| Matter of Pace-O-Matic, Inc. v New York State Liq. Auth. |
| 2010 NY Slip Op 02694 [72 AD3d 1144] |
| April 1, 2010 |
| Appellate Division, Third Department |
| In the Matter of Pace-O-Matic, Inc., Respondent, v New York StateLiquor Authority, Appellant. New York State Racing and Gaming Association, Inc., ProposedIntervenor-Appellant. |
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McCarthy, J. Appeal from a judgment of the Supreme Court (McDonough, J.), enteredMarch 31, 2009 in Albany County, which, among other things, granted petitioner's application,in a proceeding pursuant to CPLR article 78, to annul a determination of respondent whichdeclared a certain game to be a gambling device.
Petitioner designed and produced a touch screen video game entitled Moxie Mania EmpireEdition. After money is deposited into the machine, the game consists of three phases. Duringthe Moxie phase, if the player selects the proper symbol within one second of the game gridappearing, he or she wins 104% of the amount wagered. If no symbol is selected, the game [*2]progresses to the post-Moxie phase, where the player must selectthe proper symbol within a set time of 10 to 19 seconds and the amount of the prize is randomlyselected by the machine in proportion to the difficulty of choosing the correct symbol. If at anytime the player selects the wrong symbol, he or she loses the amount wagered. The perfect playphase awards a prize for selecting the correct symbol in the Moxie phase 15 consecutive times.
Prior to selling the game in New York, petitioner retained two experts who examined andtested Moxie Mania and determined that it was a game of skill, not a game of chance, such that itwould not be considered a gambling device. Petitioner also sought and obtained an opinion fromrespondent's counsel that the game was not a gambling device.[FN1]After Moxie Mania was offered for sale and approximately 500 machines were installed in thestate, mainly in bars, respondent began reviewing the game in response to a state senator'srequest for a declaratory ruling as to whether it was a gambling device. Respondent ultimatelyissued a ruling that Moxie Mania is an illegal gambling device.
Petitioner commenced this proceeding seeking annulment of respondent's determination. TheNew York State Racing and Gaming Association, Inc. (hereinafter RGA) moved to intervene orto appear as amicus curiae. Supreme Court issued a judgment in petitioner's favor and deniedRGA's motion to intervene, although it granted RGA amicus status. Respondent and RGAappeal.
Supreme Court did not err in denying RGA's motion to intervene. Courts "may allow otherinterested persons to intervene" in special proceedings (CPLR 7802 [d]), but this permissivedetermination lies within the court's discretion (see Matter of Tennessee Gas Pipeline Co. vTown of Chatham Bd. of Assessors, 239 AD2d 831, 832 [1997]). The court did not abusethat discretion here, where RGA failed to substantiate its interests in the proceeding, havingintroduced only speculative proof regarding potential financial effects to its members if MoxieMania is permitted. Like Supreme Court, we will grant RGA amicus curiae status and therebyconsider its arguments without allowing it to intervene as a party.
Respondent has the authority and obligation to prevent gambling in establishments itlicenses (see Alcoholic Beverage Control Law § 105 [22]; § 106 [6]; seealso 9 NYCRR 53.1 [m], [t]). As the Alcoholic Beverage Control Law does not containdefinitions relating to gambling, respondent may reasonably rely on Penal Law definitions todetermine whether a particular game or activity is permissible (see Matter of Plato's CaveCorp. v State Liq. Auth., 68 NY2d 791, 793 [1986]). Under the Penal Law, gambling occurswhen someone "risks something of value upon the outcome of a contest of chance" with theunderstanding that something of value will be awarded in the event of a certain outcome (PenalLaw § 225.00 [2]). The parties agree that players in Moxie Mania pay cash to play, thusrisking something of value. There is also an understanding that something of value may beobtained; winning players receive a voucher that can be cashed in at the establishment where themachine is located. The only contested aspect of the definition of gambling is whether MoxieMania is a contest of chance. That term is defined as "any contest, game, gaming scheme orgaming device in which the outcome depends in a material degree upon an element of chance,notwithstanding that skill of the contestants may also be a factor" (Penal Law § 225.00[1]). "Outcome" is not defined in the [*3]statutes, but one ofpetitioner's experts concluded that the best definition, and the one most commonly used in theacademic literature, is "the magnitude of the award, gross or net of consideration." Thus, theoutcome includes both whether the player correctly solves the puzzle and what prize is awarded.
Applying these definitions to Moxie Mania, respondent did not act arbitrarily or capriciouslyin finding that the game was a contest of chance. Respondent acknowledged that the Moxiephase could be considered skill-based, as the reward for success is constant. While solving thepuzzle in any phase may require skill,[FN2]the outcome in the post-Moxie phase—which includes the amount of theprize—"depends in a material degree upon an element of chance" (Penal Law §225.00 [1]). The prize is selected at random by the machine, is not revealed until after the Moxiephase and may be more or less than a player might receive in the Moxie phase. Two playerscould receive different awards for solving the same number of puzzles in the same amount oftime, based entirely on the randomly-selected prize amounts. The prize amount could also bedifferent for two players winning the perfect play phase, or even for one player winning thatphase at different times. One of petitioner's experts determined that the post-Moxie phase,considered in isolation, would be a mixed game of skill and chance. The same could be truewhen considering that phase in conjunction with the overall game.
Respondent was entitled to rely upon the underlying information in the experts' reportswithout accepting the ultimate conclusions reached by petitioner's experts. Contrary to SupremeCourt's assertion, respondent did not "cherry pick" statements out of context, but insteadseparated out certain data and conclusions from the experts' opinions, accepting some andrejecting others. Respondent reviewed those reports, saw a live demonstration of the game andspoke to petitioner's president who designed the game. Based on the information before it, whilea contrary decision may also have been reasonable, we cannot say that respondent committed anerror of law or acted in an arbitrary or capricious manner by determining that Moxie Mania is acontest of chance (see Matter ofPeckham v Calogero, 12 NY3d 424, 431 [2009]; Matter of Pizzaguy Holdings, LLC v New York State Liq. Auth., 39AD3d 1072, 1073-1074 [2007]; Matter of Rios v State Liq. Auth., 32 AD2d 995,996 [1969]). Accordingly, Supreme Court should not have disturbed respondent's declaratoryruling that Moxie Mania is a gambling device that is not permitted on licensed premises.
Mercure, J.P., Lahtinen, Malone Jr. and Garry, JJ., concur. Ordered that the judgment ismodified, on the law, without costs, by reversing so much thereof as annulled respondent'sdetermination that Moxie Mania is a gambling device that is not permitted on licensed premises,and, as so modified, affirmed.
Footnote 1: The opinion letter clearly statedthat counsel's opinion was not binding on respondent and petitioner could request a declaratoryruling. Petitioner did not make such a request.
Footnote 2: One of petitioner's expertsfound that his performance in the game did not improve in a statistically significant way despiterepeated play, raising a question as to whether the game truly involves skill.