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The Bizarre Law of Dealer Schools

30 March 2003

Changes in the law always trail changes in society. As legal gambling becomes more accepted, legislatures and judges find themselves struggling to catch up.

Sometimes they fail.

One of the best examples of a court refusing to accept that the world had changed occurred in Michigan, where the State Supreme Court ruled that it was against the law to operate a casino dealer school.

We all understand that laws vary from state to state. Nevada, for decades, licensed activities that were crimes in other states. Even today, some states with licensed casinos require employees to have attended dealers schools, while other states say that operating a gaming school is a crime. The Attorney General of Louisiana had to issue a formal Opinion that a trade school could have blackjack, craps and baccarat tables and roulette wheels, so long as the casino equipment was used for school instruction purposes only.

But, legal gambling is one of the few businesses where it could possibly be a crime in a state to teach how to do something that is legal in that same state.

The conflict began on December 29, 1992, when the Michigan Gaming Institute, Inc., applied to the State Department of Education for a license to operate a private trade school. The proposed curriculum included courses in the casino games of craps, blackjack, roulette, baccarat, and pai gow poker. The state agency decided that it would not issue the license, holding that it would not approve "applications for schools teaching casino gambling unless gaming were legalized."

The trial Court and Court of Appeals, with one dissent, had no trouble overturning the decision. They pointed out that the school was not teaching people how to gamble, but rather imparting the skills necessary for students to become croupiers and dealers to work in legal casinos. They also concluded that Michigan no longer had a public policy against legal gambling.

The state appealed to the Michigan Supreme Court. In an unexpected decision, the state's highest Court reversed. A majority of justices felt so sure that a gaming school must be illegal that they did not even allow a hearing or write an opinion, simply adopting the dissenting opinion of the Court of Appeals.

This 1996 decision is a landmark in the law failing to grasp what was happening in the real world. The Court held its hand out to the sea and told the tide to stop coming in.

The opinion adopted by the Supreme Court was based on a 1978 Attorney General Opinion, which had held that gaming is criminal behavior in Michigan. In an understatement, the opinion did concede: "It is true that the Attorney General's seventeen-year-old [sic] opinion does not account for some of the more recent legislative developments exempting certain activity from the public policy against gambling."

The "certain activity" included one of the largest lotteries in the world, operated and promoted by the state itself; charity bingo; and state-licensed pari-mutuel wagering on horse races.

Two additional forms of gambling had been approved by the State Legislature, which should have ended the debate on whether Michigan had a public policy against casinos. Charities were allowed to run "millionaire parties," called "Las Vegas Nights" in other states, for money. The law specifically stated that the games to be played were those "customarily associated with a gambling casino."

Millionaire parties were limited to small stakes. But Michigan had also entered into tribal-state compacts permitting federally recognized tribes to open high scale casinos. In fact, Michigan had more full-scale casinos than New Jersey.

The Court's opinion disregarded all this, calling them "limited exceptions." In a prissy statement, it declared, "the purpose of the current scheme of criminal laws remains to suppress gambling as an activity injurious to public morals and welfare."

The Court even warned that, "A court could issue arrest or search warrants for on-site casino gambling in petitioner's school. The school's operators could be charged as persons who indirectly assist in the keeping of a gaming house, and the students could be charged as loiterers in a place of illegal occupation." This ignored the fact that no actual gambling takes place and the students were learning an occupation that was legal in Michigan.

The most amazing part of the Opinion is the dismissal of the fact that Michigan had casinos. The Court held that the state had been forced by federal law to enter into compacts with its tribes. Of course, the federal law only applied because Michigan already permitted casino gaming for money, i.e., the millionaire parties. If the state had wanted to prevent its tribes from having casinos, all it had to do was prohibit charities from running casino nights.

The United States Supreme Court and Congress had made it clear that the only time federal law forces a state to enter into compacts for tribal casinos is when that state permits casinos for non-Indians, showing that state has a public policy favoring casinos.

