People Ex Rel. Lockyer v. Pacific Gaming Technologies

98 Cal. Rptr. 2d 400, 82 Cal. App. 4th 699, 2000 Cal. Daily Op. Serv. 6287, 2000 Daily Journal DAR 8303, 2000 Cal. App. LEXIS 595

• Court: California Court of Appeal
• Decided: July 27, 2000
• Docket: B134202
• Status: Published

Opinions

Opinion

VOGEL (Miriam A.), J.

Pacific Gaming Technologies (PGT) places VendaTel vending machines in bus stations, truck stops, and other places where people are likely to buy prepaid telephone calling cards. Unlike ordinary vending machines, the VendaTel has a “sweepstakes” feature that pays out money. The VendaTel looks like a slot machine. It acts like a slot machine. It sounds like a slot machine. The trial court nevertheless said that it is not a slot machine. In our view, if it looks like a duck, walks like a duck, and sounds like a duck, it is a duck.¹ And so it is with this duck. We reverse.

Facts

PGT has marketed its telephone card vending machines in other parts of the country. In 1997, when it decided to market the VendaTel in California, PGT knew there might be a problem and voluntarily contacted the Attorney General (who represents the Division of Gambling Control of the Department of Justice). On August 26, 1998, representatives of the Attorney General’s office inspected the VendaTel. On August 31, the Attorney General filed this action for declaratory and injunctive relief, asking for a determination that the VendaTel is an illegal gambling device and slot machine within the meaning of sections 330a, 330b, and 330.1 of the Penal Code.² PGT answered, and both parties thereafter moved for summary judgment.³ The undisputed evidence shows that:

— The VendaTel is a large freestanding metallic box (about the same size as a slot machine) with a large video display monitor. A computer inside each VendaTel operates the machine.

— At the top of the video display monitor, the user is informed, “This is not a gaming device” and, below that, “$ Discounts $ Pre-Paid Phone Calls.” The word “Sweepstakes” is prominently displayed, with an explanation that each user has the opportunity to win a cash prize of $1 to $100. When not in use, the screen displays a large, flashing $100 bill. Sweepstakes rules are posted on the side of the VendaTel (e.g., no purchase is necessary, users must be 18 years of age or older). A preset computer program determines the results of the sweepstakes. The user cannot control the results.⁴

— To operate a VendaTel, the user inserts a bill ($1, $5 or $10) into the machine’s bill acceptor, then (once for each dollar inserted) pushes a red button located on a control panel below the video display monitor. There is another button that offers instructions in Spanish.

— The VendaTel responds with audio and visual displays. The audio sounds like a slot machine. The screen shows three animated spinning reels with depictions of United States currency (in denominations ranging from $1 to $100). The bills spin in the same manner that fruit and other things spin on slot machines. When the reels stop spinning, the user wins the “sweepstakes” if three identical bills are aligned. If the user wins, the machine announces, “You’ve just won 10 bucks” (or whatever the amount may be). The cash prize is the amount of the aligned bills (e.g., if the three $100 bills are aligned, the prize is $100). Win or lose, the user receives a ticket for each dollar inserted. The top part of the ticket shows the result of the “sweepstakes” (and may be redeemed at the business where the machine is located). The bottom part of the ticket is the telephone calling card (in the form of a personal identification number which may be used to place one call for up to five minutes of prepaid telephone time anywhere in the United States). If the user has inserted more than $1, the screen flashes, “Press Button to Spin Again!”

— All users who insert money into the VendaTel are eligible to win a cash prize. Conversely, a user may enter the sweepstakes without purchasing a telephone card. To do so, the user fills in and mails a postcard provided for that purpose. When PGT receives the postcard, a free opportunity is exercised on the user’s behalf (at a “dedicated” VendaTel). If the user wins the sweepstakes, PGT mails a check to the user.

On this evidence and on a demonstration of the VendaTel conducted in the courtroom, the trial court held that the VendaTel is not a slot machine, lottery or other controlled game. The State’s motion was denied, PGT’s motion was granted, and a judgment was entered in favor of PGT. The State appeals.⁵

Discussion

The State contends the VendaTel contains “the elements of a slot machine.” We agree, and therefore do not consider the parties’ other arguments.

