PEOPLE v. GREWALAppellant, John C. Stidman, Petition for ReviewCal.April 17, 2014 5217896 Case No. IN THE SUPREME COURT OF CALIFORNIA | THE PEOPLE, Plaintiff and Respondent, --~.. v. KIRNPAL GREWAL etal.,~~~” peehe pr ome, FF “ wetatre Clerk Defendants and Appellants. fe eneene Bee we pea After a Decision By the Court of Appeal, Fifth Appellate District Consolidated Case Nos. F065450/F065451/F065689 Kern County Superior Court Case Nos. CV-276959, CV-276958, CV-276961 . William D. Palmer, Judge PETITION FOR REVIEW TORYE. GRIFFIN (186181) HUNT JEPPSON & GRIFFIN LLP 1478 Stone Point Dr., Suite 100 Roseville, CA 95661 Telephone: (916) 780-7008 tgriffin@hjg-law.com Attorneysfor Defendant/Petitioner John Stidman Case No. IN THE SUPREME COURT OF CALIFORNIA THE PEOPLE, Plaintiff and Respondent, v. KIRNPAL GREWAL etal., Defendants and Appellants. After a Decision By the Court of Appeal, Fifth Appellate District Consolidated Case Nos. F065450/F065451/F065689 Kern County Superior Court Case Nos. CV-276959, CV-276958, CV-276961 William D. Palmer, Judge PETITION FOR REVIEW TORYE. GRIFFIN (186181) HUNT JEPPSON & GRIFFIN LLP 1478 Stone Point Dr., Suite 100 Roseville, CA 95661 Telephone: (916) 780-7008 tgriffin@hjg-law.com Attorneysfor Defendant/Petitioner John Stidman Table of Contents ISSUES PRESENTED...cecessssseessesseseeeceeeseeeesesesceseeseseesecseassecseeneenes 1 WHY REVIEW SHOULD BE GRANTED 0.0... eeeccccccsecsseessesensessseeeseeaes 2 FACTUAL AND PROCEDURAL BACKGROUND........ccccsesesssssseessetenees 9 LEGAL ARGUMENT1.00.cccesctesssseceteeeeeecenseseseeseaceseseeeeseesssecesseseeneseens 12 A. Review is Appropriate Because the Court ofAppeal’s Decision Creates a Conflict in the Law Regarding the Proper Definition of a Slot Machine in California........0...:ccccssssesssessesssesscscessceecseesesscscesesscseucasesasens 12 B. Review is Appropriate Because the Court of Appeal Exceededits Authority by Improperly Injecting a Subjective ComponentInto the Determination of Whether a Device is a Slot Machine Under Penal Code SeCtiON 330D oo.eeeeecesseseecescesessecseesssceeeeseeeseeeeeesessesseessessecseeesnssenseases 17 C. Review is Proper Becausethe Court ofAppeal’s Decision Runs Counter to Established Law By Reading the Long-Standing “Consideration” Requirement out of Penal Code Section 330b.............. 24 D. Review is Warranted Because,if the Court of Appeal’s Decision Stands, it Calls Into Serious Question the Continuing Legality of Well- Established Sweepstakes and Other Games Whose Validity Were Previously Beyond Question ...........c:ccccsssessscccsssessscecssssssecsssscccsssessceeeees 27 E. The Court of Appeal’s Decision Runs Counter to the Rule of Lenity 30 CONCLUSION...0.cece eeeseeseesesseceeseeesssesesessceseeseseeseseessscessesseeeseeanseesaseees 33 Table of Authorities Cases California Gasoline Retailers v. Regal Petroleum Corp. (1958) 50 Cal.2d B44 oeeceeseeeseeeseeeeeessceceseescessesceseeseessueeseeessecesaaeeesesessesssesesseeessenesaeensenes 23 Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53......5, 19 People ex rel. Lockyer v. Pacific Gaming Technologies, 82 Cal.App.4th 699 (2000)... eeeceeesseecseescescesceetenseeeeceseessecsesssessseessessceesneeenseetscs 14, 17,22 People v. Avery (2002) 27 Cal4th 49 oo... cccccccccssscssecsseeseeessessessnseseseeens 30 People v. Jones (1988) 46 Cal.3d 585 ....ccccccccssesssessscssessssesessssesesesscsssscseees 30 People v. Manzo (2012)53 Cal.4th 880........ccssssscssssescssessessessesseenseeseess 30 People v. Nuckles (2013) 56 Cal.4th 601 oo...cccccssecsseeseeeseeseesesseeseecees 30 People v. Ralph (1944) 24 Cal.2d 575 .....ccccccsccsscccsssesseesseceeccsressesssseseseeens 31 People v. Vis (1966) 243 Cal.App.2d 549.000... .cccccssessccseseecsssereeetenees 31, 32 Trinkle v. California State Lottery (2003) 105 Cal.App.4th 1401....... passim Trinkle v. Stroh, 60 Cal.App.4th 771 (1997) ......ccccssssscessessecseeseeseeseee 14,17 Walsh v. Department ofAlcoholic Beverage Control (1963) 59 Cal.2d 757 secesceaceeeesceesesscensseeonsnssssescesessessessesceseseesseesnsesesseessseesneasseseeseceuseesssesesenensens 31 Western Telcon, Inc. v. California State Lottery (1996) 13 Cal.4th 475 ...25, 26 Statutes Business & Professions Code Section 17200 .0.......ccsccssscseessssceseeceeees 2,12 Business & Professions Code Section 17539.35 woc.c.cesscssscssesssssscecsseeeeeseee 6 Business & Professions Code Sections 17539-17539.3......ccccessscsscseseseseeee 6 Penal Code Section 319 oo...ceccscccssesscsseccscsssesssceceesessacesecesseseeseceeesseeacens 2 Penal Code Section 330.1 wc... cceeesecsseccessecsecsecssssscecscccesseseeesessssesssssevossaes 3 