Is an eight-liner that pays out on a stored-value card a gambling device in Texas?

TX AG Opinion GA-0527: Is an eight-liner paying out on a stored-value card a gambling device?

Plain-English summary

The Bexar County Criminal District Attorney asked about an amusement machine that operates like a traditional "eight-liner" (an electronic device resembling a slot machine where a player wins by matching symbols across eight lines). On this machine a player creates an electronic account, accumulates winnings, and then receives a stored-value card loaded with the amount won, which can be spent on merchandise at various stores. The Texas Supreme Court had already held that a machine paying out gift certificates usable for merchandise is a gambling device. The DA wanted to know whether a stored-value debit card, being different from a paper gift certificate, would instead fall outside the definition of a gambling device.

Texas Penal Code chapter 47 makes gambling a crime, and it defines a "gambling device" broadly as a contrivance that, for consideration, gives a player a chance to win something of value. There is a narrow carve-out in section 47.01(4)(B), commonly called the "fuzzy animal exception," for devices made solely for bona fide amusement that reward the player only with low-value noncash merchandise prizes, toys, or novelties (or a representation of value redeemable for those items) capped at the lesser of ten times the play cost or five dollars.

The Attorney General concluded the stored-value card did not fit that exception. In Hardy v. State, the Texas Supreme Court reasoned that gift certificates used as a medium of exchange at retail stores were cash equivalents, not noncash prizes, because they functioned like legal tender. The same logic applied to a stored-value card: the value loaded on it can be exchanged for merchandise, so it operates like legal tender in a store, even if the holder must show identification or enter a PIN to use it. Because the card is a money equivalent and not a noncash merchandise prize, a machine that issues one to enable buying merchandise does not qualify for the section 47.01(4)(B) exception and is a gambling device. The opinion added two notes from its analysis: a 2005 opinion treating a prepaid credit card as not "money" under a different statute (the Charitable Raffle Enabling Act) did not control here, because that turned on a statutory definition rather than the Penal Code term "noncash"; and a prior opinion of the office had concluded section 47.01(4)(B) itself was unconstitutional, with a bill then pending in the Legislature that would remove the fuzzy animal exception entirely.

Currency note

This opinion was issued in 2007. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Penal Code chapter 47, including the gambling-device definition and the section 47.01(4)(B) exception, has been the subject of repeated legislative attention, and the opinion itself flagged a pending bill aimed at the exception. Anyone analyzing an amusement machine today should check the current statute and current case law rather than relying on the 2003 Vernon text this opinion construed.

Who this opinion affected (as of 2007)

Prosecutors and law enforcement: The opinion gave them a basis to treat eight-liners paying out on stored-value cards as gambling devices, the possession, manufacture, or transfer of which is a criminal offense under section 47.06.

Amusement-machine operators: The opinion told them that switching the payout from gift certificates to stored-value cards usable for merchandise did not bring a machine within the amusement exception, because both are cash equivalents.

Anyone relying on the fuzzy animal exception: The opinion narrowed the exception's reach and noted the office's prior view that section 47.01(4)(B) was unconstitutional, signaling uncertain ground for machines built around it.

Common questions

Does paying out on a debit-style card instead of a gift certificate avoid the gambling laws?
No, according to this opinion. A stored-value card usable for merchandise functions as a medium of exchange, so like a gift certificate it is a cash equivalent, not a noncash prize, and the machine is a gambling device.

What is the "fuzzy animal exception"?
It is the section 47.01(4)(B) carve-out for devices made solely for bona fide amusement that reward players only with low-value noncash merchandise prizes, toys, or novelties (capped at the lesser of ten times the play cost or five dollars).

Does requiring a PIN or ID on the card change the result?
No. The opinion said that even with a requirement to present identification or a PIN, the stored-value card still operates like legal tender in a retail establishment, so it remains a money equivalent.

What did Hardy v. State decide?
The opinion explained that in Hardy the Texas Supreme Court held eight-liners issuing gift certificates redeemable for merchandise were gambling devices, because the certificates were used as a medium of exchange and were therefore cash equivalents, not noncash prizes.

