembly has no power to authorize, and shall prohibit, casinos from operation in the State of Oregon.

In interpreting an initiated constitutional provision, the Oregon Supreme Court seeks to determine the intent of the voters in adopting it. Pendleton School Dist. 16R v. State, 345 Or 596, 606, 200 P3d 133 (2009); Ecumenical Ministries v. Oregon State Lottery Comm., 318 Or 551, 559, 871 P2d 106 (1994). While the provision's text and context are the best indicators of the voters' intent, if that intent is unclear after an examination of text and context, then the Oregon Supreme Court turns to the provision's history.

2. Meaning of "Lotteries"

a. Text and Context: Subsection 4(1)

To determine the whether the term "lotteries" as used in subsection 4(1) includes electronic gaming devices or Keno, we first examine the text of Article XV, section 4 of the original Oregon Constitution. In 1857, Webster's dictionary defined "lottery" as a "scheme for the distribution of prizes by chance." N. Webster, AN AMERICAN DICTIONARY OF THE ENGLISH LANGUAGE (1828). Both the 1839 and 1840 editions of a leading law dictionary include the same definition as Webster's for "lottery": "a scheme for the distribution of prizes by chance." J. Bouvier, A LAW DICTIONARY (1839 and 1860 editions).

But subsection 4(1) forbids not only lotteries, it also prohibits the "sale of lottery tickets for any purpose whatever." A question thus arises as to whether, in order to be prohibited under subsection 4(1), the "lottery" scheme must involve the sale of tickets. We can quickly dispense with this issue. If the drafters of the original constitution were concerned only with lotteries that involved lottery tickets, they could have just banned the sale of lottery tickets. Instead, they banned the operation of lotteries generally. As Attorney General I. H. Van Winkle observed in 1935:

• • • it is immaterial what plan is used or what form the device may take, if it depends upon chance as to its result it is a lottery. It follows, therefore, under the decisions and the quotation above cited, that slot machines being devices depending on chance as to their results, either whole or in part, are lotteries, and under the provision of the constitution above quoted are forbidden in the state of Oregon and their operation can not be authorized by the legislature.
• • • the constitutional provision not only forbids the sale of lottery tickets but also forbids lotteries, which includes lotteries of any and all kinds, whether operated through the sale of tickets or otherwise.

17 Op Atty Gen 250, 252 (1935).

b. Case Law

The case law interpreting Article XV, section 4 (1859), clearly supports the conclusion that subsection 4(1) does not apply only to lotteries involving the sale of tickets. A mere fourteen years after the people's adoption of the original Oregon Constitution in 1857, the Multnomah County Circuit Court upheld a police court decision that a dice and box game (not involving tickets) was a lottery. Fleming v. Bills, 3 Or 286 (Cir Ct 1871).

Subsequently, the Oregon Supreme Court defined the term "lottery" for purposes of section 4, Article XV, as:

• • • any scheme whereby one, on paying money or other valuable thing to another, becomes entitled to receive from him such a return in value, or nothing, as some formula of chance may determine * * *.

Hendrix v. McKee, 281 Or 123, 131-132, 575 P2d 134 (1977), quoting State v. Schwemler, 154 Or 533, 536, 60 P2d 938 (1936). In Hendrix, the court held that a "pull tab" machine was a device that fell within the constitutional definition of a lottery and that "its use violates the public policy of the state of Oregon."

There also is the question whether, for purposes of Article XV, section 4, a "lottery" must be based upon "pure chance" or "dominant chance." We have long concluded that "dominant chance" likely is the standard in Oregon.

c. History

The history of Article XV, section 4 (1859) is helpful only insofar as it confirms that the drafters of the original Oregon Constitution did not intend to prohibit all forms of gambling but instead intended to prohibit only those types of gambling that qualified as lotteries.

3. Measure 75 – Electronic Gaming Devices and Keno

a. Electronic Gaming Devices

Measure 75 authorizes the gaming operator to operate "[u]p to 3,500 electronic gaming devices[.]" Measure 75, § 7(1)(a). The measure defines "electronic gaming device" as a device that, upon payment of consideration, whether by reason of skill or the element of chance or both, may deliver to or entitle the person playing or operating the device to receive cash, tokens, merchandise, or other value. Measure 75, § 7(3)(c).

A comparison of the characteristics of Measure 75's electronic gaming devices and the Oregon Supreme Court's construction of the term "lottery" for purposes of Article XV, section 4(1) makes clear that those devices are lotteries insofar as they rely wholly or predominantly upon chance.

b. Keno

Measure 75 authorizes the gaming operator to operate "Keno." The measure does not define "Keno." Subsection 4(2) of Article XV identifies "lotto" and "bingo" as a lottery. Thus, assuming the players pay consideration, there is no doubt that Keno is a lottery for purposes of subsection 4(1) of Article XV: it involves the payment of money in a scheme that awards prizes based upon chance.

4. Necessary Involvement of State Lottery in Operation of Measure 75's Electronic Gaming Devices and Keno

Measure 75 provides that the State Lottery Commission shall issue "a 15-year license to the gaming operator to operate the games authorized under section 7 of this Act" if the commission determines that the operator meets certain criteria. Measure 75, § 6(1). But the State Lottery cannot comply with this direction if it would violate the Oregon Constitution.

As noted above, subsection 4(1) of Article XV prohibits lotteries outright unless they are operated by a charitable, fraternal, or religious organization or the State Lottery. Keno clearly is a lottery and Measure 75's electronic gaming devices are lotteries to the extent they operate purely or predominantly on chance. We understand that the gaming operator contemplated by Measure 75 will not be a charitable, fraternal, or religious organization. Accordingly, subsection 4(1) of Article XV prohibits the operation of such lotteries outright unless the State Lottery operates the game or the devices.

