State v. 26 Gaming Machines

• Decision Date: 05 February 2004
• Docket Number: No. 03-173.,03-173.
• Parties: STATE of Arkansas v. 26 GAMING MACHINES.
• Court: Arkansas Supreme Court

145 S.W.3d 368

356 Ark. 47

STATE of Arkansas v. 26 GAMING MACHINES.

No. 03-173.

Supreme Court of Arkansas.

February 5, 2004.

Appeal from the Circuit Court, Sebastian County, J. Michael Fitzhugh, J.

Mike Beebe, Att'y Gen., by: Brad Newman, Ass't Att'y Gen., Little Rock, for appellant.

Pryor, Robertson & Barry, PLLC, by: C. Brian Meadors, Fort Smith, for appellee.

ROBERT L. BROWN, Justice.

This is a State appeal from an order of the Sebastian County Circuit Court in which the court found that three countertop Megatouch machines were not gaming devices per se and that the State had failed to provide evidence that the machines actually were used as such. Accordingly, the court refused to forfeit the machines and ordered them returned to their owners. The State argues one point on appeal: that the circuit court's refusal to forfeit the three alleged gaming machines was clearly erroneous. We disagree and affirm the circuit court's order.

In May 2002, the Fort Smith Police Department identified 28 suspected gaming machines in various Fort Smith businesses. Of the 28 machines, a gaming machine expert determined that 26 machines violated Arkansas law as gaming devices. On June 28, 2002, the prosecuting attorney filed a petition to forfeit the machines, and on July 3, 2002, and July 24, 2002, the circuit court issued summonses for the machines from the various businesses.

A raft of pleadings, motions, and discovery petitions ensued, and on October 30-31, 2002, the circuit court conducted a non-jury trial. At the trial, Robert Sertell was called as an expert witness for the State. He testified that he was a retired gambling teacher who at the time of trial served as the chairman of Casino Horizons Corporation, a training and consulting firm for the gaming industry as well as law enforcement. He became involved in conducting a gaming-machine investigation in Sebastian County in the summer of 2002 and created a twelve-page report on the various machines seized. He concluded that some of the games offered on the countertop and the free-standing machines were for gambling and some were not. The free-standing machines, according to Mr. Sertell, were designed to look like slot machines, operate like slot machines, sound like slot machines, and payoff in credits or points in almost the same way a slot machine does, with no skill required of the player. Of the 26 machines seized, all 26 required money to play, and some contained ticket dispensers.

Mr. Sertell testified that gambling consists of three elements: consideration, chance, and reward. He said "consideration" means that money must be paid to buy the right to play a game. "Chance" means that the player can do nothing to change or predict the outcome of the game. And "reward" means that the design of the game may entitle the player or winner to become entitled to something of value. All of the machines in question exhibited the element of "consideration," because they accepted either coin or paper currency. All of the machines involved "chance," he said, because they contain a random number generator or a reflexive game element. Some of the machines exhibited "reward" in the form of (1) points, which could be used as additional consideration to "buy" additional credits; (2) the ability to play the game without spending more money; or (3) a visual reward from seeing a virtual person take off his or her clothes. Mr. Sertell, however, denied that nudity was the type of reward that qualified as an element of gambling.

With respect to 19 of the 26 machines, the State and their owners either settled the litigation during the trial, or the machines were deemed to be inoperable and were returned to their owners, or the machines were forfeited to the State because no claim was filed by any purported owner. Of the remaining seven machines, four were upright, free-standing machines, and three were countertop Megatouch machines with touch screens. The court described the free-standing machines as Fruit Bonus 96 machines. The court likened the free-standing machines to slot machines that did not require any skill for use and were based upon chance. The court found that the free-standing machines were not amusement devices but were gaming devices per se subject to seizure and forfeiture. The court further concluded that the money seized from these machines was subject to forfeiture.

The three remaining machines were countertop Megatouch machines, which contained fifty-to-seventy different games, including draw poker, joker poker, and blackjack. These machines did not contain any type of pay out mechanisms such as hoppers or chutes for monetary winnings or pre-printed tickets. Accordingly, the court found that the countertop machines were not gaming devices per se. In making this finding, the court said:

The State argues and it's [sic] expert testified that if the machine offers a game of poker and nothing more, it could still be considered a gaming device and subject to seizure and forfeiture. To hold such could, in the Court's opinion, subject a personal computer or a child's hand held computer game to seizure simply because a poker game may be included in the computer game. There must be more.