Penal Code Section 330a(a)..........cccccesccccessseseecseceeeeesscecereessesessesseessceseeaess 27 Penal Code Section 3300 00...seessssseccesecsecsccseeessseeseeseeseesessseneseeaes passim Penal Code Section 330D(G)...........:.cssscecsssecscesseesecesssseseeessesseesaesssesseseeenees 26 TO THE HONORABLE CHIEF JUSTICE TANI CANTIL- SAKAUYE AND THE ASSOCIATE JUSTICES OF THE SUPREME COURT OF CALIFORNIA: Petitioner John Stidman(“Petitioner”), by and through his attorneys, respectfully submits this Petition for Review of the March 7, 2014, published decision of the Fifth Appellate District. A copy ofthe Fifth Appellate District’s opinion is attached to this Petition. ISSUES PRESENTED 1. Did the Court of Appeal err by rejecting established judicial interpretation of Penal Code Section 330b, thus creating a conflict with prior law? 2. Given the language of Penal Code Section 330b,is the aspect of “chance”in a gaming devicerelative to the user’s subjective experience of the game,oris it, as found in 7;rinkle v. California State Lottery (2003) 105 Cal.App.4th 1401, 1410-1411, something to be analyzed according to the device’s actual operation? 3. Did the Court of Appeal exceedits authority in interpreting Penal Code Section 330b by injecting a subjective componentinto the determination of whether a particular deviceis an illegal slot machine? 4, Did the Court of Appeal err by eliminating the long-standing requirement of consideration in the determination of whether a device is an illegal slot machine under Penal Code Section 330b? 5. Did the Court of Appeal violate the rule of lenity by applying its new interpretation of Penal Code Section 330b against Petitioner even though that interpretation expressly conflicted with the interpretation set forth in prior, published appellate decisions? WHY REVIEW SHOULD BE GRANTED The People of the Stateof California, by and through the Kern County District Attorney (the “People”’), filed civil actions under the unfair competition law (Bus. & Prof. Code, § 17200 et seq.), seeking to enjoin several Internet café businesses from continuing to engage in practices that allegedly violated the gambling prohibitions set forth at Penal Code sections 319 (unlawful lottery) and 330a, 330b and 330.1 (unlawful slot machines or devices). Generally speaking, the term “Internet café” depicts a café or similar establishmentthatsells computer use and/or Internet access, as well as other related retail products or services, on its premises. Someofthose businesses promote the sale of their products and services by offering a sweepstakes giveawaythat allows customersto ascertain their winnings, if any, by playing specialized game programs on the businesses’ own computer terminals. Petitioner utilized such a sweepstakes to promote his products and services. Whenthe People requested preliminary injunctions, the owners and operators of the Internet café businesses in question opposed suchrelief on the groundthat their businesses did not conductlotteries but instead offered lawful sweepstakes that promotedthe sale of their products. Additionally, the owners and operators maintained that the required statutory elements of an unlawful slot machine or gambling device were not present. Thetrial court disagreed, and granted the preliminary injunctions as requested by the People. Defendants separately appealed from the orders granting such preliminary injunctions, and the Court of Appeal ordered those appeals consolidated. The Fifth Appellate District, in a published decision, affirmedthe trial court, concluding that the People will likely prevail on its claims that defendants violated prohibitions against slot machines or gambling devices under section 330b. Prior to the Court of Appeal’s decision in this case, the law was clear that a device was not a slot machine within the meaning of Penal Code section 330b unless the device itself generates the element of chance in a game, throughuse of a random numbergeneratoror otherwise.’ (Trinkle v. ' Section 330b makesit unlawful to own or possess a slot machine, and as relevant to the element of chance, defines a slot machine in pertinentpart as any device that “by reason of any element of hazard or chanceor of other outcomeof operation unpredictable by him or her, the user mayreceive or 3 California State Lottery (2003) 105 Cal.App.4th 1401, 1410-1411 (“Tsrinkle IT’).) In Trinkle II, the Third District Court of Appeal construed the language of Penal Code section 330b, and held: “Without the element of chance incorporated into the operation of the machine, the machineis nothing more than a vending machine which dispenses merchandise for consideration.” (/d.) Underthe clear language of the California Penal Code and the previously-controlling cases such as Trinkle IT, California businesses, including Internet cafés, had every right to use sweepstakes promotions provided they followed the rules. Those rules wererelatively simple, and were set by statute. So long as the machine did notcreate the element of chance, but just distributed pre-determined prizes or entries in a pre- determined fixed order, then the machine did not meetthe definition of a slot machine or gambling device under Penal Codesection 330b regardless of whether a person using the machine understood how the machine worked or could predict whether he or she would win. The undisputed evidencein the record before the trial court and Court of Appeal in this case demonstrates that the computer terminals used by patrons at Petitioner’s place of business to reveal their sweepstakes results did not and technologically could not influenceoralter the outcome becomeentitled to receive any piece of money,credit, allowance, or thing of value”. (Penal Code § 330b(d).) of the sweepstakes; the computer terminals had no random number generators, and were merely an entertaining way for customers to reveal the next available sweepstakes entry in the electronic stack of pre-determined entries. In other words, it was undisputed that there was no “element of chance incorporated into the operation of the machine” within the meaning of Trinkle II. In its decision, however, the Court of Appeal expressly rejects the Third Appellate District’s interpretation ofPenal Code section 330b set forth in Trinkle II, and further finds that Petitioner’s conduct violated that section based on its contrary interpretation of that statute. In reaching this conclusion, the Court of Appeal for the first timein this State injected a subjective “look and feel”test into the determination ofwhether a device is an illegal slot machine under Section 330b. Thatis, prior to the Court of Appeal’s decision here, never before has any court purported to determine the legality of a particular machine under Penal Code section 330b based solely on the look and feel of that machine,or the end user’s subjective understanding of the game. Indeed, the Court of Appeal broadly characterizes all sweepstakes promotions of the type utilized by Petitioner as illegal gambling because such devices haveall the “trappings and experiences involved in playing traditional slot machines.” (Opinion,at p.22.) The Court of Appeal’s approach violates well-established rules of statutory construction. An appellate court “has.no powerto rewrite the statute so as to make it conform to a presumedintention whichis not expressed.” (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 59 (noting that because the anti-SLAPP statute does not state or imply an “intent-to-chill” requirement, to judicially impose one “would violate the foremost rule of statutory construction”) (internal quotations and citations omitted).) But that is exactly what the Court of Appeal did in this case. The Court of Appeal’s decision conflicts with long-standing authority in this State, injects a new subjective test, and thus throwsthe law onits head. Review bythis Court is necessary to resolve the resulting conflicts and confusion in the law. Review in this case is also necessary to settle important questions of law. The operation of a sweepstakes has long been legal under California law, so long as the sweepstakes meetscertain statutory requirements. (See Bus. & Prof. Code §§ 17539-17539.3, 17539.35.) What distinguishes a lawful sweepstakes from an illegal lottery or slot machineis the presence or absenceof certain elements specified in the California Penal Code. Determining whether any particular digital sweepstakes promotion (such as the one used by Petitioner) complies with the detailed statutory requirements requires a precise and fact-specific analysis ofhow the particular sweepstakes software works and howit is used by a business. 