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Gambling in South Carolina

October 30th, 2009 Leave a comment Go to comments

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Gambling Law in South Carolina:
An Analysis of National Opinion and the South Carolina Code of Law

by Jacob Davis

Enforcement in the Spotlight

It was big news in April 2006 when Mt. Pleasant police cited 22 people after breaking up a high-stakes poker game in what papers called a “raid.”[1] In April 2008, it even made the news in Columbia when Hanahan police raided another underground game, citing an assistant prosecutor and seizing more than $40,000.[2] This kind of strict law enforcement, of laws that some say “go too far,”[3] has helped prompt state legislators to push for a loosening of gambling restrictions in South Carolina.

After a long and bitter fight to ban video poker, and perhaps an even uglier battle to establish a state “Education Lottery,” South Carolina citizens could be forgiven for shouting “Enough already!” to arguments over legalized gambling.  Unfortunately, the recent well-publicized “raids” on “underground” poker games have brought the issue back to the forefront.  Scarcely does an article appear in the newspapers (or online for that matter) without including the old saw that South Carolina law prohibits “playing Monopoly at [the] kitchen table.”[4] Never mind that it probably doesn’t, or that no evidence exists that anyone has ever even been ticketed for something so preposterous.  Even the South Carolina Attorney General’s office is forced to joke that, “Candyland…is safe” in South Carolina.[5]Still, the public’s (not to mention the legislature’s) renewed interest in modifying South Carolina’s 200-year-old anti-gambling laws means the subject deserves an in-depth look.  Even if South Carolina citizens would prefer the issue didn’t “pass go.”
“Gaming Tables”

Far more complicated than situations involving “Candyland” are those with “gaming tables.”  South Carolina statutes against gaming tables aim to outlaw the possession, transportation, or use of the physical apparatus or equipment used in gambling, not just the gambling itself.[6] Gaming tables “distinguished…by…figures,” (think “roulette”) specifically “roley-poley tables,” “faro-banc,” and “rouge et noir” (a game similar to “solitaire”) are specifically prohibited.[7] This prohibition on tables with distinctive markings has a number of exceptions, including billiards, bowls, chess, draughts, and backgammon (as long as no wager are placed on the game by bystanders or players.)[8] However, it seems that a table without markings but for a game without betting, such as “bridge,” would be legal.[9]

Also prohibited are certain “machines or devices” (technically called “coin-operated machines or devices or other amusements”), like the infamous video poker machines.[10] But the category of exceptions to this is vast such that virtually every other kind of “machine or device” (arcade games, juke boxes, pin-ball machines, etc.) is exempt as long as it isn’t “used for gambling purposes.”[11]

Games with “Cards or Dice”

When considering whether a game constitutes “gambling,” the key factor is always whether it is a “game of skill” or a “game of chance.”  The determining factor of chance is that it involves an absence of skill on the part of the participant.[12] Games of skill are not gambling, while games of chance usually are.

The legality of games with “dice” seems to rest on whether there is betting involved.[13] If a game’s “common use” (i.e. how it’s normally played) doesn’t involve gambling it is unlikely it would be illegal unless bets are being placed on its outcome.  Thus, a game like “craps” is illegal, but simply rolling dice for amusement is probably not.[14]

Almost the same goes for card games, for while the statute specifically allows only “whist” and “draughts” (drawing cards), there are plenty of other card games like samba, rummy, canasta, and the aforementioned bridge that do not involve betting.[15]

Those Pesky “Cruises-to-Nowhere”

One of the only bastions of legalized gambling in South Carolina continues to be the small but persistent casino boat industry.  While nowhere near the size or scope of states like Mississippi’s, a few small operations continue to exist in the state.[16] States were delegated the ability to regulate casino boat gambling (“cruises to nowhere”) when the U.S. Congress passed the Johnson Act (originally passed in 1951, later broadened by amendments in 1962 and 1992.)[17] In this act the federal government specifically delegated to state governments the ability to regulate gambling on this kind of cruise that originated or docked in their waters.[18]

Effective June 1, 2005 the South Carolina legislature passed the “Gambling Cruise Prohibition Act,” which further delegated its regulatory powers in this area to local county and municipal governments.[19] The South Carolina Supreme Court last handled this issue in 2006′s Palmetto Princess, LLC v. Town of Edisto Beach,[20] a case that dealt with a local ordinance prohibiting gambling cruises that was put in place before the Act was passed (as the court noted).  Since Edisto Beach passed their ordinance before the legislature’s grant of authority (and since there was no state prohibition against casino boat gambling), the Court ruled Edisto Beach had violated S.C. Code § 5-7-30.

