In a blow to the gambling industry and slot-machine lovers everywhere, the Fort Worth Court of Appeals has ruled that eight-liner machines are unconstitutional under Art. III, § 47, which affirmatively requires the Legislature to pass laws prohibiting lotteries. If upheld by the Texas Supreme Court, the ruling means that voters will have to approve a constitutional amendment to authorize eight-liners (and perhaps other games of chance), as they have for charitable bingo, charitable raffles, and, of course, the state lottery. Prospects of doing that any time soon appear dim at best.
The case, The City of Fort Worth and David Cooke, in his Official Capacity as Fort Worth City Manager v. Stephannie Lynn Rylie, Texas C&D Amusements, Inc., and Brian and Lisa Scott d/b/a TSCA and d/b/a River Bottom Pub (No. 02-17-00185-CV), has been kicking around in the Texas court system for a good while. In 2014 the Fort Worth City Council enacted two ordinances regulating and taxing game rooms. The operators brought a declaratory action against the city, seeking a declaration that various provisions of the Texas Occupations Code and Texas Alcoholic Beverage Code pre-empted the ordinances, which regulate coin-operated machines. The city counterclaimed that the so-called “fuzzy animal exemption,” § 47.01, Penal Code (enacted 1995), which the operators relied on, constituted an unconstitutional “end run” around Art. III, § 47. The trial court ruled largely in favor of the operators and held that the fuzzy-animal exemption was constitutional. The court of appeals affirmed in part and reversed in part, but limited its holding to the pre-emption issues. On appeal to SCOTX, the high court sent the case back with instructions to determine whether the operators’ machines are constitutional or legal (see City of Fort Worth v. Rylie (Rylie II), 602 S.W.3d 459 (Tex. 2020), rev’g (Rylie I), 563 S.W.3d 346 (Tex. Civ. App.—Fort Worth 2018).
On remand, in an opinion by Justice Kerr, the court of appeals poured out the operators. The court’s analysis commenced with the history of Art. III, § 47, which first appeared in the 1845 Texas Constitution and has remained ever since. As the court is bound to construe constitutional provisions according to its plain language, “while striving to give [them] the effect their makers and adopters intended,” the court looked to the “words as they are generally understood.” In 1876, the date of adoption of the current constitutional provision, the term “lottery” was “understood to involve the elements of chance, consideration, and prize.” The court’s historical analysis and review of case precedent confirmed this. Having defined the term as it appears on the constitution, the court turned to the operators’ argument that the Legislature had the authority to define “lottery” within reasonable limitations, since the constitution does not do so. The court flatly rejected this argument, holding that the Legislature has no power to “statutorily remove from the definition of ‘lottery’ a game which inarguably conforms to the constitutional meaning of ‘lottery.’”
The court likewise brushed off the operators’ arguments that the three elements of a lottery—chance, consideration, and prize—are alone insufficient (though they did not offer any additional elements that might get eight-liners out from under the constitutional definition) and that when the Legislature and voters approved charitable bingo in 1980, they somehow approved eight-liners because the constitutional amendment deleted previous language about prohibiting lottery “evasions.” This doesn’t make any more sense in my description than it does in the opinion, and the court of appeals treated it as such.
Given the amount of money invested in eight-liner machines around the state, we expect another appeal to SCOTX. But to us, the court of appeals’ opinion seems solid and irrefutable. For years the industry has tried to get the Legislature to give its blessing to eight-liners, either statutorily or through a constitutional amendment. The court of appeals’ decision, if upheld, reduces the options to one: the voters will get the final say.