NORTH DAKOTA

I. Definition of Gambling

1. Gambling is defined by North Dakota code as “risking any money, credit, deposit, or other thing of value for gain, contingent, wholly or partially, upon lot, chance, the operation of gambling apparatus, or the happening or outcome of an event . . . .” N.D. Cent. Code § 12.1-28-01 (2006). The definition of gambling includes risking something of value on a sporting event “over which the person taking the risk has no control.” Id.

2. Gambling does not include business transactions; contests or games of skill, speed, strength, or endurance where awards are only given to the entrants; and the use of gaming equipment and devices by institutions of higher education where the purpose of the use of the equipment is to conduct scientific research in a controlled environment. Id.

3. North Dakota applies a test of predominance in determining whether a game qualifies as gambling. “The three elements of gambling are generally recognized as consideration, prize, and chance.” Midwestern Enterprises, Inc. v. Stenehjem, 625 N.W.2d 234 (N.D. 2001). It is important that chance play a predominant factor in the operation of the game or device. Middlemas v. Strutz, 299 N.W. 589, 590 (N.D. 1941).

4. Fun casinos are legal when chips are given to players to participate in games and no consideration is given by the player in order to receive the chips. 1982 Op. Atty Gen. N.D. 119. As long as the element of consideration is not present then the activity does not constitute gambling. Id. However, consideration will be sufficiently shown where a player purchases drinks and subsequently receives “free” chips for play. Id.

II. Definition of Bookmaking

North Dakota does not have statutory, case law, or attorney general opinion definition of bookmaking.

III. Specific Gaming Device Definitions

Gaming devices, under the North Dakota code, are those gambling apparatuses that are used in the playing phases of any gambling activity. N.D. Cent. Code § 12.1-28-01 (2006). The gambling activity can be one that requires gambling between persons or gambling by one individual involving the playing of a machine. Id. A gambling apparatus does not include amusement games or devices permitted under amusement concessions in the Sports & Amusements chapter of the North Dakota Code. Id.

Coin operated gaming device:

North Dakota’s criminal code, in defining the gambling activity that qualifies as a class C felony, references the maintaining of a coin-operated gaming device. That section of the code then goes on to define a “coin-operated gaming device”. The definition of a coin-operated gaming device includes slot machines that operate by insertion of a coin or token, and by an element of chance, may deliver or entitle the person operating the machine to receive cash, merchandise or tokens. N.D. Cent. Code § 12.1-28-02 (2006). A coin-operated gaming device can also include machines that are similar to a slot machine and require insertion of a coin or token in order to operate. Id. Antique slot machines are excluded from this definition, but the machine must be twenty-five years old or older and “is collected and possessed by a person as a hobby and is not maintained for the business of gambling.” Id. The definition does not extend to those machines that are legally permissible as an amusement machine under section 53-04-01. Id.

In Midwestern Enterprises, Inc. v. Stenehjem, a device accepted $1, $5, $10, and $20 bills as payment to receive two-minute phone cards. 625 N.W.2d 234 (N.D. 2001). The device did not give change, but instead randomly dispensed chances to win cash prizes for each dollar risked. Id. Payment of twenty dollars for a phone card valued at one dollar allowed the participant the opportunity to get twenty two-minute phone cards in conjunction with twenty chances to win cash prizes. Id. at 235. The device does not allow a participant to insert a twenty-dollar bill, receive one two-minute phone card and nineteen dollars in change. The Supreme Court of North Dakota affirmed the lower court’s decision that the device qualified as a gambling apparatus under § 12.1-28-01(3) of the State code. Id.

IV. Bucket Shop Laws

Case law indicates that bucket shop laws were in effect in North Dakota in the early 1900’s. See Thoreson v. Hector, 210 N.W. 169 (N.D. 1926); Edgeley Co-operative Grain Co. v. Spitzer, 184 N.W. 880 (N.D. 1921). However, current North Dakota Century Code and case law indicate that bucket shop activities and laws are not longer in effect.

V. Prohibition of Games of Skill

Section 12.1-28-01 of the North Dakota code states that card, dice and similar games, when conducted in a private residence, are excluded from the presumption that the premises are maintained as a gambling house. N.D. Cent. Code § 12.1-28-01. Although the code does not expressly permit conducting games of skill, this section of the code appears to indicate that friendly games conducted in a private residence will be permitted by the state.