6 The Court of Appeal’s strained and unprecedentedinterpretation of Penal Code section 330b not only expressly contradicts and disagrees with previously controlling case law set forth in Trinkle IJ and othercases, but also misinterprets the relevant statutes in a waythat calls into serious question the continued legality of many sweepstakes promotions utilized by retail establishments throughout California. In its opinion, the Court of Appeal for thefirst time in California found that a device mayconstitute an illegal slot machine even where no consideration is required to play the gameon that device. Moreover, the Court of Appeal adopted an extremely broad definition of the term “apparatus” within the meaning of Penal Code Section 330b. Those conclusions, in conjunction the Court of Appeal’s rejection of the holding in Trinkle IJ, call into question the continued legality of many well-established and previously unquestioned sweepstakes promotions. Indeed, many of the highly popular and well-publicized sweepstakes operatedin California, such as those utilized by McDonald’s, Coca-Cola, and other establishedretailers, require the end user to enter a code on a device or machinein order to play the game. Under the Court ofAppeal’s opinion, those sweepstakes are now illegal, because the user’s personal phone or computeris part of the “apparatus,” and the element of chanceis dictated not by operation of the gamebutrather by the end user’s lack of 7 knowledge as to whetheror not he or she will win a prize. The unintended and potentially far reaching impacts of the Court ofAppeal’s decision on long-standing, legitimate sweepstakescasts serious doubt on the correctness of the Court of Appeal’s determination, and demonstrates that the Court of Appeal went far beyondits role as an adjudicative body tasked with interpreting statutes, not rewriting them. Finally, the Court of Appeal’s decision raises an important issue of law with respect to application of the rule of lenity. The rule of lenity comes into play whena statute defining a crimeis susceptible of two reasonable interpretations. In such circumstances,the rule of lenity requires that the statute be strictly construed and applied in the defendant’s favor. The rule of lenity applies here because, prior to the Court of Appeal’s decision, the prevailing authority on the issue of whether a machine constituted an illegal slot machine under Penal Code section 330bError! Bookmark notdefined. wasset forth in Trinkle IJ. Based on the undisputed evidencein the record, if Petitioner’s conduct was measured under Penal Code section 330b as interpreted in 7rinkle IT, then Petitioner’s conduct would be legal. But the Court of Appeal rejected Trinkle IT’s interpretation of Section 330b, and found Petitioner’s conductillegal based on the Court of Appeal’s contrary interpretation of that Section. The Court ofAppeal’s “if it walks like a duck”interpretation of Penal Code Section 330b, which runs directly counter to prior judicial interpretation of the same 8 statute, and retroactive application of that new interpretation to a defendant, violates the rule of lenity. FACTUAL AND PROCEDURAL BACKGROUND’ Defendant Stidman ownsandoperates a business known asthe I ZoneInternet Café (I Zone) in Bakersfield, California. I Zone sells Internet time to the public at a price of $20 per hour, which time may be used on a system of computer terminals located on the I Zone premises. In addition, I Zonesells copying services, packaging services and refreshments. To promote the sale of Internet time and other products, I Zone offers a sweepstakes to customers wheneverthey make a purchase. According to the sweepstakes rules, noncustomers mayalso enter the sweepstakes; that is, no purchase is necessary to enter. Under the sweepstakes operated by Petitioner, a person who purchases Internet time or other products receives sweepstakes points for each dollar spent. A customeris also given sweepstakes points for his first purchaseof the day as well as for being a new customer. A whiteplastic card with a magnetic strip is provided to the customer, which card is activated by an employeeat the register. When the customer swipes the * The factual background is a summary ofthe facts as stated in the Court of Appeal’s published decision for the Court’s convenience. This Petition challenges the Court of Appeal’s legal conclusions based on the undisputed facts, not the factual findings made bythetrial court and adopted by the Court of Appeal. card at an open computer terminal, he is given the option of using the Internet function or playing sweepstakes computer games. If he chooses the latter, the time spent playing sweepstakes computer games does not reduce the amountof Internet time available. Both options are touch-screen activated and do not require a keyboard or mouse. A customer could also reveal a sweepstakes result by other means, such as by using a special function on the computer terminal or by asking an employeeat the register to print out a result on paper. In playing the sweepstakes computer games, customersuse their sweepstakespoints in selected increments on a choice of games, with each game representing a separate sweepstakes. Participants in the sweepstakes have a chance to win cash prizes in various