PICKAWAY COUNTY SKILLED GAMING, L.L.C., ET AL., APPELLEES, v. CORDRAY, ATTY. GEN., APPELLANT, ET AL.
No. 2009-1559
Supreme Court of Ohio
Submitted June 9, 2010—Decided October 12, 2010
[Cite as Pickaway Cty. Skilled Gaming, L.L.C. v. Cordray, 127 Ohio St.3d 104, 2010-Ohio-4908.]
{124} Costs are taxed to respondent.
Judgment accordingly.
BROWN, C.J., and PFEIFER, LUNDBERG STRATTON, O‘CONNOR, O‘DONNELL, LANZINGER, and CUPP, JJ., concur.
Willacy, LoPresti & Marcovy, Timothy A. Marcovy, and Thomas P. Marotta, for relator.
Rita R. Johnson, pro se.
{11}
{12} In this appeal, we address whether the $10 limit imposed by
{13} 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.
Relevant Background
{14} 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.
{15}
{16} Prior to 2004,
{17} 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 (accessed at the website of Governor Strickland at http://www.governor.ohio.gov). 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 also to 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.
{18} 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 Rec-
{19} 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,
{110} 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 rulemaking authority. On October 10, 2007, the Ohio House of Representatives passed Sub.H.B. No. 177, which, among other provisions, amended
{111} 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 general seeking a judgment declaring
{113} PCSG and Cline appealed the trial court‘s judgment to the Tenth District Court of Appeals, which held that the prize-value limit set forth in
{14} In light of its holding that
{15} PCSG and Cline filed a discretionary appeal from the Tenth District‘s judgment, and the attorney general filed a cross-appeal. We accepted jurisdic-
Analysis
The Equal Protection Clauses
{16} The Equal Protection Clause of the Fourteenth Amendment to the United States Constitution provides, “No State shall * * * deny to any person within its jurisdiction the equal protection of the laws.” Ohio‘s Equal Protection Clause, Section 2, Article I of the Ohio Constitution, states, “All political power is inherent in the people. Government is instituted for their equal protection and benefit * * *” “The Equal Protection Clause[s] [do] not forbid classifications. [They] simply keep[] governmental decisionmakers from treating differently persons who are in all relevant respects alike.” Burnett v. Motorists Mut. Ins. Co., 118 Ohio St.3d 493, 2008-Ohio-2751, 890 N.E.2d 307, ¶ 30, quoting Nordlinger v. Hahn (1992), 505 U.S. 1, 10, 112 S.Ct. 2326, 120 L.Ed.2d 1.
{17} The federal and Ohio equal-protection provisions are “functionally equivalent,” State v. Williams, 126 Ohio St.3d 65, 2010-Ohio-2453, 930 N.E.2d 770, ¶ 38, citing Eppley v. Tri-Valley Local School Dist. Bd. of Edn., 122 Ohio St.3d 56, 2009-Ohio-1970, 908 N.E.2d 401, ¶ 11, and State v. Thompson, 95 Ohio St.3d 264, 2002-Ohio-2124, 767 N.E.2d 251, ¶ 11, and “are to be construed and analyzed identically,” Am. Assn. of Univ. Professors, Cent. State Univ. Chapter v. Cent. State Univ. (1999), 87 Ohio St.3d 55, 60, 717 N.E.2d 286.
{18} Courts apply varying levels of scrutiny to equal-protection challenges depending on the rights at issue and the purportedly discriminatory classifications created by the law. “[A] statute that does not implicate a fundamental right or a suspect classification does not violate equal-protection principles if it is rationally related to a legitimate government interest.” Williams, 126 Ohio St.3d 65, 2010-Ohio-2453, 930 N.E.2d 770, ¶ 39, citing Eppley, 122 Ohio St.3d 56, 2009-Ohio-1970, 908 N.E.2d 401, ¶ 15. The parties do not dispute that this case does not involve a fundamental right or suspect classification3 and that rational-basis review applies.
