Pickaway Cty. Skilled Gaming, L.L.C. v. Cordray
| Decision Date | 12 October 2010 |
| Docket Number | No. 2009-1559.,2009-1559. |
| Citation | 936 N.E.2d 944,2010 -Ohio- 4908 |
| Parties | PICKAWAY COUNTY SKILLED GAMING, L.L.C., et al., Appellees, v. CORDRAY, Atty. Gen., Appellant, et al. |
| Court | Ohio Supreme Court |
Syllabus of the Court
The prize-value limit set forth in R.C. 2915.01(AAA)(1) is rationally related to legitimate government interests and does not violate the Equal Protection Clauses of the United States and Ohio Constitutions.
Butler, Cincione & DiCuccio, Gail M. Zalimeni, N. Gerald DiCuccio, and Alphonse P. Cincione, Columbus, for appellees.
Richard Cordray, Attorney General, Benjamin C. Mizer, Solicitor General, Stephen P. Carney, Deputy Solicitor, Christopher P. Conomy, Assistant Solicitor, and Randall W. Knutti, Assistant Attorney General, for appellant.
Roetzel & Andress, L.P.A., Jim M. Petro, and Jeremy S. Young, Columbus, urging affirmance for amicus curiae, Ohio Coin Machine Association.
*105 {¶ 1} R.C. 2915.02(A)(2) states that no person shall "[e]stablish, promote, or operate or knowingly engage in conduct that facilitates * * * any scheme of chance." R.C. 2915.01(C) defines "scheme of chance"; the subsection specifically states that a "scheme of chance" does not include a skill-based amusement machine. These machines range from games (e.g., Skee-ball and Whac-a-Mole) commonly found at fair and amusement-park midways and in family fun centers to more sophisticated skill-based games found in the members-only arcade involved in this case. Although Ohio law permits the operation of skill-based amusement games, R.C. 2915.01(AAA)(1) establishes a $10 prize-value limit for each play on the machines.
{¶ 2} In this appeal, we address whether the $10 limit imposed by R.C. 2915.01(AAA)(1) violates the Equal Protection Clauses of the United States and Ohio Constitutions. Appellant, the attorney general of Ohio, asserts that the limit is rationally related to two legitimate government interests: (1) establishing economic regulations governing the operation of skill-based amusement machines and (2) protecting against criminal acts and enterprises as a prophylactic measure against illegal gambling. Appellees, Pickaway County Skilled Gaming, L.L.C. ("PCSG"), and Steven S. Cline, argue that the prize-value limit set forth in R.C. 2915.01(AAA)(1) serves no purpose other than to define criminal activity and that the prize value is not rationally related todetermining whether amusement machines are based on skill or on chance.
{¶ 3} We hold that the prize-value limit is rationally related to legitimate government interests and does not violate the Equal Protection Clauses of the United States and Ohio Constitutions.
{¶ 4} Cline owns PCSG. PCSG owns and operates Spinners Skill Stop Games ("Spinners"), a members-only amusement-game arcade located in Circleville, Ohio. The arcade contains 150 skill-based amusement machines for use by its members; the machines have names such as Queen Bee, Fruit Bonus 2004, Mystery J & B 2003, Crazy Bugs, New Cherry, Monkey Land, Rosen' Jack 2003, and Triple Jack 2003.
{¶ 5} R.C. Chapter 2915 prohibits gambling except as otherwise expressly permitted by law. Pursuant to R.C. 2915.02(A)(2), "No person shall * * * [e]stablish, promote, or operate or knowingly engage in conduct that facilitates any game of chance conducted for profit or any scheme of chance." The definition of "scheme of chance" specifically excludes skill-based amusement machines. R.C. 2915.01(C). R.C. 2915.01(AAA) defines the term "skill-based amusement machine." Pursuant to R.C. 2915.01(AAA)(2), the device may not *106 incorporate any element of chance. The outcome of the game and the value of any prize must be based solely on the player's ability to achieve the object of the game or the player's score. R.C. 2915.01(AAA)(2). Additionally, the wholesale value of any merchandise prize or redeemable voucher awarded as a result of a single play of the machine cannot exceed $10. R.C. 2915.01(AAA)(1).1
{¶ 6} Prior to 2004, R.C. Chapter 2915 made no provision for the operation of skill-based amusement machines. In 2003, the legislature amended R.C. Chapter 2915 to exclude skill-based amusement machines from the definition of "schemes of chance." Am.Sub.H.B. No. 95, 150 Ohio Laws, Part I, 396, 865. Under that law, a "skill-based amusement machine" required the player's active participation and the outcome of the game could not be determined "largely or wholly by chance" or "by a person not actively participating in the game." Am.Sub.H.B. No. 95, 150 Ohio Laws, Part I, at 875.