This section of the state constitution says, “Each municipality of the State … may enact … ordinances, not inconsistent with the Constitution and general law of this State, … for preserving health, peace, order, and good government in it….” (Emphasis added).[21] The Court reasoned (despite a strong dissent from Justice Burnett) that in the absence of a STATE prohibition on casino boat gambling, a LOCAL ordinance outlawing it would be an “ordinance…inconsistent with the Constitutional and general law.”  The Court has not heard any other cases on the issue since the legislature passed the Act, so the Constitutionality of local ordinances remains in doubt and casino cruises continue to operate in the state.

However, it should be noted that neither the federal Johnson Act, nor the state Gambling Cruise Prohibition Act allows the regulation of gambling that takes place on cruise ships, also called “destination cruises,” after they have left U.S. or state waters.[22]

The latest front in the ongoing war between casino boat outfits and local governments had been the fight over whether state law required the operators to provide gross proceeds and payouts from their gambling machines in monthly reports to the state Revenue Department.  Operators had resisted turning over the numbers for tax purposes.  But there Little River’s SunCruz Casinos won a victory in May 2008, as the state Supreme Court said casino boats operating out of South Carolina do not have to report how much money they take in each month to the Department.  Justices agreed with SunCruz that state law only requires that they report the percentage of winnings to losses per machine. The ruling means that operators, who could be taxed by local governments based on their gross receipts, will only have to provide that information for a Revenue Department audit.[23]

The State-Run “Education Lottery”

Few issues in South Carolina politics have been as contentious as legalized gambling, and perhaps no facet of legalized gambling has been more contentious than the “State Education Lottery.”  Many political commentators cite the issue as the main (or only) factor in Democratic challenger Jim Hodges’ upset of popular incumbent Governor David Beasley in South Carolina’s 1998 gubernatorial race.[24] [25] [26]
The furor over South Carolina’s “archaic” gambling laws is often stoked by reference to the hypocrisy implicit in the state-run “Education Lottery.”  While technically meeting the definition of “a lottery,”[27] the state’s “Education Lottery” is run by the state Lottery Commission, not private individuals.  Just as the state legislature is able to pass legislation outlawing lotteries,[28] it is able to pass legislation carving out an exception for a state run lottery (the “South Carolina Education Lottery Act.)[29] The state legislature wrote the law outlawing lotteries, so absent a state constitutional amendment, normal legislation can create this exception.

The lottery’s website[30] proudly touts its burgeoning success, noting the more than $2,000,000,000 directed toward various state education programs as of the 2008-2009 fiscal year.  A separate “Winners” tab displays individual profiles of the almost 2,000 winners who have claimed various prizes in lottery games, replete with a summary of how the player felt upon winning and what they plan to do with their prize money.[31] The “Odds” tab explains the odds of winning a “top prize” vary, from around 1 in 17,142.86 (“3 Times Lucky”) to 1 in 146,107,962 (“Power Ball”).[32] For obvious reasons there is no tab with “Loser” profiles.
Nationwide Trends and Opinion

Currently Utah and Hawaii are the only two states in the Union that prohibit all types of gambling.[33] South Carolina, like more than 40 states, has a state lottery (as well as multiple “scratch-off games”).  With the start of our lottery in January 2002, South Carolina followed a national trend toward more-and-more acceptance of state-supported lottery ventures.[34] (Not to mention tacit state approval of gambling as shown through relaxed gambling codes.)