{119} “The rational-basis test involves a two-step analysis. We must first identify a valid state interest. Second, we must determine whether the method or means by which the state has chosen to advance that interest is rational.” McCrone v. Bank One Corp., 107 Ohio St.3d 272, 2005-Ohio-6505, 839 N.E.2d 1, ¶ 9, citing Buchman v. Wayne Trace Local School Dist. Bd. of Edn. (1995), 73 Ohio St.3d 260, 267, 652 N.E.2d 952.
{20} “Under the rational-basis standard, a state has no obligation to produce evidence to sustain the rationality of a statutory classification.” Columbia Gas Transm. Corp. v. Levin, 117 Ohio St.3d 122, 2008-Ohio-511, 882 N.E.2d 400, ¶ 91, citing Am. Assn. of Univ. Professors, 87 Ohio St.3d at 58, 60, 717 N.E.2d 286. “[S]tatutes are presumed to be constitutional and * * * courts have a duty to liberally construe statutes in order to save them from constitutional infirmities.” Eppley, 122 Ohio St.3d 56, 2009-Ohio-1970, 908 N.E.2d 401, ¶ 12, citing Desenco, Inc. v. Akron (1999), 84 Ohio St.3d 535, 538, 706 N.E.2d 323. The party challenging the constitutionality of a statute “bears the burden to negate every conceivable basis that might support the legislation.” Columbia Gas Transm. Corp. at ¶ 91, citing Lyons v. Limbach (1988), 40 Ohio St.3d 92, 94, 532 N.E.2d 106.
The Prize-Value Limit Serves Legitimate Government Interests
{121}
{122} The Tenth District seized on this purpose in holding that the prize-value limit set forth in
{123} PCSG and Cline urge us to reach the same conclusion, arguing that the prize-value limit serves no purpose other than to define criminal activity. However, the Tenth District, PCSG, and Cline fail to recognize that “‘not every provision in a law must share a single objective.‘” Park Corp. v. Brook Park, 102 Ohio St.3d 166, 2004-Ohio-2237, 807 N.E.2d 913, ¶ 27, quoting Fitzgerald v. Racing Assn. of Cent. Iowa (2003), 539 U.S. 103, 109, 123 S.Ct. 2156, 156 L.Ed.2d 97. Rather, “a statute can meet its proclaimed purpose while at the same time balancing other objectives.” Id., ¶ 30.
{24} In Park Corp., Brook Park imposed different taxes upon parking fees charged by an exhibition center and fees charged by airport parking lots. The exhibition center argued that taxing its parking fees at a higher rate than the airport parking fees was not rationally related to the government‘s interest in collecting revenue from parking facilities. Id., ¶ 29. This court noted that although the city primarily imposed the taxes to create a new revenue stream, the city may have had additional objectives in imposing a lower tax rate on airport parking fees, such as ensuring continued viability of the airport lots or seeking to aid the development of the part of the city that included the airport lots. Id., ¶ 30-33.
{25} In Fitzgerald, the United States Supreme Court held that an Iowa statute that imposed different taxes on revenue from slot machines at racetracks than on revenue from slot machines on riverboats did not violate the Equal Protection Clause. The court noted that the riverboat tax could have served multiple objectives in addition to raising tax revenue—for example, encouraging the economic development of river communities or providing incentives for riverboats to stay in the state rather than relocate to other states. 539 U.S. 103, 109, 123 S.Ct. 2156, 156 L.Ed.2d 97. The court stated that “[o]nce one realizes that not every provision in a law must share a single objective, one has no difficulty finding the necessary rational support for [the different tax rates]“.
{126} The fact that one purpose of
{127} First, the attorney general argues that the prize-value limit serves as an economic regulation of skill-based amusement machines. The state plainly has a
{128} Second, the attorney general contends that the prize-value limit protects against criminal acts and enterprises by acting as a prophylactic measure against illegal chance-based gambling. Courts have long recognized that state legislatures have a legitimate interest in regulating gambling. “The suppression of gambling is concededly within the police powers of a State, and legislation prohibiting it, or acts which may tend to facilitate it, will not be interfered with by the court unless such legislation be a ‘clear, unmistakable infringement of rights secured by the fundamental law.‘” Ah Sin v. Wittman (1905), 198 U.S. 500, 505-506, 25 S.Ct. 756, 49 L.Ed. 1142, quoting Booth v. Illinois (1902), 184 U.S. 425, 429, 22 S.Ct. 425, 46 L.Ed. 623. See also State v. Posey (1988), 40 Ohio St.3d 420, 426, 534 N.E.2d 61 (noting that the state has a legitimate interest in regulating gambling and in permitting certain gambling activities for charitable purposes).