Subdivision (1) of section 330b makes it illegal to possess (or do anything with) a slot machine. Subdivision (2) of section 330b defines a slot machine as any device “that is adapted . . . for use in such a way that, as a result of the insertion of any piece of money or coin or other object, . . . such machine or device is caused to operate or may be operated, and by reason of any element of hazard or chance or of other outcome of such operation unpredictable by him, the user may receive or become entitled to receive any piece of money ... or thing of value . . . which may be exchanged for any money ... or which may be given in trade, irrespective of whether it may, apart from any element of hazard or chance or unpredictable outcome of such operation, also sell, deliver or present some merchandise, indication of weight, entertainment or other thing of value.” Subdivision (4) of section 330b exempts pinball and other “amusement machines” that are “predominantly games of skill.”⁶

Given the plain language of section 330b, it is clear that the VendaTel is a slot machine. By the insertion of money and purely by chance (without any skill whatsoever), the user may receive or become entitled to receive money. To avoid this conclusion, PGT points to section 330.5 and claims an exemption. PGT’s reliance on section 330.5 is misplaced.

Section 330.5 provides, as relevant, that “Sections 330.1 to 330.4, inclusive, . . . shall not apply to music machines, weighing machines and machines which vend cigarettes, candy, ice cream, food, confections or other merchandise, in which there is deposited an exact consideration and from which in every case the customer obtains that which he purchases . . . (Italics added.) PGT says that it fits within the exemption because the VendaTel dispenses a five-minute phone card for every dollar inserted. This argument begs the question. Since the machine also dispenses a chance to win the sweepstakes, it gives more than the merchandise—which means the sum deposited is not the “exact consideration” for the telephone card.⁷ (Merandette v. City and County of San Francisco (1979) 88 Cal.App.3d 105, 113-114 [151 Cal.Rptr. 580] [a reward of extended play is a “thing of value” within the meaning of the slot machine statutory scheme].)

As the Third District explained in Trinkle v. Stroh, supra, 60 Cal.App.4th 771, section 330.5 means what it says. Although the vending machine in Trinkle dispensed music and prizes instead of telephone calling cards and prizes, the case is otherwise indistinguishable from the one now before us, and the rules announced there quite clearly apply here. These were the facts in Trinkle: John Trinkle and others owned vending and amusement machines, including “Match 5 Jukeboxes” that they rented to business establishments. After six of the Match 5 machines were seized by the Department of Alcoholic Beverage Control (ABC), the owners sued to recover the machines, alleging that no criminal prosecutions had been filed and that the machines were not gaming devices. (60 Cal.App.4th at pp. 774-775.) The trial court held that the Match 5 Jukeboxes were illegal slot machines. The Court of Appeal agreed.

Each Match 5 Jukebox consisted of a standard jukebox with a “Match 5” device attached to the top. “The front panel of the Match 5 device contained thirty colored lights, five each of six different colors. Players deposited $1 into a bill validator or coin slot in the jukebox (not in the Match 5 device) and selected four songs to be played. These machines would not operate if less than $1 was deposited. Before each song was played, the lights on the Match 5 device randomly flashed and then stopped, with five of the lights remaining lit. If all five remaining lights were the same color, the player who chose the song won a money jackpot, which was displayed on the front of the Match 5 device. The jackpot was increased by 5 cents for each 25 cents deposited into the machine. The jackpot came out of [Trinkle’s] proceeds but was paid out by a bartender or clerk.” (Trinkle v. Stroh, supra, 60 Cal.App.4th at pp. 775-776.)

The owners insisted that their Match 5 Jukebox was exempt under section 330.5 “because in every case the customer gets what he or she pays for—songs.” (Trinkle v. Stroh, supra, 60 Cal.App.4th at p. 781.) The ABC, in turn, said the customers did not get what they paid for “ ‘in every case,’ because some customers g[o]t more than what they paid for—the jackpot.” (Id. at p. 782.) Trinkle agreed with the ABC, adopting the trial court’s finding that, “ ‘once the elements of chance and prize are added to a vending machine, the consideration paid from the player-purchaser’s perspective is no longer solely for the product.’ ” (Ibid.) Put another way, “[a]n otherwise illegal machine does not become legal merely because it plays music, gives a person’s weight, vends food, etc.” (Ibid.)

The Match 5 Jukebox, said the court, was simply an “ ‘attempt to circumvent the gaming laws by adding the element of chance and prize to a vending machine. Once the element of chance is added, people are no longer paying just for the product regardless of the value given that product by the vender. From the perspective of the [Match 5 Jukebox] player-purchases, they may be paying for both the songs and the chance at winning. Indeed, many players may care little about the songs. Their main focus may be the game. This is particularly true when the machine requires that four songs be selected. The potential cash payoff may be more attractive than the four songs one is forced to select.’ ” (Trinkle v. Stroh, supra, 60 Cal.App.4th at p. 782.)