Fortunately for the Michigan Supreme Court, its embarrassing decision to outlaw casino dealer schools was quickly overshadowed by events in the real world, and forgotten. Before the year was out, the voters of Michigan had approved an initiative authorizing three state-licensed casinos in Detroit. Included in the new Michigan Gaming Control and Revenue Act were provisions explicitly allowing dealer schools.

Despite all the evidence, the majority of the justices on the Michigan Supreme Court had declared that the state had a strong public policy against casinos. Almost two million Michigan voters told them they were wrong.

Recent Articles
Best of I. Nelson Rose
I. Nelson Rose

Professor I. Nelson Rose is an internationally known scholar, public speaker and writer and is recognized as one of the world's leading authorities on gambling law. A 1979 graduate of Harvard Law School, he is a tenured full Professor at Whittier Law School in Costa Mesa, California, where he teaches one of the first law school classes on gaming law.

Professor Rose is the author of more than 300 books, articles, book chapters columns. He is best known for his internationally syndicated column, "Gambling and the Law ®," and his landmark 1986 book by the same name. His most recent book is a collection of columns and analysis, co-authored with Bob Loeb, on Blackjack and the Law.

A consultant to governments and industry, Professor Rose has testified as an expert witness in administrative, civil and criminal cases in the U.S., Australia and New Zealand, and has acted as a consultant to major law firms, international corporations, licensed casinos, players, Indian tribes, and local, state and national governments, including Arizona, California, Florida, Illinois, Michigan, New Jersey, Texas and the federal governments of Canada and the United States.

With the rising interest in gambling throughout the world, Professor Rose has spoken before such diverse groups as the F.B.I., National Conference of State Legislatures, Congress of State Lotteries of Europe, United States Conference of Mayors, and the National Academy of Sciences. He has presented scholarly papers on gambling in Nevada, New Jersey, Puerto Rico, England, Australia, Antigua, Portugal, Italy, Argentina and the Czech Republic.

He is the author of Internet Gaming Law (1st & 2nd editions), Blackjack and the Law and Gaming Law: Cases and Materials.

I. Nelson Rose Websites:

www.gamblingandthelaw.com

Books by I. Nelson Rose:

Compulsive Gambling and the Law

> More Books By I. Nelson Rose

I. Nelson Rose
Professor I. Nelson Rose is an internationally known scholar, public speaker and writer and is recognized as one of the world's leading authorities on gambling law. A 1979 graduate of Harvard Law School, he is a tenured full Professor at Whittier Law School in Costa Mesa, California, where he teaches one of the first law school classes on gaming law.

Professor Rose is the author of more than 300 books, articles, book chapters columns. He is best known for his internationally syndicated column, "Gambling and the Law ®," and his landmark 1986 book by the same name. His most recent book is a collection of columns and analysis, co-authored with Bob Loeb, on Blackjack and the Law.

A consultant to governments and industry, Professor Rose has testified as an expert witness in administrative, civil and criminal cases in the U.S., Australia and New Zealand, and has acted as a consultant to major law firms, international corporations, licensed casinos, players, Indian tribes, and local, state and national governments, including Arizona, California, Florida, Illinois, Michigan, New Jersey, Texas and the federal governments of Canada and the United States.

With the rising interest in gambling throughout the world, Professor Rose has spoken before such diverse groups as the F.B.I., National Conference of State Legislatures, Congress of State Lotteries of Europe, United States Conference of Mayors, and the National Academy of Sciences. He has presented scholarly papers on gambling in Nevada, New Jersey, Puerto Rico, England, Australia, Antigua, Portugal, Italy, Argentina and the Czech Republic.

He is the author of Internet Gaming Law (1st & 2nd editions), Blackjack and the Law and Gaming Law: Cases and Materials.

I. Nelson Rose Websites:

www.gamblingandthelaw.com

Books by I. Nelson Rose:

Compulsive Gambling and the Law

> More Books By I. Nelson Rose