Attorney General's Opinion
Attorney General Richard Blumenthal
July 13, 1998
Acting Executive Director
Division of Special Revenue
555 Russell Road
Newington, CT 06111
Dear Mr. Wandrak:
This is in response to your request for an opinion on whether an employee of the Division of Special Revenue (DOSR) may own stock in International Game Technology, Inc. (IGT) in light of the conflict of interest rules contained in Conn. Gen. Stat. 12-561. For the following reasons, we believe that the statute prohibits employee ownership of the stock.
The statute involved provides, in pertinent part, as follows:
Conflict of interest. No executive director or unit head or employee of the division or member or employee of the Gaming Policy Board shall directly or indirectly, individually or as a member of a partnership or as a shareholder of a corporation, have any interest whatsoever in dealing in any lottery, racing, fronton or betting enterprise or in the ownership or leasing of any property or premises used by or for any lottery, racing, fronton or betting enterprise.
Conn. Gen. Stat. 12-561.
Stock in the company is publicly traded on the NASDAQ exchange. You advise us that IGT is the world's largest distributor of slot machines and gaming equipment and it sold 84.6% of the slot machines at the Mohegan Sun Casino and 63.8% of the slot machines at Foxwoods Casino. Pursuant to the Gaming Compact with the Mohegan Tribe, Sec. 6, and the Gaming Procedures applicable to the Mashantucket Pequot Tribe, Sec. 6, IGT holds a Gaming Service Enterprise registration with the State. Provisions reproduced in Attachment A. IGT also performs jackpot verification and payment of jackpot prizes, under service contract for a progressive slot machine game connecting at least seven tribal casinos throughout the nation including the Mohegan Sun and Foxwoods. IGT's registration is revokable for cause. See Attachment A, Sec. 6(g).
You further inform us that the employee who owns the stock is a Special Revenue Gambling Facilities Liaison Officer. His duties at the casinos include monitoring gaming operations, identifying deficiencies in internal controls and monitoring the status of DOSR licenses. See Job Description, Attachment B. It is not known whether the employee acquired the stock before or after his employment with the DOSR. In determining the applicability of the statute to these facts we utilize the classic rules of statutory construction. Words are construed according to the commonly approved usage of the language. Conn. Gen. Stat. 1-1(a); Caldor, Inc. v. Heffernan, 183 Conn. 566, 570, 440 A.2d 767 (1981). Also, in interpreting statutes, we consider the history of the statute, its language considered in all of its parts, the mischief the law was designed to remedy, and the policy underlying it. Waterbury Savings Bank v. Danaher, 128 Conn. 78, 81, 20 A.2d 455 (1941).
The present question distills to the issue of whether the employee, as a shareholder in IGT, has "any interest whatsoever" in "dealing in any betting enterprise" or in the "ownership . . . of any property used by or for any . . . betting enterprise." The term "betting enterprise" is not defined by the statute. Turning to the ordinary meaning of these words, "betting" commonly means the putting of a certain sum of money or valuable thing at stake on the happening or not happening of some uncertain event." 38 C.J.S. Gaming 4 citing Shaw v. Clark, 49 Mich. 384, 13 N.W. 786, 787, 43 Am. Rep. 474 (1882); Carpenter v. Beal-McDonnell & Co., 222 F. 453, 460 (D. Ark. 1915). The term "enterprise" means "2. A business organization" Webster's II New Riverside University Dictionary (1988). You have supplied us with no facts demonstrating that IGT is itself a betting enterprise as it does not operate a betting business. Rather, it is a manufacturer or service provider to businesses where bets are taken. It supplies property, i.e. machines and games, to such betting enterprises. This falls within the purview of the final phrase of the cited statute. IGT does deal in the ownership of property used for a betting enterprise, i.e. slot machines and progressive game services at the Mohegan Sun and Foxwoods casinos.
This conclusion also follows from an analysis of the history and underlying policy of the statute and the mischief which it was designed to prevent. The DOSR conflict of interest statute was part of the original enabling act creating the Commission on Special Revenue, predecessor to the Division of Special Revenue, which regulates legalized gambling in Connecticut. See 1971 Conn. Pub. Acts. No. 71-865, Sec. 5 The statutory language, in pertinent part, has remained unchanged since that time. Legislative remarks on the provision in question focused on the need to protect the public from fraud and dishonesty. As Senator Strada stated:
Section 5, of this bill, prohibits all the commissioners and all employees of the commission from either directly or indirectly, individually or as a member of any partnership or a shareholder of a corporation, from having any interest whatsoever, in any of the legalized gambling activities. This provision, Mr. President, is very broad. And amply protects the protect [sic]. It covers all the situations referred to in the proposed amendment. Section 6 of this bill, gives the commission the power to make and enforce all regulations, necessary to carry out the intent and purpose of the act, and to prevent fraud and dishonesty.
14 Sen. Proc. 1971 Sess. Pt. 7 at p.3377.
The potential for mischief is not illusory where state employees, responsible for exercising judgment in monitoring revenues from casino slot machines, also have a stake in the sale of those machines. There is a lingering suspicion that defects would be ignored to protect the interests of IGT, which the employee shares as a stockholder. It has been held that "[N]o person should be a judge in his own cause." Patterson v. Council on Probate Judicial Conduct, 215 Conn. 553, 566, 577 A.2d 701 (1990) quoting Dacey v. Connecticut Bar Ass'n., 184 Conn. 21, 24-25, 441 A.2d 49 (1981). Similarly, a state employee should not put himself or herself in the position of inspecting his or her company's products in operation. The situation presents a conflict of interest. Accordingly, we advise that the matter should be brought to the attention of your personnel officer for review of the factual situation and for the taking of whatever action would be appropriate under the circumstances. In addition, you may wish to bring this matter to the attention of the Ethics Commission.
Very truly yours,
Robert F. Vacchelli
Assistant Attorney General