{¶ 7} On August 22, 2007, Ohio Governor Ted Strickland issued Executive Order 2007-28S in response to a documented "increase in the number of illegal gambling machines around the State of Ohio." Executive Order 2007-28S, ¶ 1 (). The governor noted that "[b]ecause of the imprecision of the statutory term 'skill-based amusement machines' and because components of illegal gambling machines have been continually altered to make them appear to be legal skill-based amusement games when they are not, the State has thus far been unsuccessful in effectively limiting the proliferation of illegal gambling machines masquerading as skill-based amusement machines." Id., ¶ 3. He also stated that "[t]he effects of illegal gambling machines are devastating, not only to the consumers who may spend excessive amounts of their financial resources to play these games in hopes of receiving a large pay-out, but alsoto the Ohio communities in which these machines are located that are experiencing an increase in other criminal and illegal activities due to the proliferation of these machines." Id., ¶ 4.
{¶ 8} Through the Executive Order, Governor Strickland declared an emergency, justifying suspension of the normal rulemaking process, and authorized the attorney general to immediately adopt former Ohio Adm.Code 109:4-3-31. Executive Order 2007-28S at ¶ 9-10. The attorney general adopted the new administrative rule, which, among other things, significantly changed the definition of "skill-based amusement machine." The rule made it an unfair and deceptive act to misrepresent that a game was skill-based if it did not meet the requirements of the rule. Former Ohio Adm.Code 109:4-3-31(B), 2007-2008 Ohio Monthly Record,*107 2-233-2-235. The rule specified that the value of prizes and redeemable vouchers for any single play of a skill-based amusement machine could not exceed $10. Former Ohio Adm.Code 109:4-3-31(D)(1)(a)(ii) through (iv). Also, skill-based amusement machines could not award cash prizes or gift cards; plays on games of chance, state lottery tickets, bingo, or instant bingo; firearms, tobacco, or alcoholic beverages; or vouchers redeemable for any of the prohibited prizes. Former Ohio Adm.Code 109:4-3-31(D)(3)(a) through (d).
{¶ 9} Under the authority of the new administrative rule, on August 22, 2007, the attorney general ordered PCSG and Cline to cease and desist all operations at Spinners, charging that they had violated the Consumer Sales Practices Act, R.C. Chapter 1345, by representing that their games were legal skill-based amusement machines when, because they awarded cash payouts, the machines did not meet the definition set forth in the new rule. PCSG and Cline filed a complaint against the attorney general seeking declaratory and injunctive relief. The trial court granted PCSG and Cline's request for a temporary restraining order and Spinners reopened.
{¶ 10} While PCSG and Cline's action was pending, the Franklin County Court of Common Pleas found in a similar action that Ohio Adm.Code 109:4-3-31 exceeded the attorney general's rule making authority. On October 10, 2007, the Ohio House of Representatives passed Sub.H.B. No. 177, which, among other provisions, amended R.C. 2915.01(AAA). The bill incorporated into the statute much of the language defining "skill-based amusement machines" that had been set forth in Ohio Adm.Code 109:4-3-31, including the $10 prize-value limit. The Ohio Senate passed Sub.H.B. No. 177, Governor Strickland signed it, and it became effective immediately, on October 25, 2007. Thereafter, the Franklin County Court of Common Pleas determined that passage of Sub.H.B. No. 177 rendered the issues in the declaratory-judgment action moot and dismissed PCSG and Cline's complaint.
{¶ 11} In anticipation of the passage of Sub.H.B. No. 177, PCSG and Cline temporarily closed Spinners to avoid violating the new law, but they reopened the business after altering its operations. Spinners continues to operate, but with substantially fewer members and fewer visits than it had prior to the enactment of Sub.H.B. No. 177.
{¶ 12} On October 31, 2007, PCSG and Cline filed the present action against the attorney general2 seeking a judgment declaringR.C. 2915.01(AAA) unconstitutional and an injunction prohibiting the enforcement of the provisions of *108 Sub.H.B. No. 177. PCSG and Cline moved for summary judgment, arguing that R.C. 2915.01(AAA)(1) violated the Equal Protection Clauses of the United States and Ohio Constitutions. The attorney general filed a cross-motion for summary judgment. The trial court reviewed state and federal equal-protection caselaw and concluded that R.C. 2915.01(AAA)(1) did not violate the Equal Protection Clauses of the state and federal constitutions. The trial court held that the prize-value limit is not rationally related to whether a machine is "skill-based." However, the trial court concluded that the limit is rationally related to determining whether a machine is for the purpose of amusement. The court stated that the legislature could reasonably conclude that high-value prizes are more closely associated with gambling, while low-value prizes are less likely to be connected with gambling and are consistent with playing for amusement. Accordingly, the trial court denied PCSG and Cline's motion for...
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