{129} Accordingly, the prize-value limit set forth in
The Prize-Value Limit Is Rationally Related to the Government Interests
{130} Having determined that
{131} “Legislative enactments that do not involve a suspect classification are ‘presumptively rationally related to legitimate social and economic goals, unless the “varying treatment of different groups or persons is so unrelated to the achievement of any combination of legitimate purposes that we can only conclude that the legislature‘s actions were irrational.“‘” McCrone, 107 Ohio St.3d 272, 2005-Ohio-6505, 839 N.E.2d 1, at ¶ 30, quoting State ex rel. Doersam v. Indus. Comm. (1988), 40 Ohio St.3d 201, 203, 533 N.E.2d 321, quoting Vance v. Bradley (1979), 440 U.S. 93, 97, 99 S.Ct. 939, 59 L.Ed.2d 171. In other words, “[a] statute will not be held to violate the Equal Protection Clause, and this court will not invalidate a plan of classification adopted by the General Assembly, unless it is clearly arbitrary and unreasonable.” Id., ¶ 9.
{132} “Ohio courts grant substantial deference to the legislature when conducting an equal-protection rational-basis review.” Williams, 126 Ohio St.3d 65, 2010-Ohio-2453, 930 N.E.2d 770, ¶ 40, citing State v. Williams (2000), 88 Ohio St.3d 513, 531, 728 N.E.2d 342. “[A] legislative choice is not subject to courtroom factfinding and may be based on rational speculation unsupported by evidence or empirical data.” Am. Assn. of Univ. Professors, 87 Ohio St.3d 55, 58, 717 N.E.2d 286, quoting Fed. Communications Comm. v. Beach Communications, Inc. (1993), 508 U.S. 307, 315, 113 S.Ct. 2096, 124 L.Ed.2d 211. “Furthermore, ‘courts are compelled under rational-basis review to accept a legislature‘s generalizations even when there is an imperfect fit between means and ends. A classification does not fail rational-basis review because “it is not made with mathematical nicety or because in practice it results in some inequality.“‘” Id., quoting Heller v. Doe (1993), 509 U.S. 312, 321, 113 S.Ct. 2637, 125 L.Ed.2d 257, quoting Lindsley v. Natural Carbonic Gas Co. (1911), 220 U.S. 61, 78, 31 S.Ct. 337, 55 L.Ed. 369. “[O]ur role is not to cross-check the General Assembly‘s findings to ensure that we would agree with its conclusions.” Eppley, 122 Ohio St.3d 56, 2009-Ohio-1970, 908 N.E.2d 401, ¶ 17, citing Arbino v. Johnson & Johnson, 116 Ohio St.3d 468, 2007-Ohio-6948, 880 N.E.2d 420, ¶ 58.
{133} Applying this highly deferential standard, as we must, we hold that the $10 prize-value limit is rationally related to the state‘s legitimate interests in regulating its economies and in preventing criminal acts and enterprises as a prophylactic measure against illegal chance-based gambling.
{134} The analysis would not be complete without addressing the position put forth by the Ohio Coin Machine Association (“OCMA“) in their amicus curiae brief. OCMA argues that decisions by three other state supreme courts are instructive because each held that laws related to coin-operated games of skill violated state and federal equal-protection clauses. Ragland v. Forsythe (1984), 282 Ark. 43, 666 S.W.2d 680; State v. Bloss (1980), 62 Haw. 147, 613 P.2d 354; Cossack v. Los Angeles (1974), 11 Cal.3d 726, 114 Cal.Rptr. 460, 523 P.2d 260.