amounts ranging from small sums to a top prize of $3,000. In opposing the motion for preliminary injunction, Petitioner presented undisputed evidence regarding how the sweepstakes functioned. Petitioner presented evidence of the inner-workings of the sweepstakes and computer terminals showing that the sweepstakes games played on the computer terminals were merely an entertaining way for customers to reveal a sweepstakes result. As described in Petitioner’s opposition, and unrefuted by the People, “[e]ach time a customerreveals the results of a sweepstakes entry, [regardless of the means used], the next available sweepstakesentry in the ‘stack’ is revealed,” in sequence, from a 10 prearranged stack of entries. The “next available sweepstakes entry” contains a predetermined result that would be the same regardless of which method was usedto reveal it. Thus, when the customer engagesthe sweepstakes computer games, the outcome is determined bythe particular sweepstakesentry that is being revealed at that time, not by the workings of the gameitself. That is, the game simply reveals the predeterminedresult of the next sequential sweepstakes entry. In other words, the computers did not include a random numbergenerator and in no wayaltered or influenced whether an particular sweepstakes entry revealed by a customer would result in a prize or not. Petitioner provided a further operational description ofhow the software system he utilized conducted the sweepstakes. The descriptive information was primarily based on declarations from Petitioner’s expert. That undisputed testimony demonstrated that the computer terminal simply acted as a reader and displayedthe results of the next sequential sweepstakes entry in the stack—-it was neverthe object of play. In fact, exactly the same results would be displayed for a specified sweepstakes entry whether the customer chose to havethe results displayed in paper format from the cashier or in electronic format at the computer terminal. Finally, it was undisputed that none of the computers used by Petitioner had a random numbergenerator and could notinfluenceoralter the result ofa particular sweepstakes entry, but merely displayed that result. 1] Based on Petitioner’s use of the sweepstakes system, the Kern County District Attorney sought the injunctions under California’s unfair competition laws, which prohibit unlawful, unfair, or fraudulent business practices. (Bus. & Prof. Code, § 17200 et seq.) The Fifth Appellate District held that the networks of terminals, software, and servers delivering the sweepstakes gamesat Petitioner’s business likely amountto an unlawful slot machine under California Penal Code section 330b, stating . that the “integrated system”hasall of the “trappings and experiences involvedin playing traditional slot machines.” (Opinion, at p.22.) According to the Court of Appeal, “if it looks like a duck, walks like a duck, and soundslike a duck, it is a duck.” (Opinion,at p. 20 fn. 24.) The Court of Appeal did not reach the issue of whether the sweepstakes system wasan illegal lottery under Penal Code section 319. (Opinion,at p.26.) LEGAL ARGUMENT A. Review is Appropriate Because the Court of Appeal’s Decision Creates a Conflict in the Law Regarding the Proper Definition of a Slot Machinein California In Trinkle IT, the Third District Court of Appeal interpreted Penal Code section 330b, and found that elements of a slot machine underthat section “are (1) the insertion of moneyor other object which causes the machine to operate, (2) the operation of the machineis unpredictable and governed by chance, and (3) by reason of the chance operation of the 12 machine, the user may becomeentitled to receive a thing of value.” (Trinkle IT, supra, 105 Cal.App.4th at 1410.) With respectto the third element — often referred to as the “chance” element — the court in Trinkle IT found that “[b]y using the words ‘such operation,’ the Legislature linked the element of chanceto the operation of the machine, requiring that the machineitselfdetermine the element of chance and becomethe object of play.” (Jd. at 1410 (Italics added).)