The court also found that the State failed to provide any evidence that the countertop machines actually were used as gambling devices. Specifically, the court found that the State had failed to show there was any reward for playing the countertop machines. Accordingly, the court concluded that the three countertop machines were not forfeitable and should be returned to their owners together with any money seized from these three machines, after expiration of the appeal time or the State's decision not to appeal.

The State argues as its sole point on appeal that the circuit court's refusal to forfeit the three alleged gaming machines was clearly erroneous. The State urges that the machines were seized pursuant to Ark.Code Ann. § 5-5-101(a) and (b) (Repl. 1997) and that the circuit court erroneously misconstrued its expert's testimony. The State also argues that the circuit court's reliance on Burnside v. State, 219 Ark. 596, 243 S.W.2d 736 (1951), was misplaced, because unlike the Burnside facts, where the equipment in question did not constitute gaming devices per se, here the State contends that the three machines were gaming devices per se. The State asserts that the inclusion of poker and blackjack software made these machines comparable to the facts in Bell v. State, 212 Ark. 337, 205 S.W.2d 714 (1947), where this court found that slot machines were gaming devices per se. The State continues by arguing that machines that offer poker or other casino games through software are designed for the purpose of promoting gambling, just like slot machines.

Alternatively, the State argues that if this court concludes that the machines were not gaming devices per se, the circuit court erred in finding that the machines were not actually used as gaming devices. The State acknowledges that its expert, Mr. Sertell, testified that viewing a nude woman on video strip poker was not a reward for gambling purposes. However, because § 5-66-104 requires a gaming device to have a purpose of "playing a game of chance, or at which any money or property may be won or lost," and because Rankin v. Mills Novelty Co., 182 Ark. 561, 562, 32 S.W.2d 161, 162 (1930), defined "property" as "any thing that is esteemed of value," one could conclude that a virtual striptease qualified as a reward for purposes of the gaming statutes.

Our standard of review is whether the circuit court's findings in the bench trial were clearly erroneous. See Sharp v. State, 350 Ark. 529, 88 S.W.3d 848 (2002). A finding is clearly erroneous when, although there is evidence to support it, the appellate court, after reviewing the entire evidence, is left with a definite and firm conviction that a mistake has been committed. Id. We review the evidence in the light most favorable to the appellee. Id.

a. Gaming Devices

Our state's Gambling Code is found at Arkansas Code Annotated §§ 5-66-101 through 5-66-119 (Repl.1997). The Code expressly requires judges to construe the statutes that prohibit gaming liberally "with a view of preventing persons from evading the penalty of the law by changing of the name or the invention of new name or devices that now are, or may hereafter be, brought into practice." Ark.Code Ann. § 5-66-101 (Repl.1997). The Gambling Code prohibits possession of gaming devices:

Every person who shall set up, keep, or exhibit any gaming table or gambling device, commonly called A.B.C., E.O., roulette, rouge et noir, or any faro bank, or any other gaming table or gambling device, or bank of the like or similar kind, or of any other description although not herein named, be the name or denomination what it may, adapted, devised, or designed for the purpose of playing any game of chance, or at which any money or property may be won or lost, shall be deemed guilty of a misdemeanor and on conviction shall be fined in any sum not less than one hundred dollars ($100) and may be imprisoned any length of time not less than thirty (30) days nor more than one (1) year. Ark.Code Ann. § 5-66-104 (Repl.1997) (emphasis added). This statute was first enacted by the General Assembly in 1837. See Revised Ark. Stat., ch. XLIV, art. III, § 1 (1837).

b. Gaming Devices per se

This court has examined several cases over the years in which it found that machines were gaming devices per se under the statute. If a machine is found to be a gaming device per se, mere possession of it is punishable under § 5-66-104. See Bell v. State, supra. One early case examined by this court involved a Baseball Mint Vender that, in exchange for one nickel, distributed mints and tokens. See Rankin v. Mills Novelty Co., supra. Upon depositing the tokens into the machine, the player could play a symbolic game of baseball. This court found that a number...