Quick Charge Kiosk LLC v. Josh Kaul

2020 WI 54SUPREME COURT OF WISCONSIN
CASE NO.: 2018AP947
COMPLETE TITLE: Quick Charge Kiosk LLC and Jeremy Hahn,
Plaintiffs-Appellants-Petitioners,
v.
Josh Kaul, in his official capacity as Attorney
General,
Defendant-Respondent.
REVIEW OF DECISION OF THE COURT OF APPEALS
Reported at 388 Wis. 2d 525,934 N.W.2d 18PDC No:2019 WI App 51 - Published
OPINION FILED: June 12, 2020
SUBMITTED ON BRIEFS:
ORAL ARGUMENT: April 27, 2020
SOURCE OF APPEAL:
COURT: Circuit
COUNTY: Milwaukee
JUDGE: John J. DiMotto
JUSTICES:
HAGEDORN, J., delivered the majority opinion for a unanimous
Court.
NOT PARTICIPATING:
ATTORNEYS:
For the plaintiffs-appellants-petitioners, there were
briefs filed by Ohioma Emil Ovbiagele, Samantha Huddleston, and
OVB Law & Consulting, S.C., Milwaukee. There was an oral
argument by Ohioma Emil Ovbiagele.
For the defendant-respondent, there was a brief filed by
Colin T. Roth, assistant attorney general; with whom on the
brief was Joshua L. Kaul, attorney general. There was an oral
argument by Colin T. Roth.
2020 WI 54NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2018AP947
(L.C. No. 2016CV6655)
STATE OF WISCONSIN : IN SUPREME COURT
Quick Charge Kiosk LLC and Jeremy Hahn,
Plaintiffs-Appellants-Petitioners,
FILED
v.
JUN 12, 2020
Josh Kaul, in his official capacity as Attorney
General, Sheila T. Reiff
Clerk of Supreme Court
Defendant-Respondent.
HAGEDORN, J., delivered the majority opinion for a unanimous
Court.
REVIEW of a decision of the Court of Appeals. Affirmed.
¶1 BRIAN HAGEDORN, J. Quick Charge Kiosk LLC is the
commercial owner of kiosks that enable customers to pay for an
opportunity to win (or lose) money through a video game based on
chance. After its kiosks were deemed illegal gambling machines
by the attorney general and law enforcement, Quick Charge and
its owner brought this declaratory judgment action.
¶2 Quick Charge asserts that its kiosks are not gambling
machines because they do not satisfy the consideration
No. 2018AP947
requirement under the gambling machine definition in Wis. Stat.
§ 945.01(3) (2017-18).1 Quick Charge points to the definition of
consideration for lotteries under § 945.01(5) and an exception
from that definition for "in-pack chance promotions" under Wis.
Stat. § 100.16(2). This same definition and exception should
apply to gambling machines, Quick Charge contends, suggesting
its kiosks are legally compliant in-pack chance promotions.
Further, Quick Charge argues there is no consideration even if
the ordinary legal definition of consideration applies because a
free play option is available. We disagree with these
arguments.
¶3 While the lottery statute expressly excludes in-pack
chance promotions from its definition of consideration, the
gambling machine statute does not. The logical implication of
this textual distinction is that meeting the requirements of an
in-pack chance promotion does not exempt a mechanical device
from the consequences of being an illegal gambling machine.
Moreover, consideration is present here because the kiosks can
be used exactly like a standard gambling machine notwithstanding
a free play option also being available. That is, customers can
pay for an opportunity to obtain something of value by chance.
We therefore hold that Quick Charge's kiosks meet the definition
of a gambling machine under Wis. Stat. § 945.01(3).
All subsequent references to the Wisconsin Statutes are to
1
the 2017-18 version.
2
No. 2018AP947
I. BACKGROUND
¶4 Jeremy Hahn owns Quick Charge Kiosk LLC, a company
that places what Quick Charge describes as cellphone charging
kiosks in various convenience stores and gas stations throughout
the state. Resembling in Hahn's words a "penny video poker
game," Quick Charge constructs the kiosks by modifying standard
gambling machine equipment purchased from third parties to
enable a cellphone charging functionality.