° Thus, the element of “chance” that must exist for a device to be a slot ‘machineis not determined by the user’s subjective experience of the game, but rather, as explained in Trinkle IT, is something to be analyzed according to the machine’s operation in itself. The mere fact that the user does not know whetherheor she will win does not convert a sweepstakes game into a slot machine. (/d. at 1411-1412.) This conclusionis illustrated by the facts and holding in Trinkle II. At issue there were the vending machinesusedby the California State Lottery to sell Scratchers tickets. The vending machines vendedScratchers tickets in the order the tickets were stacked in the bins inside the machine. The purchasers inserted the purchaseprice and received the nextticket(s) in line. The court found that the element of chance for the game came from > Trinkle II interpreted Penal Codesection 330bpriorto its amendment, which amendment removedthe word “such”prior to the word “operation.” Nothing in the legislative history of the amendmentor subsequent case law exists to indicate that removal of the word “such” changed the meaning of the statue in any way material to the issues in this case. 13 the printing of the winning tickets and the placementofthosetickets in a predetermined sequence amongthe othertickets. The element of chance wastherefore built into the gameat the time of manufacture and placement in the bins, not at the time ofpurchase or play. Because the operation of the vending machinesdid not in any way affect the game’s element of chance, the court held that the vending machines werenotillegal slot machines. Jd. at 1411-1412. In contrast to the machinesat issue in 7rinkle IJ, the machines in question in Trinkle v. Stroh and People ex rel. Lockyer v. Pacific Gaming Technologies were found to be slot machines under Penal Codesection 330b because the outcomeofthe gamesat issue was dependent upon the element of chance that was generated by the machines themselves. As stated by the court in Trinkle II, “in both [Trinkle v. Stroh, 60 Cal.App.4th 771 (1997)] and [People ex rel. Lockyer v. Pacific Gaming Technologies, 82 Cal.App.4th 699 (2000)], the machines in question were foundto be slot machines under Penal Code section 330b because the outcome was dependent on the element ofchance that was generated by the machines themselves.” (Trinkle II, 105 Cal.App.4th at 1410-11 (emphasis added).) Asnoted by the court in Trinkle IT, “[w]hile the technology of old slot machines may differ from the modern slot machines, the element of gambling remains the same. The operation of the device (the spinning wheels or a computer program) renders the chanceresult.” (Trinkle II, 105 14 Cal.App.4™at 1411.) Based on these established authorities and the undisputed facts before the trial court and Court of Appeal, Petitioner’s computers were not illegal slot machines within the meaning of Penal Code Section 330b. The most relevant analogyto Petitioner’s sweepstakes promotion is a lottery Scratcher ticket vending machineat issue in 7rinkle I. As explained in Trinkle II, the vending machines usedto dispenselottery tickets in the Scratchers games consisted of stand-alone cabinets containing a number of bins into which a stock of Scratchers tickets may be loaded. Each bin contained a separate Scratchers game, andthe cost of a ticket varied depending upon the game. A customer elected to purchasea ticket from one or another of the bins by pushing a button in front of the window for that bin, and the tickets were dispensed sequentially, according to the order in which they were loadedinto the bin. (Trinkle IT, 105 Cal.App.4th at 1403-1404.) Just like the vending machinesin Trinkle II, it was undisputed below that neither the computer terminal nor the customer’s interaction with the program affected the outcomeof the sweepstakesresults or the odds of winning a prize. Noneof the servers accessed by the computersutilized by Petitioner contained a random numbergeneratorthat dictated the outcome of the sweepstakes entries. Instead, the outcome of each entry was predetermined and stored within a database of available entries, and the 15 computer was merely a means ofdisplaying the outcomebyrevealing the next entry in the pre-shuffled database. Moreover, because the orderin whichthe entries are to be revealed was predetermined, the system did not differentiate entries granted in conjunction with a retail purchase from those granted without purchase;all entries had an equal chanceat prize. In sum, Petitioner’s sweepstakes entries were dispensedjust like lottery tickets are dispensed in hard form using the California State Lottery’s Scratcher vending devices. The only difference is the way the results are viewed. In the case of the Lottery Scratchers, the results were predetermined, and the customer simply scratchesoffthe top layer ofthe play card to see whether he or she won a prize. In Petitioner’s case, the sweepstakes entries were generated off-site, and shuffled like digital lottery tickets. Once the customerselected the level of play, the computer revealed the results of the next sweepstakes entry from the top of the predetermined roll of entries based on the off-site shuffle. Accordingly, under the undisputed facts before the trial court and Court of Appeal, if the decision in Trinkle IT were recognized as controlling, Petitioner should have prevailed. (Trinkle IT, 105 Cal.App.4th at 1411-1412 (“[w]ithout the element of chance incorporated into the operation of the machine, the machine is nothing more than a vending machine which disposes merchandise for consideration’”’).) 