Pace-O-Matic, Inc. v. N.Y. State Liquor Auth.

• Decision Date: 01 April 2010
• Citation: 72 A.D.3d 1144,898 N.Y.S.2d 295
• Parties: In the Matter of PACE-O-MATIC, INC., Respondent, v. NEW YORK STATE LIQUOR AUTHORITY, Appellant. New York State Racing and Gaming Association, Inc., Proposed Intervenor-Appellant.
• Court: New York Supreme Court — Appellate Division

898 N.Y.S.2d 295

72 A.D.3d 1144

In the Matter of PACE-O-MATIC, INC., Respondent,

v. NEW YORK STATE LIQUOR AUTHORITY, Appellant.New York State Racing and Gaming Association, Inc., Proposed Intervenor-Appellant.

Supreme Court, Appellate Division, Third Department, New York.

April 1, 2010.

Mark D. Frering, New York State Liquor Authority, Albany, for appellant.

Featherstonhaugh, Wiley and Clyne, L.L.P., Albany (Stephen B. Hanse of counsel), for proposed intervenor-appellant.

Gleason, Dunn, Walsh & O'Shea, Albany (Thomas F. Gleason of counsel) and Hurwitz & Fine, P.C., Buffalo (Earl K. Cantwell of counsel), for respondent.

Before: MERCURE, J.P., LAHTINEN, MALONE JR., McCARTHY and GARRY, JJ.

McCARTHY, J.

Appeal from a judgment of the Supreme Court (McDonough, J.), entered March 31, 2009 in Albany County, which, among other things, granted petitioner's application, in a proceeding pursuant to CPLR article 78, to annul a determination of respondent which declared a certain game to be a gambling device.

Petitioner designed and produced a touch screen video game entitled Moxie Mania Empire Edition. After money is depositedinto the machine, the game consists of three phases. During the Moxie phase, if the player selects the proper symbol within one second of the game grid appearing, he or she wins 104% of the amount wagered. If no symbol is selected, the game progresses to the post-Moxie phase, where the player must select the proper symbol within a set time of 10 to 19 seconds and the amount of the prize is randomly selected by the machine in proportion to the difficulty of choosing the correct symbol. If at any time the player selects the wrong symbol, he or she loses the amount wagered. The perfect play phase awards a prize for selecting the correct symbol in the Moxie phase 15 consecutive times.

Prior to selling the game in New York, petitioner retained two experts who examined and tested Moxie Mania and determined that it was a game of skill, not a game of chance, such that it would not be considered a gambling device. Petitioner also sought and obtained an opinion fromrespondent's counsel that the game was not a gambling device.¹ After Moxie Mania was offered for sale and approximately 500 machines were installed in the state, mainly in bars, respondent began reviewing the game in response to a state senator's request for a declaratory ruling as to whether it was a gambling device. Respondent ultimately issued a ruling that Moxie Mania is an illegal gambling device.

Petitioner commenced this proceeding seeking annulment of respondent's determination. The New York State Racing and Gaming Association, Inc. (hereinafter RGA) moved to intervene or to appear as amicus curiae. Supreme Court issued a judgment in petitioner's favor and denied RGA's motion to intervene, although it granted RGA amicus status. Respondent and RGA appeal.

Supreme Court did not err in denying RGA's motion to intervene. Courts "may allow other interested persons to intervene" in special proceedings (CPLR 7802[d] ), but this permissive determination lies within the court's discretion ( see Matter of Tennessee Gas Pipeline Co. v. Town of Chatham Bd. of Assessors, 239 A.D.2d 831, 832, 657 N.Y.S.2d 269 [1997] ). The court did not abuse that discretion here, where RGA failed to substantiate its interests in the proceeding, having introduced only speculative proof regarding potential financial effects to its members if Moxie Mania is permitted. Like Supreme Court, we will grant RGA amicus curiae status and thereby consider its arguments without allowing it to intervene as a party.

Respondent has the authority and obligation to preventgambling in establishments it licenses ( see Alcoholic Beverage Control Law § 105 [22]; § 106[6]; see also 9 NYCRR 53.1[m], [t] ). As the Alcoholic Beverage Control Law does not contain definitions relating to gambling, respondent may reasonably rely on Penal Law definitions to determine whether a particular game or activity is permissible ( see Matter of Plato's Cave Corp. v. State Liq. Auth., 68 N.Y.2d 791, 793, 506 N.Y.S.2d 856, 498 N.E.2d 420 [1986] ). Under the Penal Law, gambling occurs when someone " risks something of value upon the outcome of a contest of chance" with the understanding that something of value will be awarded in the event of a certain outcome (Penal Law § 225.00[2] ). The parties agree that players in Moxie Mania pay cash to play, thus risking something of value. There is also an understanding that something of value may be obtained; winning players receive a voucher that can be cashed in at the establishment where the machine is located. The only contested aspect of the definition of gambling is whether Moxie Mania is a contest of chance. That term is defined as "any contest, game, gaming scheme or gaming device in which the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor" (Penal Law §...