{135} In Bloss, the Supreme Court of Hawai‘i held that a law that prohibited minors from playing or loitering near pinball machines violated the state and federal Equal Protection Clauses. 62 Haw. at 157-158, 613 P.2d 354. The court held that the law was not rationally related to the legislative purposes of (1) protecting young people from harmful influences or (2) preventing young people from spending their lunch money on coin-operated amusement devices. Id. at 156-157. Bloss involved an antiquated law that had been written when pinball machines did not have flippers and were games of chance, not skill, and before electronic videoscreen amusement games existed. Although singling out pinball machines may have served a legitimate interest when the law was enacted, the Hawai‘i court held that, particularly in light of the development of electronic video games that were not prohibited under the law, it no longer served such an interest and, therefore, it had no reasonable relationship to the harm that it
{136} The same is true of Cossack, in which the Supreme Court of California considered the constitutionality of an ordinance that prohibited the operation of certain types of gaming machines. The plaintiffs sought to operate games of skill that fit within the technical definition of the games that had been prohibited by the ordinance. However, the court concluded that because the ordinance was enacted when the machines in question were games of chance, it was intended to prohibit only games of chance. 11 Cal.3d at 734, 114 Cal.Rptr. 460, 523 P.2d 260. Because the machines had evolved into games of skill, the court held that the ordinance was not intended to prohibit their operation. Id. However, the court stated that if the ordinance was intended to prohibit games of skill, it would violate the state and federal Equal Protection Clauses because it would result in an arbitrary distinction between the prohibited games of skill and other permissible games of skill. Id. As with Bloss, this case does not address the value of prizes awarded for playing the machines and does not reach the issue before this court.
{137} Lastly, Ragland did not involve regulation of skill-based games and is, therefore, not instructive. In Ragland, the Arkansas Supreme Court held that a law that allowed only Arkansas residents to own coin-operated amusement machines had no rational relationship to a valid state interest. 282 Ark. at 46, 666 S.W.2d 680.
{138} The cases cited by OCMA are inapposite. They do not relate to the prize-value issue in this case. Therefore, we turn to whether the prize-value limit set forth in
{139} First, the $10 prize-value limit set forth in
{140} PCSG, Cline, and OCMA argue that the $10 prize-value limit is not rationally related to the state‘s interest, because it does not eliminate the lure of big prizes. Because the limit is based on each play, and
{141} “[I]n the local economic sphere, it is only the invidious discrimination, the wholly arbitrary act, which cannot stand consistently with the Fourteenth Amendment.” Dukes, 427 U.S. at 303-304, 96 S.Ct. 2513, 49 L.Ed.2d 511, citing Ferguson v. Skrupa (1963), 372 U.S. 726, 732, 83 S.Ct. 1028, 10 L.Ed.2d 93. “A legislative body may direct its legislation against any evil as it actually exists, without covering the whole field of possible abuses, and it may do so none the less that the forbidden act does not differ in kind from those that are not forbidden. ” Benjamin v. Columbus (1957), 167 Ohio St. 103, 117, 4 O.O.2d 113, 146 N.E.2d 854, quoting Xenia v. Schmidt (1920), 101 Ohio St. 437, 130 N.E. 24, paragraph nine of the syllabus. “The “task of classifying persons for * * * benefits * * * inevitably requires that some persons who have an almost equally strong claim to favored treatment be placed on different sides of the line,” and the fact the line might have been drawn differently at some points is a matter for legislative, rather than judicial consideration.” Fitzgerald, 539 U.S. at 108, 123 S.Ct. 2156, 156 L.Ed.2d 97, quoting United States RR. Retirement Bd. v. Fritz (1980), 449 U.S. 166, 179, 101 S.Ct. 453, 66 L.Ed.2d 368, quoting Mathews v. Diaz (1976), 426 U.S. 67, 83, 96 S.Ct. 1883, 48 L.Ed.2d 478.