¶5 A customer who puts money into a Quick Charge kiosk
receives two potential benefits. First, the kiosk gives the
customer credits to play a video game on the kiosk's screen with
a chance to win a cash prize. For every dollar inserted, a
customer receives 100 credits. Customers wager the credits
throughout different rounds and either win or lose those credits
based on the game's results. These results are determined by a
random number generator. If all credits are not lost, the
customer can print out a ticket representing his or her
winnings. That ticket is redeemable for cash from the store
where the kiosk is located. If all credits are lost, the
customer receives no cash prize and cannot continue playing the
video game without inserting more money. The kiosks' video game
pays out around 65% of all money inserted.
¶6 Inserting money into a kiosk also allows a customer to
charge a cellphone using the kiosk's attached charging cord.
Charging time is based on the amount deposited——$1 earns you one
minute of charging time. Quick Charge has two different styles
of kiosks, and their cellphone charging functionalities work
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No. 2018AP947
differently. If customers use a "Quick Charge" kiosk only for
charging a phone, they can redeem the unused video game credits
for cash after the charging time expires——100 unused credits
equals $1. In other words, charging can be done at no net cost.
A "Pow'R Up" kiosk, on the other hand, requires the customer to
play the video game at least once in order to redeem any
credits.
¶7 Soon after these kiosks debuted in retail locations,
the Attorney General opined that they were illegal gambling
machines as defined by Wis. Stat. § 945.01(3). Several kiosks
were then seized by law enforcement for violating the statutory
prohibition on gambling machines.
¶8 Quick Charge, along with its owner, responded with a
declaratory judgment action naming the Attorney General in his
official capacity. It sought a declaration that the kiosks
complied with the in-pack chance promotion exception under Wis.
Stat. § 100.16(2) and thus were not in violation of any gambling
laws under Wis. Stat. ch. 945. The circuit court granted
summary judgment in the Attorney General's favor, declaring the
kiosks illegal gambling machines.2 The court of appeals affirmed
that decision, Quick Charge Kiosk LLC v. Kaul, 2019 WI App 51,
¶1, 388 Wis. 2d 525, 934 N.W.2d 18, and we granted Quick
Charge's petition for review.
The Honorable John J. DiMotto, Milwaukee County Circuit
2
Court, presided.
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No. 2018AP947
II. STANDARD OF REVIEW
¶9 We review a summary judgment decision de novo,
applying the same methodology as the circuit court but
benefitting from the analyses of both courts below. Eichenseer
v. Madison-Dane Cty. Tavern League, Inc., 2008 WI 38, ¶30, 308
Wis. 2d 684, 748 N.W.2d 154. Summary judgment is appropriate
when there is no genuine issue of material fact and "the moving
party is entitled to judgment as a matter of law." Wis. Stat.
§ 802.08(2). The parties agree on the material facts, but
dispute questions of statutory interpretation and application.
These are issues of law we review independently. Heritage
Farms, Inc. v. Markel Ins. Co., 2012 WI 26, ¶24, 339
Wis. 2d 125, 810 N.W.2d 465.
III. DISCUSSION
¶10 Quick Charge disputes that its kiosks are illegal
gambling machines under Wis. Stat. § 945.01(3)(a). The statute
defines a gambling machine as "[1] a contrivance [2] which for a
consideration [3] affords the player an opportunity to obtain
something of value, [4] the award of which is determined by
chance, even though accompanied by some skill and whether or not
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No. 2018AP947
the prize is automatically paid by the machine."
§ 945.01(3)(a).3
¶11 Of these four criteria, Quick Charge contests only the
consideration requirement.4 It does so on two grounds. First,
Quick Charge looks to the lottery subsection which, along with
the gambling machine definition, is found in Wis. Stat.
§ 945.01. The lottery subsection contains a statutory
definition of consideration, and includes an exception from that
definition for "in-pack chance promotions" under Wis. Stat.
§ 100.16(2). § 945.01(5)(b)2.g. Quick Charge argues that this
same definition and exception should apply to the consideration
requirement for gambling machines and that its kiosks are in-
pack chance promotions under § 100.16(2). Second, Quick Charge
asserts that its kiosks do not meet the consideration
requirement for gambling machines anyway because a free play
option is available.
3While Wis. Stat. § 945.01(3) defines a gambling machine,
other statutes set forth the applicable criminal penalties. For
example, Wis. Stat. § 945.03(1m)(e) dictates that anyone who
"[s]ets up for use for the purpose of gambling or collects the
proceeds of any gambling machine" is guilty of a felony. And
anyone who "[p]ermits a gambling machine to be set up for use
for the purpose of gambling in a place under his or her control"
is guilty of a misdemeanor under Wis. Stat. § 945.04(1m)(b).