Background and statutory framework

The Texas Constitution has prohibited most gambling since 1861 and directs the Legislature to pass laws against lotteries and gift enterprises; the Legislature did so in Penal Code chapter 47, which criminalizes gambling and the knowing ownership, manufacture, transfer, or possession of a gambling device (Tex. Const. of 1861, art. VII, § 17; Tex. Const. art. III, § 47(a); Tex. Penal Code Ann. §§ 47.01-.10, 47.02(a)(3), 47.06(a) (Vernon 2003); Hardy v. State, 102 S.W.3d 123, 130 (Tex. 2003)). A "gambling device" is defined broadly, with paragraph (A) expressly including electronic versions of bingo, keno, blackjack, lottery, roulette, and video poker that award and track credits or free games (Tex. Penal Code Ann. § 47.01(4) (Vernon 2003)). In 1993 the Legislature added the paragraph (B) "fuzzy animal" exception for bona fide amusement devices rewarding players only with low-value noncash merchandise prizes, toys, or novelties (Tex. Penal Code Ann. § 47.01(4)(B) (Vernon 2003); Act of May 31, 1993, 73d Leg., R.S., ch. 774, § 1, 1993 Tex. Gen. Laws 3027, 3027).

In Hardy, the Texas Supreme Court held that gift certificates used as a medium of exchange at retail outlets were cash equivalents, not noncash merchandise prizes, so eight-liners issuing them were gambling devices (Hardy, 102 S.W.3d at 125-32; State v. One Super Cherry Master Video 8-Liner Mach., 55 S.W.3d 51, 54 (Tex. App.-Austin 2001), rev'd, 102 S.W.3d 132 (Tex. 2003); Fifty Six (56) Gambling Devices v. State, No. 07-03-0132-CV, 2004 WL 635429, at *2 (Tex. App.-Amarillo 2004, no pet.)). Applying that reasoning, the opinion concluded a stored-value card usable for merchandise is likewise a money equivalent and not a noncash prize. It distinguished a 2005 opinion construing "money" under the Charitable Raffle Enabling Act, which turned on a statutory definition rather than the Penal Code term "noncash" (Tex. Occ. Code Ann. § 2002.002).

Citations

Constitution and statutes:

• Tex. Const. of 1861, art. VII, § 17; Tex. Const. art. III, § 47(a)
• Tex. Penal Code Ann. §§ 47.01-.10, 47.01(4), 47.01(4)(B), 47.02(a)(3), 47.06(a) (Vernon 2003)
• Act of May 31, 1993, 73d Leg., R.S., ch. 774, § 1, 1993 Tex. Gen. Laws 3027, 3027
• Tex. Occ. Code Ann. § 2002.002

Cases:

• Hardy v. State, 102 S.W.3d 123 (Tex. 2003)
• State v. One Super Cherry Master Video 8-Liner Mach., 55 S.W.3d 51, 54 (Tex. App.-Austin 2001), rev'd, 102 S.W.3d 132 (Tex. 2003)
• Fifty Six (56) Gambling Devices v. State, No. 07-03-0132-CV, 2004 WL 635429, at *2 (Tex. App.-Amarillo 2004, no pet.)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0527
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2007/ga0527.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain - the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS
GREG ABBOTT

March 6, 2007

The Honorable Susan D. Reed
Bexar County Criminal District Attorney
Bexar County Justice Center
300 Dolorosa, Fifth Floor
San Antonio, Texas 78205-3030

Opinion No. GA-0527

Re: Whether a machine that records a player's winnings onto a stored-value debit card is a "gambling device" for purposes of section 47.01(4)(B) of the Penal Code (RQ-0529-GA)

Dear Ms. Reed:

You ask about an amusement machine requiring the player to pay money in order to play. You inform us that the machine "requires a player to create an electronic account with the machine operator." Request Letter, supra note 1, at 1. The player can accumulate winnings, which are "recorded in the account[,] and the player is given a stored-value card" in an amount of the accumulated winnings. Id. You describe how a player can then use the stored-value card to purchase merchandise. See id. Noting that the Texas Supreme Court has determined that a machine rewarding players with a gift certificate to be used for merchandise is a gambling device, you inquire whether "[i]n light of the difference between a stored-value debit card and a gift certificate, . . . an amusement machine that issues a stored-value debit card [is] excluded from the definition of gambling device." Id. at 2.