Interestingly enough, this trend seems to be at odds with the public’s opinion of legalized gambling itself.[35] What the Pew Research Center calls “A modest backlash in attitudes” has seen the American public’s disapproval of legalized gambling grow since 1989.[36] And while majorities still approve of legalized gambling as a source for states to raise revenues, this support has fallen across the board, on everything from lotteries to casino gambling.[37]

As of 2006, 70% of Americans agreed that, “legalized gambling encourages people to gamble more than they can afford.”[38] At the same time, the number of Americans who said they enjoyed gambling “A lot” or “a little” dropped from 34% to 23%.[39] The number of Americans who said they had “placed a bet on one thing or another in the past year” also dropped, from 71% in 1989 to 67% in 2006.[40] A plurality of Americans (42%) also said they thought a casino had a negative impact on the local community.[41]

In the face of these trends, 2005 industry estimates say 890 casinos nation-wide took in more than $52,000,000,000 in gross revenues, and commercial casinos have nearly doubled their take in the past decade.[42] It was also a banner year for state lotteries in 2005, as 41 states sold $52,000,000,000 in tickets, up from $19,000,000,000 worth of tickets sold in 32 state lotteries in 1989.  And in 2004, per capita sales figures, averaged across all states with a lottery, were estimated at $184.[43]

Viewing those numbers it’s not surprising that although the number of Americans gambling overall has fallen, the number of Americans who visited a casino or played a slot machine rose from 20-29% and 19-24% respectively.[44] One report placed the number of slot machines in the country at 740,000.[45] (But state lotteries are by far the most popular form of gambling, with 52% of Americans saying they purchased a lottery ticket in the past year.)[46]

One possible explanation for the expansion of legalized gambling in the face of what seems to be dwindling public support for it is offered by Pew’s analysis of why people oppose legalized gambling.  While support for legalized gambling has declined, the number of people who oppose it on moral grounds has remained static or declined.[47] “White evangelical Protestant” was the only demographic group surveyed with more members who still thought it was morally wrong to gamble (and that was only a plurality, 49-43%).[48] It seems the increase in disapproval of legalized gambling has come from those who don’t see it as wrong, but are merely beginning to recognize its “downsides.”[49] Left unstated is the fact that these people apparently think increased state revenues are worth the price of the damage wrought on their communities.

Legislation in the Works

Calls for legislation that clears up the ambiguity surrounding casino boat gambling with a state-wide ban have largely been stymied.  Several bills, H 3363[50] and S 211[51] have come before the legislature in the past year that sought to outlaw “casino-boat gambling” state-wide, but have not made it out of committee.  It’s no secret that the fears of coastal interests, who want to avoid any possible burdens to the lucrative tourist and cruise industry, are a major factor in stalling these bills.

On the other hand, there have also been an attempts H 3201[52] and S 0732[53] to carve out a small exception for “recreational” poker games in the home, but they too have remained stuck in committee.  Rep. Wallace Scarborough, R-James Island, introduced one of the bills, but denies it is an attempt to bring legalized gambling to the state.  Rather, he said “that it is an attempt to let friends put a friendly wager on a couple hands of poker.”[54] Charleston’s Post and Courier credited strong opposition from the Southern Baptist Convention for “derailing” the bill.[55]

Ultimately, these examples show state gambling reforms rely on constituent pressure.  The state legislature created a state lottery under pressure from voters, just like they outlawed video gambling under similar pressure.  Any change, whether it be outlawing gambling boats, or loosening restrictions on poker, will come as a response to voters writing, calling, and campaigning for it.  To that end Palmetto Family Council (PFC) remains a staunch ally of those who decry the destructive nature of gambling (state-supported or not) and wish to see it curtailed in South Carolina.
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[1] Smith, Glenn. Mt. Pleasant police cite 22 in poker raid. The Post and Courier, April 14, 2006.

[2] Wire reports. Assistant prosecutor, others arrested in raid.  The State, April, 7, 2008.

[3]Wenger, Yvonne. South Carolina’s lawmakers look at ‘laws that go too far.’ The Post and Courier, March 24, 2008.

[4] Ibid.

[5] Hicks, Brian. Card games of any kind no dice in S.C. The Post and Courier, April 28, 2007.

[6] S.C. Code § 16-19-50.

[7] Ibid.

[8] Ibid.

[9] 7 S.C. Jur. Gaming § 10.

[10] S.C. Code § 16-19-40.