16 The Court of Appeal, however, expressly rejected the interpretation of Penal Code Section 330b set forth in 7rinkle I, and found that Petitioner’s computers violated that Section based onits novel interpretation. It stated: [W]e disagree with Trinkle IT’s description of the mannerin which the chance element must be realized in order to constitute a slot machine or device undersection 330b. Specifically, Trinkle I held that the chance element must be created by a randomizing process occurring at the moment the machineor device is being played. (Trinkle II, supra,at p. 1411.) As will be explained below, we think that holding was in error. Since we disagree with 7rinkle IJ on these significant matters relating to the statutory elements, we adopt a different approach here than what wasarticulated in that case.- (Opinion,at pp. 16-17.) As a result of the Court of Appeal’s holding, there is now a conflict amongthe District Courts of Appeal as to the proper definition ofan illegal slot machine under Penal Code Section 330b. Becausethis Section is a criminalstatute, resolving the conflict in the law is important to provide fair notice to all persons in California as to how their conduct will be judged underthis Section. Review is warranted for this reason alone. B. Review is Appropriate Because the Court of Appeal Exceeded its Authority by Improperly Injecting a Subjective ComponentInto the Determination of Whethera Device is a Slot Machine Under Penal Code Section 330b As noted above, the element of “chance” must be satisfied in order for a device to constitute an illegal slot machine under Penal Code Section 17 330b. Underestablished law set forth in Trinkle IT, Trinkle v. Stroh, People ex rel. Lockyer v. Pacific Gaming Technologies, and elsewhere, whether a | customerusing a particular device understands how the device works or can predict whether he or she will win is not determinative of the element of chance. Rather, as noted in these cases, the determinative issue is how the machine actually works. These cases make clear that if the machine does not create the element of chance, butjust distributes pre-determined prizes or entries in a pre-determinedfixed order, then the machine does not meetthe statutory definition of a slot machine or gambling device under Section 330b. Forthe first time in California, the Court of Appeal here steps away from looking at the actual workings on the machineor device, and focuses instead solely on the end user’s experience to determine whether a deviceis an illegal slot machine. The Court of Appeal stated: Defendantsinsist that their sweepstakes systems are on par with the vending machinein Trinkle II, since customers playing defendants’ computer sweepstakes games merely receive the next available entry result from a stack that is in a previously arranged, sequential order. We disagree. Forat least two reasons, we hold that 7rinkle IT does not salvage the devices at issue in the present appeal. First, we disagree that the chance element must always be generated by some randomizing action of the deviceitself whenit is being played. Section 330b only requires that prizes may be won “by reason of any element of hazard or chanceor of other outcome of operation unpredictable by him orher ....” (§ 330b, subd. (d).) Under this broad wording,if the entries are arrangedin a particular order beforehand, rather than rearranged each time the gameis played, it will still suffice. 18 Either way, the next sequential entry/result that is dealt out by the software system will be, from the perspective of the player, by “chance or of other outcomeofoperation unpredictable by him or her ....” (dbid.) Second, Trinkle IT is distinguishable factually because, in the words of a recent federal district court decision, it involved a passive vending machinethat “simply delivered a finished product—thelottery ticket.” (Lucky Bob’s Internet Café, LLCv. California Dept. ofJustice, et al. (S.D.Cal. 2013) 2013 U.S. Dist. Lexis 62470, p. *8 (Lucky Bob’s).) Here, in contrast, all the trappings and experiences involved in playing traditional slot machines are actualized in one form or another by defendants’ sweepstakes software systems and networked computer