"As early as 1861, the Texas Constitution prohibited most types of gambling." Hardy v. State, 102 S.W.3d 123, 130 (Tex. 2003) (citing TEX. CONST. of 1861, art. VII, § 17). Pursuant to the constitutional mandate to "pass laws prohibiting lotteries and gift enterprises," the Legislature enacted chapter 47, Texas Penal Code, which makes gambling a criminal offense. TEX. CONST. art. III, § 47(a); see TEX. PENAL CODE ANN. §§ 47.01-.10 (Vernon 2003). In Texas, a person commits an offense if the person "plays and bets for money or other thing of value at any game played with cards, dice, balls, or any other gambling device." TEX. PENAL CODE ANN. § 47.02(a)(3) (Vernon 2003). It is also a criminal offense for a person to "knowingly own[], manufacture[], transfer[], or possess[] any gambling device" designed for gambling purposes. Id. § 47.06(a). A "gambling device" is defined as

any electronic, electromechanical, or mechanical contrivance not excluded under Paragraph (B) that for a consideration affords the player an opportunity to obtain anything of value, the award of which is determined solely or partially by chance, even though accompanied by some skill, whether or not the prize is automatically paid by the contrivance. The term:

(A) includes, but is not limited to, gambling device versions of bingo, keno, blackjack, lottery, roulette, video poker, or similar electronic, electromechanical, or mechanical games, or facsimiles thereof, that operate by chance or partially so, that as a result of the play or operation of the game award credits or free games, and that record the number of free games or credits so awarded and the cancellation or removal of the free games or credits; . . .

Id. § 47.01(4) (Vernon 2003). In 1993, the Legislature added an exception to the definition. See Act of May 31, 1993, 73d Leg., R.S., ch. 774, § 1, 1993 Tex. Gen. Laws 3027, 3027. The exception, commonly known as the fuzzy animal exception, provides that a gambling device:

(B) does not include any electronic, electromechanical, or mechanical contrivance designed, made, and adapted solely for bona fide amusement purposes if the contrivance rewards the player exclusively with noncash merchandise prizes, toys, or novelties, or a representation of value redeemable for those items, that have a wholesale value available from a single play of the game or device of not more than 10 times the amount charged to play the game or device once or $5, whichever is less.

TEX. PENAL CODE ANN. § 47.01(4)(B) (Vernon 2003). Your specific question focuses on paragraph (B) and whether the amusement machine and its reward as you describe it falls within the exception. See Request Letter, supra note 1, at 1.

You state that the machine in question operates like a traditional "eight liner." See id. An eight liner is an electronic device, resembling a slot machine, on which a person wins by "matching symbols in one of eight lines-three horizontal, three vertical, and two diagonal." Hardy, 102 S.W.3d at 125. Eight liners record points won or credits. See id. at 126; State v. One Super Cherry Master Video 8-Liner Mach., 55 S.W.3d 51, 54 (Tex. App.-Austin 2001) (describing operation of eight liners), rev'd, 102 S.W.3d 132 (Tex. 2003). Upon completion of play, the player or the operator pushes a button on the machine, which cancels the existing credits and issues some form of indicator as to the number of points or credits earned, which in turn equates to money. See Hardy, 102 S.W.3d at 126; One Super Cherry Master Video 8-Liner Mach., 55 S.W.3d at 54. With regard to the machine about which you ask, the value of the money accumulated is recorded on a stored-value card, which can be redeemed for merchandise at various stores. See Request Letter, supra note 1, at 1.

You correctly note that the Texas Supreme Court ruled that gift certificates are not "noncash merchandise prizes" within the exception and that machines that issue them are gambling devices. See id. at 2. In Hardy v. State, the Texas Supreme Court considered whether eight-liner machines that issued gift certificates fell within the gambling device exception. See Hardy, 102 S.W.3d at 125. The machines in question produced tickets that could be exchanged for gift certificates redeemable for merchandise at Wal-Mart and Sam's Club or for credits to play at another machine. See id. at 126. The eight liners in the case did not award prizes, toys, or novelties, and the awarded gift certificates were not redeemable solely for such items, so the question for the court was whether a gift certificate itself was a noncash merchandise prize. See id. at 131 (stating that the parties agreed a "gift certificate is not a toy or novelty"). The court defined cash as "ready money (as coin, specie, paper money, an instrument, token, or anything else being used as a medium of exchange)" or "money or its equivalent paid immediately or promptly after purchasing" and then defined "noncash" simply as not cash. See id. Critical to the court's analysis was the fact that the gift certificates "were used as a medium of exchange at various retail outlets." Id. The court observed that the gift certificates were the equivalent of money, noting that the denomination of the certificate coincided with the denomination of paper bills and that they were easily converted to cash. See id. at 131-32. The court stated that if the "reward operates in the same manner as legal tender in a retail establishment, it does not qualify as a noncash merchandise prize, toy or novelty item." Id. at 132. Finally, the court held that "because the eight liners . . . rewarded the players with 'cash' or its equivalent, the machines do not satisfy the section 47.01(4)(B) exclusion." Id.

