Justices question grants, video lottery

Lawrence Messina

Tuesday, Oct. 14, 2003 | 9:05 a.m.

CHARLESTON, W.Va. -- The state Supreme Court appeared skeptical of both sides in a long-awaited hearing over the legality of the Economic Development Grant Committee and the state's use of video lottery.

During a hearing last week, several justices disagreed with Jackson County lawyer Larry Harless' contention that the state lottery system cannot legally include video versions of casino-style games.

"That is not a serious argument," Justice Elliott "Spike" Maynard said.

He and other justices appeared reluctant to deprive the state of hundreds of millions of dollars a year by siding with Harless and abolishing the machines.

"Are we prepared to make that judgment and take a bite out of the state's budget?" Justice Warren McGraw said.

But the justices also questioned whether the committee adhered to standards set by the Legislature when it approved $225 million in grants to 48 projects in 27 counties in August.

"They followed a political standard," Chief Justice Larry Starcher said. "It was a political process. But don't say it was based on objective standards."

Maynard agreed, but he and Justice Joseph Albright also said the court would not necessarily void those awards as a result.

"It's not the business of this court to spell out those specifications," Albright said.

The justices said they hoped to rule quickly in the case, which combines two petitions filed over the committee's grants with one challenging the constitutionality of video lottery.

The court deemed the cases related because video lottery proceeds would pay off bonds that the state Economic Development Authority must sell to fund the grants. The EDA has balked because of Harless' video lottery challenge.

"It's a refusal based on impracticality," said William Herlihy, a lawyer for the EDA. "We could issue the bonds and they would just sit fallow."

To change that, Herlihy joined with lawyers for other affected parties to urge the justices to affirm two legislative acts. One allowed slot-type machines at the state's four racetracks. The other, passed in 2001, added video-poker style machines to the lottery system.

Tom Goodwin, a lawyer for the Lottery Commission, reminded the justices that the 2001 law replaced privately owned, unregulated machines widely known to pay out illegally. Goodwin said both it and the racetrack act were proper, comprehensive efforts to provide a well-regulated and state-controlled lottery system.

Representing antigambling groups from Greenbrier and Cabell counties, Harless has challenged the nature of the games. He argued that unlike "traditional" ticket and scratch card games, they pit the state against players and create an incentive to beat and even cheat them.

"It's not the video that's objectionable," Harless told the justices. "It's that it's not lottery, but instead the most extreme form of gambling."

Harless told the justices that their counterparts in South Dakota, California and South Carolina have refused to include video poker-type machines within the realm of a lottery. Two past West Virginia rulings have as well, he said.

Stephen Farmer, a lawyer for several grant winners -- Charleston, Huntington and Kanawha and Ohio counties -- invoked other West Virginia rulings to defend video lottery. These have defined a lottery as any game based on chance for which a player pays money to win a prize.

"If skill is predominant over chance, then I believe it is not a lottery," Farmer said. "If the odds are predetermined in favor of the owner of the game, it is not a lottery."

Farmer argued that if the justices deemed video poker to involve more skill than chance, then state law allows the Legislature to authorize such machines. Several justices tested that logic.

"We would have all kinds of table games. We would have real poker parlors," Maynard said. "We would have it all within a day, by just a statute."

Harless countered that the voters, not the Legislature, should decide whether to keep the casino-style machines if they are not a lottery. Maynard suggested they already have.

"The people of West Virginia vote every day on this issue when they go to the dog track," he said. "They go there by the thousands."

Farmer also stressed the importance of the $57 million in grants that his clients await. Charleston wants to build a new baseball stadium, Huntington has its Pullman Square project and Ohio County is landing a Cabela's sports emporium at its proposed Fort Henry business park.

Farmer said the Legislature obeyed the court's May ruling that found fault with an earlier incarnation of the committee and its batch of grant awards. Harless had brought that 2002 case as well, and a special session bill sought to apply the May decision.

But the justices said some projects did not appear to leverage other funds, retain or create jobs or satisfy other standards that the legislation required the committee to consider.

"It's not up to this court to decide the propriety or wisdom of these projects," Maynard said. "Frankly, there are some that I don't like. But that's not our decision to make."