An Attorney’s general opinion clarifies that bowling tournaments, even where there is a $1,000 entry fee, are a lawful contest of skill. 1985 N.D. AG.

VI. Express Exemptions

1. Games of Chance

Under the regulations and guidelines of the North Dakota State Gaming Commission numerous games of chance are made legal provided they are conducted by qualifying organizations under permissible conditions.

a. Organizations & Licensing

Organizations must apply for a permit in order to conduct games of chance. N.D. Cent. Code § 53-06.1-03 (2006). Permits are local to a city or county and are typically issued to non-profit organizations or a group of people domiciled in North Dakota. N.D. Cent. Code § 53-06.1-01 (2006). Public-spirited organizations may apply for a local county or city permit to conduct raffles, bingo or sport pools. N.D. Cent. Code § 53-06.1-03 (2006). The definition of a public-spirited organization is in the sole discretion of the governing body of the city or county in which the permit is sought. Id. Such an organization may also apply for a charity local permit to conduct raffles, bingo, sports pools, paddlewheels, twenty-one, and poker. Charity local permits are governed by the following restrictions: may only conduct one event per year; cannot compensate employees; chips must be used for wagers; chips must be redeems for merchandize cash or prizes; net income must be disbursed for eligible uses set forth in section 53-06.1-11.1; a report must be filed with the attorney general of the governing body. Id.

Licenses are issued, to eligible organizations, by the attorney general. N.D. Cent. Code § 53-06.1-01 (2006). An eligible organization is defined as a “veterans, charitable, educational, religious, fraternal, civic and service, public safety, or public-spirited organization domiciled in North Dakota, incorporated as a nonprofit organization, and which has been regularly fulfilling its primary purpose within this state during the two immediately preceding years.” Id. An education organization does not need to be incorporated or in existence for two years in order to qualify as eligible. Id. Also, the primary purpose of the organization cannot be the conduct of games. Id. Eligible organizations can apply for a license to conduct bingo, raffles, calcuttas, pull tabs, punchboards, twenty-one, paddlewheels, poker, or sports pools. N.D. Cent. Code § 53-06.1-03 (2006). “Only one licensed organization . . . may conduct games at an authorized site on a day . . .” Id. An exception to this general rule is that a raffle may be conducted by another licensed organization when the raffle is physically separate from the area where the games are conducted by the regular organization; or upon request by the regular organization their permit is suspended for that specific time of the day, this request must be met with the approval of the alcoholic beverage establishment. Id. Licensed organizations may not have more than twenty-five sites unless one sit is temporarily authorized for fourteen or fewer consecutive days. Id. The permitted games may only be conducted “during the house when alcoholic beverages may be dispensed according to applicable regulations of the state, county, or city.” Id. Persons under twenty-one years of age are not permitted to play pull-tabs, punchboards, twenty-one, calcuttas, sports pools, paddlewheels, or poker. Id. Persons under eighteen years of age are not permitted to play bingo unless the accompanied by an adult. Id. The licensed organizations site authorization and license, or permit must be displayed at the site. Id.

b. Games Permitted:

Poker, calcutta, paddlewheels, punchboards, sports wheels, raffles, bingo and twenty one are the permitted games of chance.

i. Poker

An organization may only conduct poker at a maximum of two occasions per year. N.D. Cent. Code § 53-06.1-07.2 (2006). Bets cannot exceed one dollar; only three raises may be made, a raise not more than one dollar by each of the players in each round of bets. Id. If the poker game is a non-tournament event than the organization must charge, in advance, each player a fee, not exceeding two-dollars per half hour of playing time. Id. However, if the game is a tournament then the organization must charge players an entry fee, no maximum fee is indicated, and the amount of prizes cannot be in excess of ninety- percent of the proceeds. Id.

ii. Calcuttas

Calcuttas can only be conducted for professional and amateur sporting events. N.D. Cent. Code § 53-06.1-07.3 (2006). Wagers may not be placed on a competitor, in a calcutta sporting event, who is under eighteen years of age. Id. Competitors are allowed one wager in a calcutta pool and the prizes may not exceed ninety percent of the gross proceeds. Id.

