Poppen v. Walker, 18374

• Citation: 520 N.W.2d 238
• Decision Date: 09 August 1994
• Docket Number: No. 18374,18374
• Parties: Henry A. POPPEN, Charles Q. Mateer, and Della Wishard, Plaintiffs and Appellants, v. Susan WALKER, Director of South Dakota Lottery, and John Theeler, Charles Burke, H.I. King, III, Elaine Emery, Gary Richards, Beverly McCracken, and John Carmody, Members of South Dakota Lottery Commission, and Donald D. Archer, Defendants and Appellees.
• Court: Supreme Court of South Dakota

Page 238

520 N.W.2d 238

Henry A. POPPEN, Charles Q. Mateer, and Della Wishard Plaintiffs and Appellants, v. Susan WALKER, Director of South Dakota Lottery, and John Theeler, Charles Burke, H.I. King, III, Elaine Emery, Gary Richards, Beverly McCracken, and John Carmody, Members of South Dakota Lottery Commission, and Donald D. Archer Defendants and Appellees.

No. 18374.

Supreme Court of South Dakota.

Argued Dec. 1, 1993.

Decided June 22, 1994.

Rehearing Denied Aug. 9, 1994.

Kent R. Cutler and Michael S. Simpkins, Cutler & Simpkins, Sioux Falls, for plaintiffs and appellants.

Mark W. Barnett, Atty. Gen., Larry Long, Charles D. McGuigan, Jeffrey P. Hallem, Asst. Attys. Gen., Pierre, for defendant and appellee State of S.D.

Thomas J. Welk, Michael S. McKnight of Boyce, Murphy, McDowell & Greenfield, Sioux Falls, for defendant and appellee Donald D. Archer.

STEELE, Circuit Judge.

Plaintiffs appeal from a grant of summary judgment for the defendants. We reverse and remand.

PROCEDURAL HISTORY

On November 30, 1992, the Plaintiffs filed this action seeking an alternative writ of prohibition restraining the defendants (State) from operating video lottery and a writ of mandamus requiring the immediate revocation of video lottery licenses. Both parties filed cross motions for summary judgment. The trial court granted the State's motion, ruling that video lottery is a "lottery" within the meaning of Article III, § 25 of the South Dakota Constitution, that video lottery is owned and operated by the State, and that the State receives the entire net proceeds from video lottery operations. Plaintiffs appeal.

DECISION

We hold that video lottery is not authorized under Article III, § 25 of the South Dakota Constitution.

FACTS

The Constitution of the State of South Dakota was adopted in 1889. Article III, § 25 at that time provided:

The legislature shall not authorize any game of chance, lottery, or gift enterprise, under any pretense, or for any purpose whatever.

In 1970, this provision was amended to authorize the legislature to allow bona fide veterans, charitable, educational, religious, or fraternal organizations, civic and service clubs, volunteer fire departments, and other public spirited organizations to conduct games of chance when the entire net proceeds of such games of chance are devoted to educational, charitable, patriotic, religious, or other public spirited uses. 1970 S.D.Sess.L. ch. 1.

In 1982, the legislature offered another amendment to the vote of the people which would have rewritten Article III, § 25 as follows:

The legislature shall not authorize any game of chance, lottery, or gift enterprise, under any pretense, or for any purpose whatever provided, however, it shall be lawful for the legislature to authorize by law games of chance which are limited to wagering or coin operated gaming machines, bingo, lotteries, and card games.

This proposed amendment was rejected by the voters of this state in November of 1982.

In 1986, the legislature proposed the amendment with which we are concerned. The amendment added the following sentence to the original provision:

However, it shall be lawful for the legislature to authorize by law, a state lottery which is regulated, controlled, owned and operated by the State of South Dakota, either separately by this state or jointly in cooperation with one or more other states. The entire net proceeds of such lottery shall be devoted to the operation of state government or such other purpose as the legislature shall determine.

The people approved the amendment in November of 1986; it will be referred to as the "1986 amendment."

In 1987, following the adoption of the 1986 amendment, statutes were enacted creating a state lottery which at the time was limited to instant "scratch and match" games. In that same year, the Legislative Research Council was directed by the legislature to conduct a study regarding the implementation of video lottery games. One of the findings of the committee was that video lottery is a "lottery" under the South Dakota Constitution.

In 1989, a bill authorizing video lottery was passed and signed into law by Governor George S. Mickelson. The statutory scheme allowed private owners of the coin-operated gaming machines to retain the proceeds from machine operation after remission of twenty-five percent of the net machine income (money put into a machine less credits paid out) to the state. Subsequent amendments have increased the state's share of the proceeds to thirty-six percent.

The video machines are electronic devices which are available to play various games upon the insertion of cash. The games currently available are varieties of the games of poker, blackjack, bingo, and keno. A player may wager up to eight twenty-five cent credits. The number of credits available to win is determined by a combination of factors, including: (1) the game played, (2) the amount wagered, and (3) the difficulty of obtaining a particular winning hand or combination. Each machine is programmed to pay back eighty percent to ninety-six percent of the total amount of credits wagered based on a probabilities formula.

