Almond v. Rhode Island Lottery Com'n

• Decision Date: 27 July 2000
• Docket Number: No. 99-525-Appeal.,99-525-Appeal.
• Citation: 756 A.2d 186
• Parties: Lincoln C. ALMOND, in his capacity as Governor of the State of Rhode Island et al. v. The RHODE ISLAND LOTTERY COMMISSION, Newport Grand Jai Alai, LLC, and Burrillville Racing Association, d.b.a. Lincoln Greyhound Park et al.
• Court: Rhode Island Supreme Court

756 A.2d 186

Lincoln C. ALMOND, in his capacity as Governor of the State of Rhode Island et al. v. The RHODE ISLAND LOTTERY COMMISSION, Newport Grand Jai Alai, LLC, and Burrillville Racing Association, d.b.a. Lincoln Greyhound Park et al.

No. 99-525-Appeal.

Supreme Court of Rhode Island.

July 27, 2000.

Present: WEISBERGER, C.J., and LEDERBERG, BOURCIER, and FLANDERS, JJ.

Sheldon Whitehouse, Attorney General, Elizabeth A. Wallace, James R. Lee, Lauren Sandler Zurier, for Attorney General's Office.

Joseph S. Larisa, Jr., Erika Leigh Kruse, for Lincoln C. Almond.

Karen A. Pelczarski, Providence, for Common Cause of RI.

Deming E. Sherman, Providence, Loretta Smith, for New England Legal Foundation.

Lauren E. Jones, Robert Smith Thurston, Providence, for RI House of Representatives.

Thomas Dickinson, Providence, Jeremiah C. Lynch, III, for Newport Grand Alai.

Laurent L Rousseau, Newport, Daniel V. McKinnon, Pawtucket, for Lincoln Greyhound Park.

Edward M. Fogarty, for RI Senate.

Robert M. Silva, Middletown, David P. Martland, David C. Potts, Middletown, for Lottery Com'n.

OPINION

WEISBERGER, Chief Justice.

This case comes before us on appeals and cross-appeals from all parties to this litigation, save for the plaintiff intervenor, the Attorney General, from a declaratory judgment entered in the Superior Court along with a denial of a request by the Governor for injunctive relief. We reverse the declaratory judgment and affirm the denial of injunctive relief for reasons which will be set forth below. The facts of the case as found by the trial justice and the context in which the case began are as follows.

From 1744 until the adoption of a Constitution by the people of Rhode Island in 1843, the General Assembly authorized and supervised a number of lotteries for the purpose of funding a number of public improvements. The lottery was supervised by the General Assembly, certain of whose members were appointed to serve as managers for some of the lotteries, but by the 1820s the General Assembly began to delegate the supervision of lotteries to professional managers. Following theratification of the Rhode Island Constitution in 1843, new lotteries were prohibited and the use of this method of funding public improvements ended. During the pre-constitutional era, the Legislature regulated every facet and every detail of every lottery that it created.

In 1973, the Constitution of Rhode Island was amended to lift the ban on state-run lotteries. The Constitution, as amended, set forth the following language in article 6, section 15:

"All lotteries shall be prohibited in the state except lotteries operated by the state and except those previously permitted by the general assembly prior to the adoption of this section, and all shall be subject to the prescription and regulation of the general assembly." (Emphasis added.)

In 1974, soon after the 1973 amendment was ratified, the General Assembly enacted a statute that was codified as G.L. 1956 § 42-61-1. This statute created a commission that was authorized to manage the lottery. The statute creating the Lottery Commission contained the following language.

"[The commission] shall consist of nine (9) members * * * three (3) of whom shall be members of the senate, not more than two (2) from the same political party to be appointed by the majority leader; three (3) of whom shall be members of the house of representatives, not more than two (2) from the same political party to be appointed by the speaker of the house; and three (3) of whom shall be representatives of the general public to be appointed by the governor." Section 42-61-1(a).

