Western Telcon, Inc. v. California State Lottery

May the California State Lottery, consistent with its constitutional and statutory authority, operate the game it calls Keno? After examining California law on lotteries and other forms of gambling, we conclude it may not, for a simple reason: California State Lottery Keno is not a lottery. As operated by the California State Lottery, Keno does not meet the statutory definition of a “lottery game” (Gov. Code, § 8880.12) or that of a “lottery” (Pen. Code, § 319), but is instead a house-banked game, in which the participants bet individually against the game’s operator, the California State Lottery.

Plaintiffs Western Telcon, Inc., doing business as Pachinko Palace, and the California Horsemen’s Benevolent & Protective Association, Inc. brought this action against the California State Lottery (CSL), seeking a declaration CSL Keno is illegal and an injunction against its further operation. The trial court granted CSL’s summary judgment motion, denied plaintiffs’ cross-motion, permitted the Califomia-Nevada Indian Gaming Association (CNIGA) to intervene as a defendant, and entered judgment for CSL and CNIGA.

The Court of Appeal affirmed, holding that CSL Keno “fully…