According to Trinkle, “section 330.5 states on its face that it is ‘expressly’ providing certain machines are not illegal. Thus, it is expressly providing what is implicit in other statutes. That the legality of such machines may be implicit in sections 330b and 330.1 (by virtue of the machines not meeting the definition of illegal machines) does not prevent the Legislature from expressly stating in a separate statute what is implicit in the defining statute.” (Trinkle v. Stroh, supra, 60 Cal.App.4th at p. 782.) The court rejected the owners’ contention that the exemption was intended to apply unless the machine gave back something of lesser value than the consideration paid (e.g., if the machine took a dollar and gave back a roll of mints worth only a dime, plus a chance to win a game). When the owners claimed the songs were worth the full amount deposited, the court explained that their position “in effect would impose a qualification on the statutes which is not apparent from the language of sections 330b and 330.1—the qualification that the value of the item sold equate exactly with the amount deposited. This would burden the courts with making economic decisions. Had the Legislature intended such a qualification, it could have and would have said so.” (Trinkle v. Stroh, supra, 60 Cal.App.4th at p. 783.)

We are not impressed with PGT’s efforts to avoid the rules announced in Trinkle. PGT says “the trial court in Trinkle found that many players were attracted to the potential cash payoff and cared little about the four songs they were compelled to purchase,” but that “the Attorney General presented no similar evidence with regard to PGT’s telephone card vending machine, nor may any such inference be drawn from the manner in which the machine dispenses the telephone cards.” There is nothing in the opinion in Trinkle to suggest that “evidence” on that point was presented to the trial court, only the logical inference that there, as here, any reasonable person looking at the machine would recognize its true purpose and the probable intent of its users. PGT says that its machine, unlike the Match 5 Jukebox, does not increase the payoff with each use or automatically connect a chance at a prize with the sale of a product. So what? With or without those features, the VendaTel meets the statutory definition of an illegal slot machine (§§ 330b, 330.1) and fails to qualify for the exemption (§ 330.5).

The problem with our dissenting colleague’s attack on Trinkle is that it suffers from the same flaw he finds in Trinkle. Either way, we must resort to implication. Trinkle notes that section 330.5 “ ‘expressly’ ” provides that certain machines are not illegal, then explains that, although the legality of such machines may be implicit in sections 330b and 330.1 (by virtue of the machines not meeting the definition of illegal machines), this “does not prevent the Legislature from expressly stating in a separate statute what it is implicit in the defining statute.” (Trinkle v. Stroh, supra, 60 Cal.App.4th at p. 782.) By this implication, Trinkle gives meaning to all three sections (330b, 330.1, and 330.5). By its implication, the dissent rejects Trinkle’s commonsense approach and urges a result that would legalize the use of a machine the Legislature quite plainly intended to prohibit. We find this result strained and unnecessary since, as the dissent concedes, “[n]either section 330.1 nor 330b mention[] ordinary vending machines.” (Dis. opn., post, p. 714.) As did Trinkle, the dissent resorts to implication: “By implication, . . . ordinary vending machines are not illegal because they provide no element of chance. Under sections 330b and 330.1, unless the vending machine can be adapted or readily converted into a slot machine, it is not illegal.” (Dis. opn., post, p. 714.) Of course, the dissent also ignores the fact that the VendaTel is a vending machine that does provide an element of chance—if it isn’t chance, what is it that determines whether the customer wins $100 for his $1?

Since the undisputed evidence establishes that the user of a VendaTel (whom PGT usually calls a “customer” but sometimes slips and calls a “player”), without any skill whatsoever but rather as the result of an element of chance obtained by the insertion of money, may become entitled to receive prize money in addition to the telephone calling card, and thereby receives more than the amount of consideration paid, the trial court’s decision is plainly wrong. The State’s motion should have been granted, PGT’s motion denied. (§§ 330b, 330.1, 330.5; Hotel Employees & Restaurant Employees Internal Union v. Davis (1999) 21 Cal.4th 585, 593 [88 Cal.Rptr.2d 56, 981 P.2d 990] [since 1911, section 330a has prohibited all slot machines, and section 330b, enacted in 1950, has redoubled the prohibition; the “Penal Code’s broad definitions of slot machines include virtually every kind of stand-alone gaming device”]; Merandette v. City and County of San Francisco, supra, 88 Cal.App.3d at pp. 113-114; Score Family Fun Center, Inc. v. County of San Diego (1990) 225 Cal.App.3d 1217 [275 Cal.Rptr. 358].)