iii. Paddewheels

Paddlewheels are characterized as a mechanical vertical wheel with equally marked off sections that are labeled with numbers or symbols. N.D. Cent. Code § 53-06.1-07.4 (2006). The winner of a paddlewheel is determined, after a spin of the wheel, based on the number or symbol that the pointer lands on. Id. Two dollars is the maximum price per paddlewheel ticket and a player may not place wagers totaling more then twenty dollars on each spin of the paddlewheel. Id. Prizes awarded may not exceed one hundred dollars, but the prize can be awarded as cash, chips or merchandise. Id.

iv. Punchboard

Punchboard and pull-tab games may not be closed unless all top tier winning pull tabs or punchboard punches have been redeemed. N.D. Cent. Code § 53-06.1-08 (2006). Maximum sales price per individual pull tab and punchboard punch is two dollars and the maximum prize value is five hundred dollars. Id.

v. Sports pool

“A sports pool must be for a professional sport only. The maximum wager is five dollars. The amount of prizes may not exceed ninety percent of the gross proceeds.” N.D. Cent. Code § 53-06.1-09 (2006).

vi. Twenty-one

In conducting the game of twenty-one, chips of various denominations must be provided by the organization to the players. N.D. Cent. Code § 53-06.1-10 (2006). Maximum wagers may be set by the organization, but cannot exceed twenty-five dollars. Id. If the organization’s site is conducted more then one active twenty-one table then minimum wagers may be set forth, but not on more than one-half of the active tables. Id. The player’s hand is being played against the dealer’s hand and only the player may place a wager on his hand. Id.

vii. Raffle

Raffle prizes cannot exceed one thousand dollars and must be either cash or merchandise and cannot include real estate. N.D. Cent. Code § 53-06.1-10.1 (2006). The total cash prizes in one day’s raffle cannot exceed three thousand dollars. Id. However, a licensed organization at one occasion per year, may, “at the request of a winning player, exchange a merchandise prize valued at not more than twenty-five thousand dollars for a cash prize.” Id.

c. Distributors & Manufacturers

Licensing must be obtained by manufacturer’s of pull tabs, bingo cards, bingo card making devices, and pull tab dispensing devices. N.D. Cent. Code § 53-06.1-14 (2006). Licensing fees vary depending on what item the licensee will be manufacturing. Id. The distributor of such devices must also annually apply for licensing. Id. Licensed distributors are prohibited from selling, marketing or distributing gambling equipment unless it is to another licensed distributor, licensed organization or organization that has a permit. Id. “A licensed distributor shall affix a North Dakota gaming stamp to each deal of pull tabs and bingo cards, punchboard, sports pool board, calcutta board, and series of paddlewheel ticket cards sold or otherwise provided to a licensed organization . . . .” Id. The stamps can be purchased from the attorney general. A licensed distributor may not also be a “licensed organization, organization with a permit, licensed manufacturer or North Dakota wholesaler of liquor or alcoholic beverages.” Id. 

2. Pari-mutuel Horse Racing

The North Dakota racing commission permits eligible organizations to conduct racing and simulcast pari-mutuel racing. See N.D. Cent. Code § 53-06.2-6 (2006). Organizations that are eligible to obtain licensing to conduct pari-mutuel wagering include: “civic and service clubs; charitable, fraternal, religious, and veterans’ organizations; and other public-spirited organizations . . . .” Id.

Licenses issued must indicate the time, place and manner in which racing may be conducted, including the number of days that races may be held, the hours of operation and the number of races that may be held per day. N.D. Cent. Code § 53-06.2-08 (2006). North Dakota’s racing commission uses a certificate system as the vehicle for a licensee to receive wagers “from any person present at a lice horse race, simulcast horse race, or simulcast dog race . . . .” N.D. Cent. Code § 53-06.2-10 (2006). The licensee issues a certificate to each bettor; the certificate shows the number of the race, amount of the bet and the entry selected. Id.

3. Lottery:

A division of the Attorney General’s office operates North Dakota lottery, including the online lottery, “a game linked to a central computer via a telecommunications network in which the player selects a specified group of numbers of symbols out of a predetermined range of numbers or symbols.” N.D. Cent. Code § 53-12.1-01 (2006). Retailers seeking a license to sell lottery tickets must make application to the director; if a license is obtained it is renewable annually, non-transferable and the license must be conspicuously displayed at the retailer’s location. N.D. Cent. Code § 53-12.1-06 (2006). North Dakota Lottery conducts the following games: Powerball, Hot Lotto, Wild Card 2, and 2 by 2. http://www.lottery.nd.gov/Games/index.shtml.