4As for the other elements, it is clear that Quick Charge's
kiosks are contrivances (mechanical devices) that afford an
opportunity to obtain something of value by chance.
Wisconsin Stat. § 945.01(3)(b) also provides three
exceptions to the gambling machine definition. Quick Charge
does not argue that its kiosks meet any of them.
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No. 2018AP947
¶12 Wisconsin Stat. § 945.01(5)(a) defines a lottery as
"[1] an enterprise [2] wherein for a consideration [3] the
participants are given an opportunity to win a prize, [4] the
award of which is determined by chance, even though accompanied
by some skill." On its face, this definition is virtually
identical to the gambling machine definition except for its
application to an "enterprise" rather than to a "contrivance."
However, the different subsections contain one other notable
distinction. Unlike gambling machines under § 945.01(3), the
lottery subsection specifically defines "consideration" and
expressly contains nine exceptions from that definition. See
§ 945.01(5)(b).5 One of those exceptions is "[u]sing a chance
promotion exempt under s. 100.16(2)." § 945.01(5)(b)2.g.
¶13 Wisconsin Stat. § 100.16, found within a chapter
addressing marketing and trade practices, sets forth a separate
albeit related prohibition. Subsection (1) prohibits selling
items with the representation or pretense that a prize might be
included with the purchase (i.e., a prize sale). § 100.16(1).
Subsection (2) then states that "[t]his section"——that is,
§ 100.16 and its proscription of prize sales——"does not apply to
5 Wisconsin Stat. § 945.01(5)(b)1. provides:
"Consideration" in this subsection means anything
which is a commercial or financial advantage to the
promoter or a disadvantage to any participant, but
does not include any advantage to the promoter or
disadvantage to any participant caused when any
participant learns from newspapers, magazines and
other periodicals, radio or television where to send
the participant's name and address to the promoter.
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No. 2018AP947
an in-pack chance promotion," followed by seven criteria that
must be met to qualify for this exception. § 100.16(2).6 Thus,
6 Wisconsin Stat. § 100.16 provides:
(1) No person shall sell or offer to sell anything by
the representation or pretense that a sum of money or
something of value, which is uncertain or concealed,
is enclosed within or may be found with or named upon
the thing sold, or that will be given to the purchaser
in addition to the thing sold, or by any
representation, pretense or device by which the
purchaser is informed or induced to believe that money
or something else of value may be won or drawn by
chance by reason of the sale.
(2) This section does not apply to an in-pack chance
promotion if all of the following are met:
(a) Participation is available, free and without
purchase of the package, from the retailer or by mail
or toll-free telephone request to the sponsor for
entry or for a game piece.
(b) The label of the promotional package and any
related advertising clearly states any method of
participation and the scheduled termination date of
the promotion.
(c) The sponsor on request provides a retailer with a
supply of entry forms or game pieces adequate to
permit free participation in the promotion by the
retailer's customers.
(d) The sponsor does not misrepresent a participant's
chances of winning any prize.
(e) The sponsor randomly distributes all game pieces
and maintains records of random distribution for at
least one year after the termination date of the
promotion.
(f) All prizes are randomly awarded if game pieces are
not used in the promotion.
(g) The sponsor provides on request of a state agency
a record of the names and addresses of all winners of
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No. 2018AP947
an in-pack chance promotion is not a standalone provision. It
is a statutory exception to an illegal prize sale. And,
connecting this with Quick Charge's argument here, the
legislature has also provided that an in-pack chance promotion
is an exception to what might otherwise be considered an illegal
lottery. Wis. Stat. § 945.01(5)(b)2.g.
¶14 Quick Charge contends its kiosks are in-pack chance
promotions under Wis. Stat. § 100.16(2). If so, they lack
consideration as defined for lotteries. The crux of Quick
Charge's theory is that the statutory definition of
consideration for lotteries should also be used for gambling
machines. If the same definition is used and the kiosks are in-
pack chance promotions, then the kiosks are not illegal gambling
machines. While creative, this theory runs headlong into basic
principles of statutory interpretation.