{142} PCSG and Cline have the burden to negate every conceivable basis that might support the prize-value limit set forth in
{143} We agree with PCSG, Cline, and OCMA that the prize-value limit does not eliminate every possibility that individuals might play skill-based amusement machines in order to accumulate vouchers and redeem them for large prizes or that individuals may become addicted to such games. However, it need not do so in order to pass rational-basis review. The prize-value limit eliminates the possibility that an individual might receive a large prize after a few plays on a skill-based amusement machine. Because of the limit, individuals must play these games many times in order to accumulate enough vouchers to obtain valuable prizes—and the more valuable the prizes, the more times individuals must play the games. Moreover, based on the $10 limit and the value of the prize they want, players can estimate the minimum number of plays that will be necessary to accumulate enough redeemable vouchers to obtain the prize. Therefore, the prize-value limit may dissuade players from spending excessive amounts of money playing skill-based amusement machines hoping to win an expensive prize. The limit is not so unrelated to the state‘s interest in establishing
{144} OCMA also contends that the prize-value limit is not rationally related to a state interest because the General Assembly simply “rubberstamped the ten-dollar figure which was apparently pulled out of thin air by the Governor and/or Attorney General.”4 As explained above, in enacting the prize-value limit, the legislature sought to eliminate the lure of big prizes and to prevent individuals from overspending when playing skill-based amusement machines. In doing so, the legislature selected a nominal prize-value limit that was reasonably calculated to achieve this purpose. A legislative enactment may be based on rational speculation and need not be supported by evidence or empirical data. Am. Assn. of Univ. Professors, 87 Ohio St.3d at 58, 717 N.E.2d 286. Accordingly, although the attorney general does not explain why the legislature chose the $10 figure as opposed to a different prize value, the $10 limit is rationally related to the government‘s interest in eliminating the lure of expensive prizes and protecting the public from overspending while playing skill-based amusement machines.
{145} The prize-value limit is also rationally related to the government‘s interest in preventing criminal acts and enterprises by acting as a prophylactic measure against illegal, chance-based gambling. “The suppression of gambling is concededly within the police powers of a state, and legislation prohibiting it, or acts which may tend to facilitate it, will not be interfered with by the court unless such legislation be a ‘clear, unmistakable infringement of rights secured by the fundamental law.‘” Ah Sin, 198 U.S. at 505-506, 25 S.Ct. 756, 49 L.Ed. 1142, quoting Booth v. Illinois (1902), 184 U.S. 425, 429, 22 S.Ct. 425, 46 L.Ed. 623.
{146} PCSG and Cline again do not meet their burden of negating any possible rational relationship between the prize-value limit and the government‘s interest in suppressing illegal chance-based gambling. Motivated by financial gain, operators of illegal chance-based amusement machines can easily alter games of chance to appear to be games of skill. Financial motivation may come from charging more to play illegal games of chance or from individuals who overspend in hopes of winning big prizes. As we explained above, the $10 prize-value limit is designed to eliminate the latter motivation. Furthermore, it stands
{147} OCMA argues that because chance-based machines are banned by the statute, except under certain conditions, any prophylactic benefit served by the prize-value limit in preventing operators from altering games of skill to include elements of chance is superfluous and overstated. However, as far back as 1939, this court acknowledged that “[e]ven if the slot machine * * * is manufactured and intended for lawful operation, its potentiality and design is such that it may be easily put to unlawful use. The regulation or prohibition of such a mechanism need not be postponed until such event occurs.” Kraus v. Cleveland (1939), 135 Ohio St. 43, 47, 13 O.O. 323, 19 N.E.2d 159.
{148} The same is true of skill-based amusement machines. In issuing Executive Order 2007-28S, Governor Strickland recognized that chance-based machines can be altered easily to make them appear to be skill-based amusement machines and that the state has been unsuccessful in limiting the proliferation of illegal gambling machines masquerading as skill-based amusement machines. Executive Order 2007-28S at ¶ 3. Because the prize-value limit set forth in
Conclusion
{149} We hold that the prize-value limit set forth in
Judgment reversed and cause remanded.
PRESTON, LUNDBERG STRATTON, O‘CONNOR, O‘DONNELL, LANZINGER, and CUPP, JJ., concur.
VERNON L. PRESTON, J., of the Third Appellate District, sitting for BROWN, C.J.
Butler, Cincione & DiCuccio, Gail M. Zalimeni, N. Gerald DiCuccio, and Alphonse P. Cincione, 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, urging affirmance for amicus curiae, Ohio Coin Machine Association.