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The Future of Gambling Laws in Ohio may be Changing

gambling1With the publicity surrounding the addition of a “Racino” of slot machines at Scioto Downs, and the recent opening of the Hollywood Casino in Columbus, Ohio, liquor permit holders, business owners, and legal scholars alike, are wondering what the future of Ohio law holds.

For many of my clients who own and/or operate fraternal organizations, bars, pizza shops, restaurants and convenience stores that sell and/or serve alcoholic beverages, most types of gambling are unlawful under the current state of the law in Ohio.

Under the Ohio Administrative Code Section 4301:1-1-53, also called Regulation 53, Ohio liquor permit holders are prohibited from operating any gambling device or conducting any game of chance on the permit premises.  A game of chance is defined under Ohio Revised Code Section 2915.01(D) to include “ poker, craps, roulette, or other game in which a player gives anything of value in the hope of gain, the outcome of which is determined largely by chance***”  A scheme of chance is defined under Ohio Revised Code Section 2915.01(C) to include “a slot machine, lottery, numbers game, pool conducted for profit, or other scheme in which a participant gives a valuable consideration for a chance to win a prize”.  A gambling device is defined by Ohio Revised Code Section 2915.01(F) as, any ticket, token, or other device representing a chance or interest in a scheme of chance. Ohio law also prohibits liquor permit holders from conducting bingo on the premises with a limited exception for charitable organizations. Charitable organizations may conduct bingo, including traditional bingo and instant bingo, if they obtain a license from the Ohio Attorney General. To qualify for a license the organization must generally have received a tax –exempt determination letter from the Internal Revenue Service stating that it is exempt from federal income taxation under one of the following Sections: 501(c)(3); 501(c)(4) (civic league); 501(c)(8) (fraternal society); 501(c)(10) (domestic fraternal society); or 501(c)(19) (veteran’s post).  The organization must also qualify as a “charitable organization” as defined by Ohio law.

Notwithstanding these stringent requirements under Ohio law, legal scholars cannot help but to speculate about changes in the law nationwide that may have been signaled by the recent ruling of the United States District Court for the Eastern District of New York in United States v. Dicristina, 11-CR-414.  In this recent decision, the federal district court ruled that poker is a game of skill that is not covered under the federal Illegal Gambling Business Act.  See United States v. Dicristina, 11-CR-414, Memorandum, Order and Judgment, August 21, 2012.

Interestingly, Judge Jack Weinstein ruled that poker is a game of skill, not a game of chance, and that it is not covered under the federal Illegal Gambling Business Act. The crux of Judge Weinstein’s reasoning is that poker games, in this case “Texas Hold’em”, are not purely games of chance. “Bluffing, raising and folding require honed skills to maximize the value of the cards dealt by Lady Luck,” Weinstein explained. The reasoning suggests that poker requires higher levels of skill, than chance, so as to take it outside of the federal statute. While many advocates of legalizing poker have lauded the opinion, the Judge noted in the 120 page decision that the state courts in New York have long held that poker contains a sufficient element of chance to constitute gambling under the state laws of New York, which similar to the laws in Ohio, defines games of chance to include “poker”.

Clearly, the ruling in United States v. Dicristina does not interpret Ohio law, nor does it interpret a state statute defining game of chance to include poker.  However, legal scholars cannot help but to speculate on the impact of Judge Weinstein’s ruling for the long term. Although the Dicristina opinion does not address the issue specifically, many believe that it may open the door for states to allow Internet poker and other forms of online betting that do not involve sports. In times of slow economy, many states, including Ohio, are interested in online gambling as a way to raise tax revenue.

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