Lately, Lisa Pertzoff of Wilmington has been flashing back 20 years to the time lawmakers first began to consider putting slot machines at Delaware’s racetracks.

Back then, most critics attacked it on moral or religious grounds. But another less strident group questioned its legality under the Delaware Constitution, Pertzoff said. Now, as the state crafts legislation that would enable Delaware to have straight gambling like roulette or craps at Delaware’s three racinos, the constitutional critics have been virtually silent, she said.

“I haven’t heard anybody bring it up as a constitutional issue. It’s just kind of dissipated. It’s a ho-hum issue,” said Pertzoff, executive director of the Delaware Council on Gambling Problems.

That’s not surprising, said gaming lawyers. As states have looked for ways to generate revenues and fuel their lackluster economies, America is experiencing an expansion of state-sponsored gambling, said gaming lawyers. Every state, including Utah, has looked at expanding gambling since the 1970s, said I. Nelson Rose, a senior professor at Whittier Law School in Costa Mesa, Calif., who has worked with the state. He calls this the third wave of legalized gambling since Colonial times — when all 13 colonies established lotteries to raise revenues.

What allows a state like Delaware to advance from state-supported sweepstakes to casino-style gambling is an expansive interpretation of the lottery provision in the state constitution, lawyers said. State lotteries began their resurgence in the mid-1960s amid the growing opposition to tax increases, said Roger Dunstan of Sacramento, Calif., who wrote a comprehensive history of gambling in the United States.

Today, lawmakers in many states, including Delaware, use the lottery exception in their constitutions to cover nearly all games of chance — from craps to baccarat — that are under state control, gaming lawyers said. The technological revolution has aided in the enlarged definition of what constitutes a lottery, Dunstan said.

“The historical definition of lottery is: A person pays consideration for the opportunity to win a prize in a game of chance,” said Anthony Cabot, a gaming lawyer in Las Vegas, who has taught gaming law at the Boyd School of Law at the University of Nevada, Las Vegas.

“That opens up virtually anything.”

Legislators who legalized state lotteries in the 1960s and 1970s meant the term “lottery” to be interpreted expansively, Cabot said. What’s more, courts have predominantly upheld this broader view.

Today, some states classify poker, dominoes and backgammon as games of chance and therefore lotteries, Cabot said.

“Lotteries are more than drawing tickets by lot,” Cabot said.

That became evident in May, when the Delaware Supreme Court issued an advisory opinion on the question of the permissibility of sports betting under the state constitution. The court concluded the recently passed sports betting legislation satisfies certain requirements of the constitution’s lottery provision.

Kenneth Nachbar, a lawyer with Morris, Nichols, Arsht & Tunnell, who argued for the National Football League in the recent Supreme Court proceeding, said the league is evaluating a possible legal challenge to the sports lottery in court. He wouldn’t elaborate as to what any challenge to sports betting might involve or in which court an action would be brought.

But there have been no murmurings of a legal challenge to table games in Delaware, said lawyers and others involved in the recent gaming legislation. And given the more recent history of court decisions involving lottery games, challenges to state-supported lottery games as not permissible under the constitution can be difficult to win, lawyers said.

“Because it’s so clear,” Rose said. “States can define lottery any way they want.”
No shortage of history

The current expansion of legalized gambling in the country is nothing new, gaming experts said.

Since its earliest days, Americans have been making wagers, Dunstan writes in his history of gambling.

In Colonial times, playing the lottery was considered a civic responsibility, he wrote. Proceeds helped build churches, libraries and establish Ivy League colleges, like Harvard, Princeton and Columbia.

Lotteries were so popular, they even became an issue in the push for American independence after the English crown tried to prevent lotteries it didn’t approve, Dunstan writes.

The second wave was set off by the nation’s westward migration and the Gold Rush, Dunstan wrote. San Francisco was the epicenter of gambling in the mid-1800s.

“The market for gambling space was so strong that a mere canvas tent, 15 by 25 feet, cost $40,000 annually, payable in advance with gold dust,” he wrote.

Lotteries returned after the Civil War in the South to help rebuild the war-torn region, Dunstan writes.

Public opinion began to turn, in the wake of scandals and the rise of Victorian morality. The Delaware Constitution of 1897 prohibited all types of gambling, including lotteries and pool selling. By 1910, virtually all forms of gambling were illegal in the United States, he wrote.

It wasn’t until the Great Depression that the mood changed again. Legalized gambling began to make its current comeback as states looked for ways to jump-start their economies. Horse racing and pari-mutuel betting led the way. In 1931, Nevada legalized most forms of gambling to boost tourism.

New Jersey created the first financially successful modern lottery in 1971, according to Dunstan. Within two years, Delaware, which in the past had successfully adopted some of New Jersey’s revenue schemes — and gone one better — was busy amending the state constitution to permit lotteries.

“Whenever you have bad economic times, tough choices have to be made,” said Ed Sutor, chief executive of Dover Downs Hotel & Casino in Dover.

It’s been called “painless” tax, because it’s voluntary, Sutor said.

Gambling is also market-driven, Dunstan said.

“People have to want it. If nobody liked to gamble, the government wouldn’t make any money,” he said.
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Indeed, an early version of sports betting in Delaware in the 1970s failed to excite consumers. It lost money and was soon abandoned.

“From what players tell me, it was a horrible game,” Rose said.
A tough ruling to challenge

When Delaware lawmakers revised and rewrote the gambling provision in its constitution in 1973 to permit “lotteries under state control for the purpose of raising fund,” it meant more than buying tickets for a sweepstakes, gaming lawyers said.

“In doing so, it construed the term lottery broadly,” U.S. District Court Judge Walter K. Stapleton ruled in a 1977 lawsuit filed by the National Football League against Delaware’s governor.

“Lotteries” means public gaming systems and includes “all types of lotteries,” Stapleton decided.

That was further affirmed in May by the Delaware Supreme Court after Gov. Markell asked the justices for their opinion on whether sports betting is a permissible lottery under the constitution. The General Assembly had passed a bill that calls for a state “sports lottery.”

The justices concluded the “sports lottery” as defined by the legislation satisfies the state-control requirements of the constitution’s lottery provision. What’s more, the justices concluded the constitution allows for lotteries to involve an element of skill, but only where chance predominates.

Any constitutional challenge to table games would have to overcome the conclusions of these courts.

What’s more, a plaintiff would have to challenge the constitutionality of each game — for example, roulette, craps, blackjack or three-card poker — individually, lawyers said.

Any plaintiff would have to have a “strong economic interest,” to undertake such litigation, Cabot said.

Then there is the issue of who has standing, or the right to make a legal claim, in a Delaware court. Under the 10th Amendment of the U.S. Constitution, the powers to legalize gambling are reserved to the state, not the federal government, according to Robert Faiss, a Las Vegas gaming law attorney.

If an action is brought in federal court, the judge has to apply state law, Rose said.

“And the state law has already been decided,” he said.

As Dover Downs invests $2.5 million to gear up for table games, it is completely comfortable with the constitutionality issue, Sutor said.

Bud Hicks, a gaming lawyer in Reno, Nev., who is past president of the International Association of Gaming Attorneys, said the racinos in Delaware wouldn’t be moving forward to start table games if there was any doubt as to its legality.

Certainly, Gov. Markell’s legal counsel is confident.

“We believe table games are constitutional,” Michael Barlow said. “The legal test is established.”

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