AJR5A - Proposes to amend the Nevada Constitution to revise provisions relating to lotteries and the sale of lottery tickets. (BDR C-986)

A.J.R. 5 of the 82nd Session - *AJR5_82* ASSEMBLY JOINT RESOLUTION NO. 5 OF THE 82ND SESSION– ASSEMBLYMEN C.H. MILLER AND MONROE-MORENO MARCH 17, 2023 ____________ Referred to Committee on Legislative Operations and Elections SUMMARY—Proposes to amend the Nevada Constitution to revise provisions relating to lotteries and the sale of lottery tickets. (BDR C-986) FISCAL NOTE: Effect on Local Government: No. Effect on the State: No. ~ EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. ASSEMBLY JOINT RESOLUTION—Proposing to amend the Nevada Constitution to revise provisions relating to lotteries and the sale of lottery tickets. Legislative Counsel’s Digest: As ratified in 1864, the Nevada Constitution prohibited the State from 1 authorizing a lottery and also prohibited lottery tickets from being sold. (Nev. 2 Const. Art. 4, § 24 (1864)) Nevada’s constitutional provisions regarding lotteries 3 were modeled after provisions in the California Constitution of 1849, which were 4 also similar to constitutional provisions adopted in several other states. (State ex 5 rel. Murphy v. Overton, 16 Nev. 136, 146-52 (1881); Ex parte Pierotti, 43 Nev. 6 243, 247-52 (1919)) Such constitutional provisions were: (1) adopted to prohibit 7 state legislatures from granting special charters to organizations, institutions, 8 corporations or other entities authorizing them to operate lotteries and sell lottery 9 tickets to the public; and (2) intended to protect the public from the harm caused by 10 such chartered lotteries which were prevalent in our Nation’s early history and 11 which were plagued by fraud, corruption, mismanagement and abuse because they 12 were largely unregulated by state governments. (Stone v. Mississippi, 101 U.S. 814, 13 818 (1879); State ex rel. Murphy v. Overton, 16 Nev. 136, 146-52 (1881); Ex parte 14 Pierotti, 43 Nev. 243, 247-52 (1919); Poppen v. Walker, 520 N.W.2d 238, 243 15 (S.D. 1994) (“These lotteries were the principal evil which led to their prohibition 16 in state constitutions.”), superseded on other grounds by constitutional amendments 17 to S.D. Const. Art. III, § 25 (1994)) 18 Under its existing provisions, the Nevada Constitution prohibits the State from 19 authorizing a lottery, it also prohibits the State and its political subdivisions from 20 operating a lottery and it also prohibits the sale of lottery tickets, but with certain 21 exceptions for charitable lotteries. Specifically, in 1990, Nevada’s voters approved 22 constitutional amendments allowing the Legislature to provide by law for the 23 operation and regulation of charitable lotteries, with certain restrictions, conducted 24 – 2 – - *AJR5_82* by charitable or nonprofit organizations in the form of raffles or drawings on their 25 own behalf. (Nev. Const. Art. 4, § 24) Following the 1990 constitutional 26 amendments, the Legislature enacted laws providing for comprehensive regulation 27 of charitable lotteries to ensure that those lotteries are operated honestly and free 28 from criminal and corruptive elements and that the proceeds of those lotteries are 29 expended to benefit the activities of charitable or nonprofit organizations in this 30 State. (Chapter 462 of NRS) 31 This joint resolution proposes to amend the Nevada Constitution to allow the 32 Legislature to provide by law for the operation and regulation of modern lotteries, 33 in addition to charitable lotteries, including authorizing lottery tickets to be sold for 34 such modern lotteries. However, this joint resolution prohibits the Legislature from 35 enacting laws which grant a special charter or similar organizational or governing 36 document to any person or other entity to operate lotteries or sell lottery tickets, and 37 this joint resolution prohibits political subdivisions of this State from operating 38 lotteries or selling lottery tickets. Finally, this joint resolution ensures that the 39 operation of any charitable lotteries must comply with the existing provisions 40 governing charitable lotteries that were added to the Nevada Constitution by the 41 1990 constitutional amendments. 42 If this joint resolution is passed by the 2023 Legislature, it must also be passed 43 by the next Legislature and then approved and ratified by the voters in an election 44 before the proposed amendments to the Nevada Constitution become effective. 45 WHEREAS, From our Nation’s early colonial period until the 1 mid-1800s, the proceeds from lotteries were used in America to 2 fund and build infrastructure, to establish and endow universities 3 like Harvard and Yale and to help finance the American battle for 4 independence during the Revolutionary War; and 5 WHEREAS, In some states during this period, state legislatures 6 would enact legislation which granted special charters to 7 organizations, institutions, corporations or other entities authorizing 8 them to operate lotteries and sell lottery tickets to the public for a 9 period of years, but the state governments overseeing such chartered 10 lotteries generally were not involved in the actual operation or 11 regulation of the lotteries; and 12 WHEREAS, Because there was inadequate government oversight 13 and regulation of such chartered lotteries, some of them were 14 plagued by fraud, corruption, mismanagement and abuse which 15 resulted in several well-known and scandalous cases of wrongdoing 16 by chartered lotteries, including an infamous case in New York that 17 “involved not only individuals of the state in ruin, but was the 18 occasion of serious embarrassment to the state government itself.” 