[11] 7 S.C. Jur. Gaming § 12.

[12] 7 S.C. Jur. Gaming § 3, citing 38 Am. Jur. 2d, Gaming § 10.

[13] 7 S.C. Jur. Gaming § 11.

[14] State v. Robinson, 40 S.C. 553, 18 S.E. 891 (1984).

[15] 7 S.C. Jur. Gaming § 9.

[16] http://www.northmyrtlebeach.net/gambling.html; http://www.suncruzcasino.com/.

[17] S.C. Code § 3-11-200.

[18] 15 U.S.C. § 1171-1177

[19]http://www.scstatehouse.net/sess116_2005-2006/bills/3694.htm.

[20] 369 S.C. 50, 631 S.E.2d 76 (S.C., 2006; http://www.judicial.state.sc.us/opinions/HTMLFiles/SC/26157.htm.

[21] S.C. Code § 5-7-30.

[22] S.C. Code § 3-11-100.

[23] Wire report. High court sides with casino boats. The Post and Courier, May 13, 2008.

[24] http://www.slate.com/id/5155/.

[25] http://www.cnn.com/ALLPOLITICS/stories/1998/11/03/election/governors/south.carolina/index.html.

[26] http://query.nytimes.com/gst/fullpage.html?res=9D02E3DD163EF936A35752C1A96E958260.

[27] S.C. Code § 16-19-10.

[28] S.C. Code § 16-19-10/20/30.

[29] S.C. Code § 59-150.

[30]www.sceducationlottery.com.

[31] Ibid.

[32] Ibid.

[33] http://www.hawaiinews.com/archives/politics/000160.shtml.

[34] Last, Jonathan V. Taste: Not just for losers anymore. The Wall Street Journal, October 21, 2005.  Reprinted as Losers’ Poker, The Weekly Standard, October 21, 2005.

[35] Pew Research Center, Gambling: As the Take Rises, So Does Public Concern, May 23, 2006.

[36] Ibid.

[37] Ibid.

[38] Ibid.

[39] Ibid.

[40] Ibid.

[41] Ibid.

[42] 2006 State of the States: The AGA Survey of Casino Entertainment. American Gaming Association (AGA); NICG Announces Indian Gaming Revenue for 2004, National Indian Gaming Commission (NIGC), July 13, 2005.

[43] Clotfelter, Charles T. and Philip J. Cook. 1990 On the Economics of State Lotteris Journal of Economic Perspectives, Vol. 4, No. 4, pp. 105-119.  Also see Clotfelter, Charles T., Philip J. Cook., Julie A. Edell, Marian Moore. 1999. State Lotteries at the Turn of the Century: Report to the National Gambling Impact Study Commission. 2004 and 2005 figures from the North American Association of State & Provincial Lotteries. http://www.naspl.org/sales&profits05.html

[44] Pew Research Center, Gambling: As the Take Rises, So Does Public Concern, May 23, 2006.

[45] Cooper, Marc. Sit and spin: How slot machines give gamblers the business. The Atlantic Monthly, December 2005.

[46] Ibid.

[47] Pew Research Center, Gambling: As the Take Rises, So Does Public Concern, May 23, 2006.

[48] Ibid.

[49] Ibid.

[50] http://www.scstatehouse.net/cgi-bin/query.exe?first=DOC&querytext=H%203363&category=Legislation&session=117&conid=3958120&result_pos=0&keyval=1173363

[51]http://www.scstatehouse.net/cgi-bin/query.exe?first=DOC&querytext=poker&category=Legislation&session=117&conid=3916980&result_pos=0&keyval=1170211

[52]http://www.scstatehouse.net/cgi-bin/query.exe?first=DOC&querytext=poker&category=Legislation&session=117&conid=3916980&result_pos=0&keyval=1173201

[53]http://www.scstatehouse.net/cgi-bin/query.exe?first=DOC&querytext=S%200732&category=Legislation&session=117&conid=3949073&result_pos=0&keyval=1170732

[54] Wenger, Yvonne. South Carolina’s lawmakers look at ‘laws that go too far.’ The Post and Courier, March 24, 2008.

[55] Ibid.

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