¶15 It is true that when a particular term is used
throughout a chapter, we usually understand it to carry the same
meaning each time. Bank Mut. v. S.J. Constr., Inc., 2010 WI 74,
¶31, 326 Wis. 2d 521, 785 N.W.2d 462. But this principle only
applies "absent textual or structural clues to the contrary."
State v. Cox, 2018 WI 67, ¶17, 382 Wis. 2d 338, 913 N.W.2d 780(citation omitted). Here, contrary clues abound.
¶16 While the legislature expressly defined
"consideration" for purposes of a lottery, exceptions and all,
prizes valued at $100 or more, if the request is made
within one year after the termination date of the
promotion.
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No. 2018AP947
it did not do the same for gambling machines. And the separate
gambling provisions are found in the exact same section of the
Wisconsin Statutes. To make its point crystal clear, the
legislature provided that the lottery provision's definition of
consideration, including its exclusion of in-pack chance
promotions, applies only to "this subsection," meaning lotteries
under Wis. Stat. § 945.01(5). Nothing in the gambling machine
provision cross-references lotteries under § 945.01(5) or in-
pack chance promotions under Wis. Stat. § 100.16(2).
¶17 This textual language is far more than a tip; it is a
dead giveaway. The legislature explicitly excluded in-pack
chance promotions from the definition of an illegal lottery, but
not an illegal gambling machine. The natural reading, and
indeed the only reasonable one, is that the legislature meant
the exception to apply to lotteries, and not gambling machines.
Therefore, even if the kiosks met the requirements for in-pack
chance promotions as defined in Wis. Stat. § 100.16(2), a
question we do not need to answer here,7 nothing in any of the
relevant statutes exempts the kiosks from the consequences of
In granting the Attorney General summary judgment, the
7
circuit court rejected Quick Charge's argument that its kiosks
met the seven criteria of an in-pack chance promotion under Wis.
Stat. § 100.16(2). Below, the court of appeals declined to
consider those criteria after determining the exception has no
application under Wis. Stat. § 945.01(3). Quick Charge Kiosk
LLC v. Kaul, 2019 WI App 51, ¶¶22, 35 n.9, 388 Wis. 2d 525, 934
N.W.2d 18. We do the same here.
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No. 2018AP947
the legislature's decision to prohibit and criminalize gambling
machines.8
¶18 This brings us to Quick Charge's argument that its
kiosks otherwise fail to satisfy the consideration requirement
of the gambling machine definition, which Wis. Stat. § 945.01(3)
does not further define. When statutory language is not
specially defined or technical, it is given its "common,
ordinary, and accepted meaning." State ex rel. Kalal v. Circuit
Court for Dane Cty., 2004 WI 58, ¶45, 271 Wis. 2d 633, 681
N.W.2d 110. And if a word has a distinct meaning in the law——as
"consideration" does——it should be given its accepted legal
meaning. See Mueller v. TL90108, LLC, 2020 WI 7, ¶19, 390
Wis. 2d 34, 938 N.W.2d 566. Black's Law Dictionary defines
consideration as "[s]omething (such as an act, a forbearance, or
a return promise) bargained for and received by a promisor from
a promisee." Consideration, Black's Law Dictionary (11th ed.
2019). We apply this definition here as it is consistent with
Quick Charge offers hypothetical in-pack chance promotions
8
facilitated by a machine and wonders whether those too would
constitute prohibited gambling machines——for example, a bottle-
cap promotion in which a soda is purchased in a vending machine
or a fast-food promotion conducted online or through a
smartphone app. We need not determine the scope of what
constitutes a "contrivance" or might otherwise meet the
definition of a gambling machine or an in-pack chance promotion
to conclude that the kiosks here meet the gambling machine
definition in Wis. Stat. § 945.01(3).
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No. 2018AP947
the meaning of consideration in our common law.9 See, e.g.,
Story v. Menzies, 3 Pin. 329, 330-31 (1851) (explaining money
paid in exchange for credit and a receipt was consideration);
DOR v. River City Refuse Removal, Inc., 2007 WI 27, ¶¶50-51, 299
Wis. 2d 561, 729 N.W.2d 396 (discussing various formulations for
how Wisconsin courts have defined consideration, notably as a
benefit to the promisor or a detriment to the promisee, and
mutual promises for future performance).
