Slot machines in Florida? Wait a minute.

• Author: Shields, David G.
• Position: Cover story

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Casino gambling, including its predominant activity --slot machines--has been the subject of considerable debate in the Florida Legislature. But does the legislature have the constitutional authority to permit slot machines throughout Florida? There would seem to be a direct answer to this question from a 1970 Florida Supreme Court case that explicitly confirmed Fla. Const. art. X, [section] 7 (1968) bans slot machines:

Obviously, the makers of our 1968 Constitution recognized horse racing as a type of lottery and a "pari-mutuel pool" but also intended to include in its sanction those other lotteries then legally functioning; namely, dog racing, jai alai and bingo. All other lotteries including bolito, cuba, slot machines, etc., were prohibited. (1)

Greater Loretta Imp. Ass'n v. State ex rel Boone, 234 So. 2d 665 (Fla. 1970), holds slot machines constitute lotteries and they are prohibited under the 1968 Constitution. A 2004 constitutional amendment, art. X, [section] 23, allows for some slot machines, but only in Broward and Miami-Dade counties and only under certain conditions.

On October 6, 2011, the First District Court of Appeal, without addressing either art. X, [section] 7 or Greater Loretta, ruled in Florida Gaming Ctrs., Inc. v. Florida Dept. of Bus. & Profl Reg., 71 So. 3d 226 (Fla. 1st DCA 2011), that the legislature has the authority to expand slot machine gambling beyond the facilities in Broward and Miami-Dade counties meeting the criteria of art. X, [section] 23. There would appear to be a serious conflict between Greater Loretta and Florida Gaming, which this article aims to address.

Two Constitutions, Two Different Anti-lottery Provisions

Florida's constitutions have prohibited lotteries since shortly after the Civil War, but the anti-lottery provision of the 1968 Constitution is significantly different from its predecessors. This difference is crucial to the discussion that follows and, thus, it is important to place these provisions side-by-side. Fla. Const. art. III, [section] 23 (1885) reads: "Lotteries are hereby prohibited in this [s]tate." (2) Fla. Const. art. X, [section] 7 (1968) reads: "Lotteries.--Lotteries, other than the types of pari-mutuel pools authorized by law as of the effective date of this constitution, are hereby prohibited in this state."

According to Greater Loretta, the 1885 provision prohibited lotteries without providing any definition of a lottery, allowing the legislature leeway in applying the term statutorily. (3) In contrast, the 1968 Constitution 1) provides lotteries are inclusive of pari-mutuel pools; 2) grandfathers lawfully existing pari-mutuel pools in 1968; and 3) bans pari-mutuel pools, including slot machines, which were not lawfully existing in 1968. (4)

The new phrase in the 1968 Constitution concerning pari-mutuel pools necessarily expanded the constitutional definition of lotteries to include pari-mutuel pools. Otherwise, the new phrase would be superfluous; the phrase would exclude something already excluded in the term "lotteries." As explained in Unrah v. State, 669 So. 2d 242, 245 (Fla. 1996), courts should avoid readings that would render part of a statute meaningless and related provisions of a statute must be construed in harmony with one another.

Greater Loretta defines "pari-mutuel pool" as a system of betting in which those who bet on the winner share the total stakes minus a small percent for the management. (5) Under this definition, slot machines operate as pari-mutuel pools. Patrons insert their coins or pay for other means to access the machines, management keeps its percentage of the take, and the balance is paid to the winning patrons.

The legislative history for art. X, [section] 7 confirms legislative intent to ban the introduction of new types of pari-mutuel pools after 1968. A 1940 amendment to the Florida Constitution providing for the distribution of tax collections from pari-mutuel pools had authorized the pari-mutuel pools that existed in 1968. (6) To resolve the apparent disparity between the anti-lottery provision and the tax distribution provision consistently with the status quo, the anti-lottery provision as originally drafted by the Constitutional Revision Commission and introduced in the Florida Senate on January 9, 1967, provided: "All lotteries are prohibited other than pari-mutuel pools regulated by law." (7) This language would have allowed the legislature continued blanket authority to legalize any new type of pari-mutuel it wanted by statute, but this provision did not make it into the 1968 Constitution. The source of most of the new anti-lottery language in the 1968 Constitution was a floor amendment adopted in the Florida Senate on August 31, 1967. (8) On this same day, the Florida Senate rejected another amendment that would have provided: "Lotteries, other than parimutuel pools regulated by law, are hereby prohibited in this state." (9) The Florida Senate specifically rejected language that would have continued to allow the legislature to authorize new types of pari-mutuel pools after 1968 and deliberately chose language that had the opposite effect.

The significant differences between the two constitutional anti-lottery provisions mean that cases interpreting the 1885 provision should be used with great caution when interpreting the 1968 provision. One cannot reasonably apply a pre-1968 lottery case today without giving serious consideration to the possibility that the old case is distinguishable or even overruled by the new provision. An examination of these pre-1968 cases follows.

Slot Machines and Lotteries Under the 1885 Florida Constitution

The constitutional story of slot machines in Florida began with a statute authorizing these machines in 1935. (10) Shortly after passage, the city of Miami brought a constitutional challenge to the slot machine statute under the anti-lottery provision of the 1885 Florida Constitution. The trial court ruled in favor of the city and the named defendant, J.M. Lee as comptroller of Florida, appealed. (11)

Twice prior to 1935, the Florida Supreme Court held that a lottery consists of three elements: prize, chance, and consideration. As early as 1898, the Florida Supreme Court viewed lotteries as limited to these three elements, as reflected in the jury instruction the court approved in Bueno v. State, 23 So. 862, 863 (Fla. 1898). The Florida Supreme Court also approved Bueno's definition of a lottery and the three elements in D'Alessandro v. State, 153 So. 95 (Fla. 1934).

In Lee, the Florida Supreme Court deviated from the three-element test for a lottery and added a fourth element: The lottery must have a widespread and not an isolated effect on the community where it is located. (12) According to Lee, if the purported lottery lacked a widespread operation in the community, then it lacked the fourth element and was not a lottery. (13)

Lee's widespread operation test is loosely based on Phalen v. Virginia, 49 U.S. 163 (1850). (14) The issue in Phalen was whether legislative changes concerning the administration of a Virginia lottery statute violated the federal constitutional prohibition against impairment of contracts. (15) Phalen discussed the supposed widespread effect of the lottery to confirm Virginia's public policy reason to modify and ultimately repeal its lottery statute and avoid the impairment of contract challenge. (16) There is no indication that Phalen was attempting to make it more difficult for states to prohibit lotteries or to create a safe harbor for non-widespread lotteries. Lee did not apply the legal analysis of Phalen to the operation of Florida's constitutional anti-lottery prohibition, but superimposed Phalen's factual description of Virginia's lottery into a collective state of mind of what Floridians supposedly meant in adopting the anti-lottery provision. Lee's mind reading exercise is an example of a legal...