The Bizarre Law of Dealer Schools

Changes in the law always trail changes in society. As legal gambling becomes more accepted, legislatures and judges find themselves struggling to catch up – and 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 dealer 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, as long as the casino equipment was used for school instruction purposes only.

But, legal gambling is one of the few businesses in which 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 Dec. 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 parimutuel 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 also had 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 of 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, "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 took 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 applied only because Michigan already permitted casino gaming for money – that is, 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 U.S. 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.

Professor I. Nelson Rose is recognized as one of the world's leading authorities on gambling law. His website is www.GamblingAndTheLaw.com.