¶19 The kiosks' video game function wherein customers pay
for an opportunity to obtain a cash prize falls within this
understanding of consideration. For customers who pay money to
play the game, consideration occurs in two ways: The customer
first inserts money to receive video game credits. Then the
customer risks those credits in the video game. Each step
involves the customer trading something of value (money or
credits) to obtain an opportunity to play the game and win
something of value. This bargained-for exchange is a
paradigmatic example of consideration.
¶20 Quick Charge does not really argue otherwise. Rather,
it focuses on the fact that this is not always the case because
9 The definition of consideration under the lottery
subsection is merely a lottery-focused gloss on this ordinary
definition of consideration. See Wis. Stat. § 945.01(5)(b)1.
("anything which is a commercial or financial advantage to the
promoter or a disadvantage to any participant"). That's not
surprising. Quick Charge's argument that the same word
generally has the same meaning is usually correct. But as
explained above, that does not mean an exception written into
one subsection should be copied and pasted into a different
subsection where the exception does not appear.
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No. 2018AP947
customers can play the kiosk's video game without inserting
their own money. Although neither has ever been used, Quick
Charge offers two methods of free play. Customers can mail a
form and self-addressed envelope to Quick Charge, and receive in
return a certificate that can be exchanged at a retail location
for one dollar to insert into a kiosk. Customers can also
request a Quick Charge employee play a dollar's worth of credits
on their behalf and mail out any resulting winnings.
¶21 Free play option or not, Quick Charge's argument does
not overcome the reality that its kiosks can be used as gambling
machines. Wisconsin Stat. § 945.01(3) does not define a
gambling machine as a contrivance whose sole use is gambling.
It says the opposite, namely, that a "gambling machine is a
contrivance which for a consideration affords the player an
opportunity to obtain something of value, the award of which is
determined by chance." § 945.01(3) (emphasis added). Quick
Charge's kiosks afford such an opportunity when a customer pays
to play the video game. And when paying for the chance to win
something of value, the consideration element is undoubtedly
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No. 2018AP947
met. Simply because a kiosk has uses other than illegal
gambling does not negate that reality.10
¶22 In sum, because customers can pay to play a video game
that awards cash prizes based on chance, Quick Charges' kiosks
are gambling machines under Wis. Stat. § 945.01(3)(a). This
conclusion is not affected by the definition of consideration
for lotteries under § 945.01(5), or that subsection's exclusion
of in-pack chance promotions under Wis. Stat. § 100.16(2).
Likewise, the kiosks are no less gambling machines just because
they can also be used for non-gambling purposes, including
Other jurisdictions have similarly concluded that a free
10
play option alone is not decisive evidence regarding whether
something constitutes a form of illegal gambling. See, e.g.,
Barber v. Jefferson Cty. Racing Ass'n, 960 So. 2d 599, 612-15
(Ala. 2006) ("Thus, the readers are slot machines as to those
who pay to play them. Are they any less so because a few
patrons play for free? We think not. . . . Gratuitous entries
obtained by mail or at the race track do not legitimize the
high-stakes MegaSweeps any more than some opportunity for free
plays could render innocuous a conventional slot machine."); see
also 38 Am. Jur. 2d Gambling § 2 ("The opportunity for free
plays does not negate the element of 'consideration' or obviate
an inquiry into the purpose and effect of the operation as the
final proof of consideration.").
The case Quick Charge cites for countervailing free play
authority did not actually find a lack of consideration based on
the availability of such an option. See Mid-Atl. Coca-Cola
Bottling Co., Inc. v. Chen, Walsh & Tecler, 460 A.2d 44 (Md.
1983). At issue there was a Coca-Cola promotion based on bottle
caps that could be obtained for free or through the purchase of
various Coca-Cola products. Id. at 104. The Maryland court
concluded the promotion was not an illegal lottery because there
was no consideration for the chance to win a prize. Id. at 108.
But that was so because no one paid for a chance as the price of
Coca-Cola products stayed constant before, during, and after the
promotion——i.e., every chance to win was a gift. Id. The same
cannot be said for Quick Charge's kiosks.
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No. 2018AP947
cellphone charging and limited gratuitous use of their video
game function. Therefore, Quick Charge's action seeking a
declaration that its kiosks are not illegal gambling machines
was correctly denied, and the circuit court properly granted
summary judgment in the Attorney General's favor.
By the Court.—The decision of the court of appeals is
affirmed.
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No. 2018AP947
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