Disposition

The judgment is reversed, and the cause is remanded to the trial court with directions to enter a new judgment in favor of the State of California (and, in furtherance thereof, to hold such additional hearings, if any, as may be required). The State is awarded its costs of appeal.

Aragon, J.,

* concurred.

1 See Pieper v. Commercial Underwriters Ins. Co. (1997) 59 Cal.App.4th 1008, 1014 [69 Cal.Rptr.2d 551] (“ ‘ “if it looks like a duck, walks like a duck and quacks like a duck, it’s a duck”—not a platypus’ ”); Aetna Casualty & Surety Co. v. Humboldt Loaders, Inc. (1988) 202 Cal.App.3d 921, 929, fn. 5 [249 Cal.Rptr. 175] (“ ‘if it looks like a duck, if it walks like a duck and if it quacks like a duck, it should be treated as a duck’ ”); Provost v. Unger (E.D. La. 1990) 752 F.Supp. 716, 721 (“if it looks like a duck, walks like a duck, and quacks like a duck, it is a duck”); In re North (Bankr. D.Vt. 1991) 128 B.R. 592, 594 (“ ‘if it looks like a duck, walks like a duck, and quacks like a duck, it must be a duck’ ”); Strength v. Alabama Dept. of Finance (Ala. 1993) 622 So.2d 1283, 1289 (“ ‘If it looks like a duck, walks like a duck, and quacks like a duck, it must be a duck’ ”); compare Perry v. Robertson (1988) 201 Cal.App.3d 333, 335, fn. 1 [247 Cal.Rptr. 74].

2 Undesignated section references are to the Penal Code. The complaint also alleged that the VendaTel is an unlawful lottery (§ 319) or other controlled game (Bus. & Prof. Code, § 19805, subd. (e)), and those issues were considered by the trial court. Our conclusion that the VendaTel is a slot machine makes it unnecessary to consider the other grounds on which the Attorney General attempted to enjoin its use in California.

3 The State filed the first motion for summary judgment, then took it off calendar when PGT explained that it had developed a new machine. On January 25, 1999, the State inspected the new machine, then filed a new motion for summary judgment based on that machine, which was followed by PGT’s motion for summary judgment. The motions were heard at the same time. The inspection was videotaped, and the tape is part of the record on appeal. We have viewed it.

4 Odds tables are loaded into the computer. At the time this case was before the trial court, the VendaTel had a “10 percent payout structure” (the VendaTel pays out $500 in prizes for every $5,000 paid into the machine) with “predetermined winners” spread out over a period of time. The user cannot “sit and play” to determine a logical sequence of payouts.

5 After the trial court’s ruling, PGT again modified the VendaTel. Although the State’s motion for reconsideration (based on the change) was denied, the trial court clarified that its judgment applied only to the machine, mode of operation, and marketing program that was before the court at the April 1999 hearing. Since our review is limited to the record made in the trial court, the same is true of this opinion.

6 Section 330.1 overlaps section 330b but the differences do not have anything to do with this case—except for the fact that section 330.5, the exemption on which PGT relies and which is discussed below, applies to section 330.1 but not to section 330b, a fine point ignored by PGT and the State. In theory, at least, the exemption available under section 330.5 would not apply to a prosecution brought under section 330b, and this fact in itself would resolve this case in favor of the State. It appears that sections “330b and 330.1 . . . were enacted in the same legislative session, under different bills. . . . The legislative history reflects the view that enactment of both bills would pose no problem, because they did not conflict.” (Trinkle v. Stroh (1997) 60 Cal.App.4th 771, 778, fn. 4 [70 Cal.Rptr.2d 661].) Since no conflict arose on the appeal before the court in Trinkle, that court did not consider the matter. Since the State does not base its claim of nonexemption on the fact that section 330.5 does not apply to section 330b, we follow Trinkle’s lead.

7 In the trial court, PGT insisted that Coca-Cola and M&M’s are dispensed from vending machines and that they too offer sweepstakes with purchases thereby providing “more” than is paid in by the user. PGT does not claim discriminatory enforcement but suggests, instead, that this means there is nothing illegal about the VendaTel. The problem with this argument is that there is no evidence to support it (PGT did not offer a scintilla of evidence about any other vending machine or sweepstakes or product, and no such evidence was offered by the State). It is therefore immaterial that the trial court accepted an argument based upon what the State of California might or might not allow with regard to Cokes and M&M’s. For this reason, we do not address PGT’s assertion on appeal that it is just doing what everyone else does.

Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.