Moreover, Measure 75 potentially permits the casino's "electronic gaming devices" to deliver cash to a player of the machine. But the Oregon Constitution provides that "in lottery games utilizing computer terminal or other devices, no coins or currency shall ever be dispensed directly to players from such computer terminals or devices." Or Const, Art XV, § 4(4)(c). Therefore, any State Lottery computer terminal or other device placed at the casino must not deliver coins or currency to a player.

5. Limits on Number of State Lottery Terminals That Can Be Placed at Measure 75 Casino

a. Prior Attorney General's Opinion

In 1995, we considered whether the State Lottery's operation of 75 video lottery terminals in combination with pari-mutuel racing activities at New Portland Meadows or Multnomah Greyhound Park as authorized by Enrolled House Bill 3411 (1995) would constitute a casino prohibited by the Oregon Constitution. Attorney General Theodore Kulongoski concluded:

There is a high probability that a court, if presented with the question, would hold that HB 3411 violates Article XV, section 4[12], of the Oregon Constitution due to the concentration and operation of 75 video lottery terminals that would be permitted at a single racing facility.

48 Op Atty Gen 15 (1995).

In reaching this conclusion, Attorney General Kulongoski relied in large part on the Oregon Supreme Court's decision in Ecumenical Ministries. He noted that the Oregon Supreme Court had concluded in that decision that, in adopting subsection 4(12), "the voters intended to prohibit the operation of establishments whose dominant use or dominant purpose, or both, is for gambling." 48 Op Atty Gen at 17 (quoting Ecumenical Ministries, 318 Or at 562).

It appears that Measure 75 contemplates a traditional casino, at least if all the games authorized by the measure are deployed in the facility. The measure refers to a "destination resort casino" with an "investment of at least two hundred fifty million dollars." Measure 75, § 6(1)(f). Accordingly, the placement of any video lottery terminals, let alone 3,500, at a facility that also could offer up to 150 table games very well could result in the State Lottery's participation in the operation of a casino.

But unlike the situation with HB 3411 (1995), the voters – not the legislature – will have adopted Measure 75 if it passes. That raises the question whether subsection 4(12) of Article XV only limits the ability of the Legislative Assembly to approve a casino and does not preclude the voters from doing so by statute rather than through a constitutional amendment.

b. Text and Context: Subsection 4(12)

Subsection 4(12) contains two parts. The first part clearly precludes the legislature from authorizing a casino. But it does not state directly that the people cannot authorize a casino. The second part of subsection 4(12) directs the legislature to prohibit casinos. It does not state that this requirement is inapplicable if the people approve a casino.

Indeed, there is no doubt that the Legislative Assembly has the power to repeal a law enacted by the people. State ex rel. Carson v. Kozer, 126 Or 641, 644, 270 P 513 (1928).

Another aspect of subsection 4(12)'s context is Article II, subsection 18(8), which provides in part that "the words, 'the legislative assembly shall provide,' or any similar or equivalent words in this constitution or any amendment thereto, shall not be construed to grant to the legislative assembly any exclusive power of lawmaking nor in any way to limit the initiative and referendum powers reserved by the people."

But the possibility of such a peculiar back and forth, enactment and repeal/prohibition, by the voters and the Legislative Assembly prompts the question whether the people instead intended subsection 4(12) to be an outright prohibition of casinos.

Indeed, in addressing the question whether the voters intended subsection 4(12) to prohibit the State Lottery's use of video lottery games, the Oregon Supreme Court first concluded that voters intended subsection 4(12) to prohibit certain establishments whose dominant use or purpose, or both, is gambling:

Considering all of the foregoing text and context, we conclude that, in adopting Article XV, section 4[12], prohibiting the operation of "casinos," the voters intended to prohibit the operation of establishments whose dominant use or dominant purpose, or both, is for gambling.

Ecumenical Ministries, 318 Or at 562.

c. History of Subsection 4(12)

In this instance, the history of Ballot Measure 4 (1984) (resulting in the adoption of subsection 4(12)) is quite clear on the question whether the measure was intended to prohibit casinos. The Ballot Title's Explanation for Measure 4 in part states unequivocally that the measure "Bans casinos." Official 1984 General Election Voters' Pamphlet, November 6, 1984, at 19. Moreover, in the sole Voters' Pamphlet argument in favor of or against Measure 4, State Senator Dell Isham states in part: "The measure will, for the first time, put a prohibition on casino gambling in our state constitution."

Because the voters intended subsection 4(12) to prohibit casinos, and it is reasonable to interpret the provision as having that effect, we conclude that the voters do not have the power in a statutory initiative to authorize a casino as that term is construed by the Supreme Court in Ecumenical Ministries. If the voters approve Measure 75, the State Lottery still must operate in compliance with the Oregon Constitution.

CONCLUSION

Due to the limits on lotteries stated in subsection 4(1) of Article XV, the State Lottery must operate any electronic gaming devices (that operate wholly or predominantly upon chance) or Keno games at the Measure 75 "destination resort casino." The number of such devices or games that the State Lottery may operate at that facility is constrained by Article XV, subsection 4(12)'s prohibition of casinos. The State Lottery may not operate lottery devices or games at the Measure 75 facility if that facility will be an establishment that has a dominant use or dominant purpose, or both, for gambling, either as a result of the placement of the lottery devices or games or otherwise.

Sincerely,

David E. Leith
Associate Attorney General and
Chief General Counsel
General Counsel Division
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