The trial justice in his factual findings set forth in detail the powers that were delegated by the statute to the Lottery Commission:

"a. Lotteries:

1. The type of lotteries to be conducted;

2. The price of tickets with respect to lotteries;

3. The number and size of prizes on winning tickets;

4. The manner of selecting winning tickets;

5. The manner of payment of prizes to the holders of winning tickets;

6. The frequency of the drawings or selections of winning tickets;

7. The number and types of locations at which tickets may be sold;

8. The method to be used in selling tickets;

9. The licensing of agents to sell tickets;

10. The license fee to be charged to agents;

11. The manner in which the proceeds of the sale of tickets are maintained, reported and/or otherwise accounted for;

12. The manner and amount of compensation to be paid to sales agents necessary to provide for the adequate availability of tickets to prospective buyers and for the convenience of the general public;

13. The apportionment of the total annual revenue accrued from the sale of tickets and from all other sources for the payment of prizes to the holders of winning tickets;

14. For payment of costs incurred in the operation and administration of the Lottery, including the expense of the Commission and the cost resulting from any contract or contracts entered into for promotional advertising, consulting, or operational services;

15. Or for the purchase or lease of facilities, lottery equipment, and materials; and for the repayment of monies appropriated to the lottery fund;

16. The manner, standards and specification for a process of competitive bidding for Commission purchase and contracts, and;

17. The sale of commercial advertising space on the reverse side or in other available areas upon lottery tickets provided that all net revenue derived from the sale of the advertising space shall be deposited immediately into the state's general fund.

"b. VLTs: [video lottery terminals]

1. The licensing of technology providers capable of interfacing with a central communications systems controlled by the Commission (the award of a license to technology providers must satisfy the requirements of the State Purchasing Laws);

2. Accounting procedures for determining net terminal income from lottery terminals and unclaimed prizes and credits;

3. The type of video lottery game to be conducted;

4. The price to play each game and the prizes or credits to be awarded;

5. Financial reporting procedures for license[d] video lottery retailers and control procedures in the event that any of these retailers should become insolvent;

6. Insurance and binding by (i) licensed video lottery retailers and (ii) technology providers;

7. The licensing of licensed video lottery retailers;

8. Contracting with technology providers;

9. A provision requiring that all VLTs be linked under a central communications system to provide auditing program information as approved by the Lottery, and;

10. Any other matter necessary for VLTs or for the convenience of the public.¹

"[The commission] * * * has exercised, and does exercise such power.

"The legislation creating the lottery provides for the position of director. The director of lotteries under the applicable statute is appointed by the Governor, subject, however, to confirmation by the Commission, and further, the director of lotteries is removable only bythe Commission. By statute, the director of lotteries is vested with certain responsibilities and authority. A review of those statutes specifically § 42-61-4 and § 42-61.2-4 clearly confirm the testimony of Director Aubin to the effect that he works for the nine members of the Commission (see testimony of Director Aubin, page 58, line 3, et seq. August 19, 1999).

"The lottery generated gross revenue in its most recent full fiscal year in the amount of $740,720,000 with net revenues of approximately $639,000,000. Of the gross revenue $548,100,000 represented VLT sales and $192,620,000 represented lottery sales. After deducting all expenses and the payouts to `successful' lottery and VLT players, and taking into account earnings on investment of lottery funds (handled by the General Treasurer) in the amount of $510,000, the revenue to the state general funds was approximately $135,000,000.

"The lottery is a major business enterprise." It is undisputed that the statute that created the Lottery Commission and delegated to it the foregoing specific powers was enacted by both Houses of the General Assembly and signed by the Governor in office at that time. The Lottery Commission operated continuously from 1974 until the present under the management of directors appointed by the Governor and approved by the commissioners. A previous director was John P. Hawkins, who also served for a time as the first chairman of the commission. Mr. Hawkins was succeeded by Gerald S. Aubin. Both Mr. Hawkins and Mr. Aubin testified in the Superior Court concerning their duties and the nature of the commission's operation. Another witness was Professor Patrick T. Conley, a noted historian who has written extensively on the constitutional and political history of the State of Rhode Island from its Colonial beginnings to modern times. The trial justice based his findings of fact upon this testimony, as well as extensive documentary evidence presented by the parties.

The present litigation arose as a result of a dispute between the Governor and the commission in respect to the authorization of an increase in the number of video lottery terminals (VLTs) to be allowedat Newport Grand Jai Alai and Lincoln Greyhound Park, which was owned by Burrillville Racing Association, Inc. On April 26, 1999, the Lottery Commission voted five to four to authorize this increase despite the opposition of the Governor, who appeared at a meeting of the commission to oppose the proposal to increase the number of VLTs. Those commissioners who voted in favor of the expansion were members of the Legislature who had been appointed either by the Speaker of the House of Representatives or by the Majority Leader of the Senate. Those voting against the additional VLTs were the three persons appointed by the Governor, who were joined by one member of the Legislature.

Shortly after the vote was recorded,...