The machines are equipped with a "hold strategy" in the games of poker and blackjack. The strategy advises the player which cards to discard in poker and whether to draw another card in blackjack. Its purpose is to reduce or eliminate the element of skill so that the outcome is determined predominantly by chance. The hold strategy is designed to maximize the winnings of the player; if it is followed, an unskilled player would theoretically win as often and as much as a skilled player over the long run.

STANDARD OF REVIEW

Summary judgment is appropriate where the pleadings, depositions, admissions, exhibits and supporting affidavits show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. McKinney v. Pioneer Life Ins. Co., 465 N.W.2d 192 (S.D.1991). Summary judgment will be affirmed only when there are no genuine issues of material fact and the legal questions have been correctly decided. Bego v. Gordon, 407 N.W.2d 801, 804 (S.D.1987). The moving party has the burden to clearly show that there is no genuine issue of material fact and is entitled to a judgment as a matter of law. Wilson v. Great Northern Railway Company, 83 S.D. 207, 157 N.W.2d 19 (1968).

This case presents no issue of material fact; rather, we are called upon to construe a constitutional provision. The proper construction to be given to such a provision is a question of law which is fully reviewable on appeal. Dahl v. Sittner, 474 N.W.2d 897, 899 (S.D.1991). Accordingly, the standard of review is de novo, and deference need not be given to conclusions of law by the trial court. Brown v. Egan Consol. School D. 50-2, 449 N.W.2d 259, 260 (S.D.1989).

ISSUES

I.

WHETHER VIDEO LOTTERY AS AUTHORIZED BY SDCL 42-7A IS A "LOTTERY" WITHIN THE MEANING OF ARTICLE III, § 25 OF THE SOUTH DAKOTA CONSTITUTION.

II.

WHETHER A LOTTERY AUTHORIZED BY SDCL 42-7A IS "REGULATED, CONTROLLED, OWNED AND OPERATED" BY THE STATE IN ACCORDANCE WITH ARTICLE III, § 25.

III.

WHETHER THE STATE RECEIVES THE "ENTIRE NET PROCEEDS" FROM VIDEO LOTTERY IN ACCORDANCE WITH ARTICLE III, § 25.

ANALYSIS

ISSUE I

Plaintiffs assert that video lottery is not a "lottery" as that term is used in the 1986 amendment, and we are called upon to construe its meaning.

The 1986 amendment is part of our constitution. Although constitutional provisions are not grants of power to the legislature, but are instead limitations on legislative authority, legislative acts are presumed to be constitutional. Wyatt v. Kundert, 375 N.W.2d 186, 191 (S.D.1985). That presumption is not overcome until the constitutionality of the act is clearly and unmistakenly shown and there is no reasonable doubt that it violates constitutional principles. Independent Community Bankers Ass'n v. State, 346 N.W.2d 737, 739 (S.D.1984); Associated General Contr. v. Schreiner, 492 N.W.2d 916, 919 (S.D.1992).

It is the duty of the Supreme Court, not the legislature, to determine the meaning of constitutional terms. South Dakota Automobile Club v. Volk, 305 N.W.2d 693, 700 (S.D.1981). The legislature cannot define the scope of a constitutional provision by subsequent legislation. Edge v. Brice, 113 N.W.2d 755 (Ia.1962). "The Constitution is the mother law. It is not the baby. Statutes must conform to the Constitution, not vice versa." Cummings v. Mickelson, 495 N.W.2d 493, 507 (S.D.1993), (Henderson, J., concurring in part; dissenting in part).

In determining the meaning of a constitutional provision, courts are guided by applicable rules of construction. First and foremost, the object of construing a constitution is to give effect to the intent of the framers of the organic law and of the people adopting it. Schomer v. Scott, 65 S.D. 353, 274 N.W. 556, 559 (1937); State v. Jorgenson, 81 S.D. 447, 136 N.W.2d 870, 875 (1965). The Supreme Court has the right to construe a constitutional provision in accordance with what it perceives to be its plain meaning. State v. Neville, 346 N.W.2d 425, 428 (S.D.1984). When words in a constitutional provision are clear and unambiguous, they are to be given their natural, usual meaning and are to be understood in the sense in which they are popularly employed. Kneip v. Herseth, 87 S.D. 642, 214 N.W.2d 93, 102 (1974). If the meaning of a term is unclear, the Court may look to the intent of the drafting body. Cummings, 495 N.W.2d at 499.

The 1986 amendment is an exception to the general prohibition against gambling in the South Dakota Constitution. An exception to a constitutional provision must be strictly construed and limited to objects fairly within its terms. Commonwealth v. Yee, 361 Mass. 533, 281 N.E.2d 248, 251 (1972). Further, the Court is not concerned with the wisdom or expediency or the need of a constitutional provision, but only whether it...