In Hardy, the court's holding rested on the premise that the item rewarded by the machine, a gift certificate, was used as a medium of exchange. Because the gift certificates were a cash equivalent, they were not "noncash" merchandise prizes. See id. Similarly, the stored-value cards you describe, despite any restrictions and limitations on ease of use, are used as a medium of exchange. The amount of value stored on the card equates to an amount or value that can be exchanged for merchandise. See Request Letter, supra note 1, at 1. In other words, even with a requirement to present identification or a personal identification number, the stored-value card "operates in the same manner as legal tender in a retail establishment." Hardy, 102 S.W.3d at 132. Such a stored-value card, like a gift certificate, is a money equivalent and does not constitute a "noncash merchandise prize." Accordingly, a machine that issues a stored-value card enabling the purchase of merchandise does not fall within the exception of section 47.01(4)(B) and is a gambling device.

SUMMARY

A stored-value card enabling the purchase of merchandise is a medium of exchange within the definition of cash and therefore does not constitute a "noncash merchandise prize" within the exception of section 47.01(4)(B), Penal Code. Eight-liner machines rewarding play with such a stored-value card are gambling devices.

Very truly yours,

GREG ABBOTT
Attorney General of Texas

KENT C. SULLIVAN
First Assistant Attorney General

ELLEN L. WITT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Charlotte M. Harper
Assistant Attorney General, Opinion Committee

Footnotes

[1] See Letter and Brief from Honorable Susan D. Reed, Bexar County Criminal District Attorney, to Honorable Greg Abbott, Attorney General of Texas, at 1 (Sept. 5, 2006) (on file with the Opinion Committee, also available at http://www.oag.state.tx.us) [hereinafter Request Letter and Brief, respectively].

[2] See Hardy v. State, 102 S.W.3d 123, 132 (Tex. 2003).

[3] "Paragraph (B) was introduced in Senate Bill 522, which amended section 47.01(4) and became effective August 30, 1993. Yet when the new Penal Code became effective on September 1, 1994, it did not contain paragraph (B). Consequently, the Legislature re-enacted the amendment in 1995." Hardy, 102 S.W.3d at 131, n.5 (citations omitted); see also Tex. Att'y Gen. Op. No. DM-466 (1998) at 1-2.

[4] See Fifty Six (56) Gambling Devices v. State, No. 07-03-0132-CV, 2004 WL 635429, at *2 (Tex. App.-Amarillo 2004, no pet.) (not reported in S.W.3d) (referring to section 47.01(4)(B) as the fuzzy animal exception).

[5] You suggest our conclusion in Attorney General Opinion GA-0341 (2005), that a prepaid credit card was not a negotiable instrument under the Charitable Raffle Enabling Act, would direct another result here. See Brief, supra note 1, at 1-2. The question in Attorney General Opinion GA-0341 was whether a prepaid credit card was "money" as the term "money" was defined by the Charitable Raffle Enabling Act. See Tex. Att'y Gen. Op. No. GA-0341 (2005) at 2 (construing section 2002.002, Occupations Code). By contrast, here we examine the Penal Code's term "noncash," as construed by the Texas Supreme Court in the absence of a statutory definition.

[6] We do not here consider a stored-value card that is redeemable solely for noncash merchandise "prizes, toys, or novelties" in accordance with section 47.01(4)(B). However, in addition to our conclusion that the amusement machine at issue does not satisfy the section 47.01(4)(B) exception, we note that in a prior opinion this office concluded that section 47.01(4)(B) is unconstitutional. See Tex. Att'y Gen. Op. No. DM-466 (1998) at 3. We also note that a bill now pending before the Eightieth Legislature would eliminate such constitutional infirmities by, among other changes, removing the fuzzy animal exception entirely. See Tex. H.B. 330, 80th Leg., R.S. (2007).