19 (State ex rel. Murphy v. Overton, 16 Nev. 136, 147 (1881) (quoting 20 Report of the Debates in the Convention of California on the 21 Formation of the State Constitution of 1849, at 92 (J. Ross Browne 22 off. rep. 1850) (statement of Delegate H. W. Halleck)); and 23 WHEREAS, As a result of the well-known and scandalous cases 24 of wrongdoing by chartered lotteries, there was a nationwide 25 backlash against such lotteries and, by 1860, a majority of states had 26 – 3 – - *AJR5_82* adopted constitutional provisions prohibiting the authorization of 1 lotteries and the sale of lottery tickets, including provisions in the 2 California Constitution of 1849, which stated that “[n]o lottery shall 3 be authorized by this State, nor shall the sale of lottery tickets be 4 allowed.” (Cal. Const. Art. IV, § 27 (1849)); and 5 WHEREAS, Because the California Constitution of 1849 served 6 as the model for the Nevada Constitution, the delegates to the 7 Nevada State Constitutional Convention of 1864 adopted 8 California’s constitutional provisions regarding lotteries, without 9 additional discussion or debate, so that the Nevada Constitution, as 10 ratified in 1864, stated that “[n]o lottery shall be authorized by this 11 State, nor shall the sale of lottery tickets be allowed.” (Nev. Const. 12 Art. 4, § 24 (1864); State ex rel. Murphy v. Overton, 16 Nev. 136, 13 146-47 (1881)); and 14 WHEREAS, Courts have recognized that constitutional provisions 15 regarding lotteries are intended to protect the public from the harm 16 caused by past chartered lotteries which were prevalent in our 17 Nation’s early history and which were plagued by fraud, corruption, 18 mismanagement and abuse because they were largely unregulated 19 by state governments (Stone v. Mississippi, 101 U.S. 814, 818 20 (1879); State ex rel. Murphy v. Overton, 16 Nev. 136, 146-52 21 (1881); Ex parte Pierotti, 43 Nev. 243, 247-52 (1919); Poppen v. 22 Walker, 520 N.W.2d 238, 243 (S.D. 1994) (“These lotteries were 23 the principal evil which led to their prohibition in state 24 constitutions.”), superseded on other grounds by constitutional 25 amendments to S.D. Const. Art. III, § 25 (1994)); and 26 WHEREAS, At the general election in 1990, Nevada’s voters 27 approved constitutional amendments allowing the Legislature to 28 provide by law for the operation and regulation of charitable 29 lotteries, with certain restrictions, conducted by charitable or 30 nonprofit organizations in the form of raffles or drawings on their 31 own behalf, and the Legislature has enacted laws providing for 32 comprehensive regulation of charitable lotteries to ensure that those 33 lotteries are operated honestly and free from criminal and corruptive 34 elements and that the proceeds of those lotteries are expended to 35 benefit the activities of charitable or nonprofit organizations in this 36 State (Nev. Const. Art. 4, § 24; chapter 462 of NRS); and 37 WHEREAS, The comprehensive regulation of modern lotteries 38 ensures that the public is protected from the harm caused by past 39 chartered lotteries which were prevalent in our Nation’s early 40 history and which were plagued by fraud, corruption, 41 mismanagement and abuse because they were largely unregulated 42 by state governments; and 43 WHEREAS, Amending the Nevada Constitution to prohibit the 44 Legislature from enacting laws which grant a special charter or 45 – 4 – - *AJR5_82* similar organizational or governing document to any person or other 1 entity to operate lotteries or sell lottery tickets will continue to 2 protect the public from the harm caused by past chartered lotteries; 3 and 4 WHEREAS, Amending the Nevada Constitution to allow the 5 Legislature to provide by law for the operation and regulation of 6 modern lotteries, in addition to charitable lotteries, will ensure that 7 such modern lotteries are operated honestly and free from criminal 8 and corruptive elements and that the proceeds of those lotteries are 9 expended to benefit the general welfare of the residents of this State; 10 now, therefore, be it 11 RESOLVED BY THE ASSEMBLY AND SENATE OF THE STATE OF 12 NEVADA, JOINTLY, That Section 24 of Article 4 of the Nevada 13 Constitution be amended to read as follows: 14 Sec: 24. 1. Except as otherwise provided in 15 [subsection 2,] this section, no lottery may be authorized by 16 this State, nor may lottery tickets be sold. 17 2. The [State and the] Legislature may provide by law 18 for the operation and regulation of lotteries, including, 19 without limitation, authorizing lottery tickets to be sold, 20 except that: 21 (a) The Legislature shall not pass any laws which grant 22 a special charter or similar organizational or governing 23 document to any person or other entity to operate a lottery 24 or sell lottery tickets or which otherwise authorize the 25 exercise of such powers under a special charter or similar 26 organizational or governing document. 27 (b) The political subdivisions [thereof] of this State shall 28 not operate a lottery [.] or sell lottery tickets. 29 (c) The operation of lotteries by persons engaged in 30 charitable activities or activities not for profit must comply 31 with the provisions of subsection 3. 32 3. The Legislature may authorize persons engaged in 33 charitable activities or activities not for profit to operate a 34 lottery in the form of a raffle or drawing on their own behalf. 35 All proceeds of the lottery, less expenses directly related to 36 the operation of the lottery, must be used only to benefit 37 charitable or nonprofit activities in this State. A charitable or 38 nonprofit organization shall not employ or otherwise engage 39 any person to organize or operate its lottery for compensation. 40 The Legislature may provide by law for the regulation of such 41 lotteries. 42 – 5 – - *AJR5_82* And be it further 1 RESOLVED, That this resolution becomes effective upon 2 passage. 3 H