4. Amusement Concessions & Games

An amusement concession is defined as “any place where a single amusement game or device, or bingo, is conducted by a person for profit . . . .” N.D. Cent. Code § 53-04.1-01 (2006). Amusement games and devices includes “electric ray guns, music boxes, picture boxes, bumper-ball, or pinball, and other similar miniature games or devices, whether or not they show a score, where a charge for playing or operating is collected . . .” Id. Amusement games include those games were a person stakes “something of value for an opportunity to win something of value in which the outcome depends in a material degree upon an element of chance, notwithstanding a person’s skill may also be a factor.” Id.

Licensing

In order to conduct amusement games, devices or bingo at an amusement concession a fair board must apply for a license. N.D. Cent. Code § 53-04.1-03 (2006). Application for the license must be made at least thirty days before the games are to be operated. Id. A fair board is defined by the section as “the officers of any state or county fair association, or the agents of any such board, duly authorized to make any contract or issue any permitted as provided by this chapter. N.D. Cent. Code § 53-04.1-01 (2006).

VII. Specific Internet Prohibition

In 2005, the North Dakota House passed House Bill No. 1509 to authorize “Internet live poker” within the State. See H. 1509, 59^th Leg. Assem. The amendment to the North Dakota code was intended to permit certain forms of poker to be played online and be operated by establishments licensed through the state attorney general. Id. Although the bill passed in the house, it was subsequently struck down by the state senate. Poker Listings.com, N.D. Attorney General says give up on Internet Poker, http://www.pokerlistings.com/nd-attorney-general-says-give-up-on-internet-poker. There have been additional efforts to legalize internet poker in North Dakota, but no efforts have been successful to date. Id. North Dakota does not appear to have any case law striking down internet gambling activity as illegal.

VIII. Penalties for unlawful gambling/Gaming Crimes

1. Gambling House:

North Dakota defines a gambling house as “any location or structure, stationary or movable, wherein gambling is permitted or promoted, or where a lottery is conducted or managed.” N.D. Cent. Code § 12.1-28-01 (2006). A gambling house is presumed to exist at any location where a gambling apparatus is found. Id. However, “this presumption shall not apply where cards, dice, or other games are found in a private residence.” Id.

2. Infraction:

Participation in gambling activities on private premises is an infraction “where the total amount wagered by an individual exceeds twenty-five dollars per individual hand, game, or event.” N.D. Cent. Code § 12.1-28-02 (2006).

3. Class A Misdemeanor:

The following activities under are all punishable under North Dakota statute as a class A misdemeanor:

a. Sell, purchase, receive, or transfer a chance to participate in a lottery, whether the lottery is drawn in state or out of state, and whether the lottery is unlawful in the other state or country;

b. Disseminate information about a lottery with intent to encourage participation in it, except that a legal lottery may be advertised in North Dakota; or

c. Engage in gambling on private premises where the total amount wagered by an individual player exceeds five hundred dollars per individual hand, game, or event. N.D. Cent. Code § 12.1-28-02 (2006).

4. Class C Felony:

Engaging in, or participation in the business of gambling is a class C felony. N.D. Cent. Code § 12.1-28-02 (2006). Although not limited to the following activities, the business of gambling does include conducting a pool or lottery; receiving wagers on another’s behalf; financing, controlling or managing a gambling business; leasing or permitting a place to be used for the purposes of maintaining a gambling business or house; maintaining for use a coin-operated gaming device; or a public servant receiving proceeds from the conduct of a gambling business. Id.

IX. Statute of Anne/recovery of debts

Various portions of North Dakota’s statute governing contracts and obligations clearly indicates that gambling contracts will not be upheld as valid enforceable contracts. In Meyer v. Hawkinson, the court held that gambling debts are not valid contracts. 626 N.W.2d 262 (N.D. 2001). The court said “gambling differs from other business transactions, and ordinary remedies usually are not available to enforce gambling debts.” Id. at 265. The court used multiple sections of the North Dakota code to enforce the concept that gambling debts are unenforceable, void contracts. Section 9-05-04 states that a contract is void if the consideration given for the contract is unlawful. Furthermore, “a contract is unlawful if it is (1) contrary to an express provision of law; (2) contrary to the policy of express law; or (3) otherwise contrary to goods morals.” N.D Cent. Code § 9-08-01 (2006).