Ruling on Ohio’s dollar limits on skilled-based arcade games

November 12, 2010

I follow the legal happenings of the amusement industry as part of another blog I write. I find it useful to set up a Westclip as a way of monitoring recent opinions issued in the amusement industry area.  Based on the number of type of results I received over the past 9 years, I have tweaked my Westclip on several occasions to add new concepts to my search.

Recently, my Westclip informed me of the case of Pickaway County Skilled Gaming, L.L.C. v. Cordray 2010 WL 3972575 (Ohio 2010), in which the Ohio Supreme Court reviewed Ohio Statutes R.C. 2915.02(A)(2) and R.C. 2915.01 (AAA)(1) when an operator of a members-only amusement game arcade that handed out cash prizes to players challenged the $10 prize limit for each play on its machines, arguing that the limit was not rationally related to determining whether amusement machines are based on skill or on chance which violated the Equal Protection Clause of the United States and Ohio constitutions.  R.C. 2915.02(A)(2) states that no person shall “[e]stablish, promote, or operate or knowingly engage in conduct that facilitates * * * any scheme of chance.” R.C. 2915.01(C) defines “scheme of chance”; the subsection specifically states that a “scheme of chance” does not include a skill-based amusement machine. These types of machines range from games (e.g., Skee-ball and Whack-a-Mole) commonly found at fair and amusement-park midways and in family fun centers to more sophisticated skill-based games found in the members-only arcade that was involved in this case.

In response to a documented “increase in the number of illegal gambling machines around the State of Ohio,” Ohio Governor Ted Strickland issued Executive Order 2007-28S on August 22, 2007.  Through this 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.  Shortly thereafter, the Ohio Attorney General closed Pickaway County Skilled Gaming (“Pickaway”) in violation of the new rule and Pickaway challenged the rule and requested an injunction.  While the challenge was pending, the Ohio House of Representatives passed Sub.H.B. No. 177, which, among other provisions, amended R.C. 2915.01(AAA). The bill incorporated into the statute much of the language defining “skill-based amusement machines” that had been set forth in Ohio Adm.Code 109:4-3-31, including the ten-dollar prize-value limit.  Now the Ohio Attorney General defends the statute saying that the limit is rationally related to two legitimate government interests: (1) establishing economic regulations governing the operation of skill-based amusement machines and (2) protecting against criminal acts and enterprises as a prophylactic measure against illegal gambling.

The Ohio Supreme Court agreed with the Attorney General.  According to the Court, “[t]he 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.  The Court agreed that R.C. 2915.01 does help protect two valid government interests and “[u]nder 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, Cent. State Univ. Chapter, 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.

So how does one cope to have games within the statutory limits but offer big prizes?  As Pickaway stated in the case, because the dollar limit is based on each play, and R.C. 2915.01(AAA)(1) does not limit the number of times an individual can play a skill-based amusement machine, players can amass endless vouchers and redeem them for valuable prizes.