terminals, since in each case points are received upon making a purchase, a game program is activated by the customerat a terminal, points are used or bet in selected increments, audio-visual scenes are played out on the screen to create the feel and anticipation of a slot machine or other gambling game, andprizes are won. For these reasons, the integrated systems in our case are ina different category than the vending machinein 7rinkle II. The mere fact that winnings are based on a predetermined sequence of results programmedinto the software system, rather than on a randomly spinning wheel(orthelike), does not change the nature and character of devices herein, which as integrated systems function as slot machines. (Opinion, at pp. 21-22 [emphasis added, internal footnotes omitted].) The Court ofAppeal’s focus on whetherthe “integrated system” has _ all the “trappings and experiences involved in playing traditional slot machines”finds no support in California law, and improperly injects a subjective componentinto the determination of whether a device or apparatus violates Penal Code section 330b. This is error, because the Court of Appeal “has no powerto rewrite the statute so as to makeit 19 conform to a presumed intention whichis not expressed.” (Equilon Enterprises , supra, 29 Cal.4th at 59.) Nothing in the California Penal Code purports to legislate the look and feel of a sweepstakes. The merefact that a digital sweepstakes game’s screen image may bear a passing resemblancein sight or soundto the types of gamestraditionally played on slot machines does not makethe sweepstakes gameillegal. The Penal Code focuses not on how the sweepstakes results are revealed, but on the inner workings of the game and the role of chance. Thus, in order to determineif a particular sweepstake system meets these requirements, a court must go beyondthe look andfeel of a sweepstakes game, and analyze the internal working of the sweepstakes software and the wayit is utilized by the business. In the proceedings below, the People produced absolutely no evidence regarding the inner workings of Petitioner’s sweepstakes systems, but instead relied on legally irrelevant declarations about how Petitioner’s sweepstakes gamessuperficially look like certain other sweepstakes games. The People appear to have made noeffort to test the actual software systems used by Petitioner. The following facts, therefore, were undisputed in the trial court: e the computers utilized by Petitioner do not impact the outcome of the sweepstakes, and do not contain random numbergenerators(i.e., they do not create the element of chance). 20 e the results of the sweepstakes are predetermined, and nothing the player can do will affect the outcomeofthe sweepstakes. _ @ anyonecan play for free without making a purchase, and nobody may purchase sweepstakesentries; that is, no consideration is required to participate in the sweepstakes. Had the Court of Appeal properly focused on the actual workings of the device or apparatus andthe actual languageofthe statute, several key differences between Petitioner’s sweepstakes and the typical slot machines used in casinos would have been revealed, all of whichillustrate why Petitioner’s computer terminalsare not illegal slot machines. Based on the undisputed evidence before thetrial court, some of those key differences include: e Customers at a casino mustpay to play a slot machine. In contrast, Petitioner did not sell sweepstakes entries; he gave them away as a promotion in conjunction with retail purchases. Moreover, no purchase was necessary to enter Petitioner’s sweepstakes, as any eligible person could enter Petitioner’s sweepstakesfor free. e A typical slot machine contains a random numbergenerator, whichis a piece of software that randomly determines the outcome every time someoneplays that slot machine. Because the random numbergenerator inside the machine randomly determines the outcome every timethe slot machineis played, on any given play, every outcomeis just as likely to occur. In contrast, there is no random number generator inside Petitioner’s computers or servers. Petitioner’s computers simply reveal the next sweepstakes gamepiece in line based on a shuffle pattern that occurred years ago, and has not been changedsince that time. e If someoneis operating a legitimate casino with a slot machine with a million-dollar jackpot, there is a chancethat different customers could hit that jackpot five times over the 21 first month the casino is open, and the casino would have to pay the jackpotfive times. Unlike a slot machine, the prizes in Petitioner’s sweepstakes gamesare fixed at the outset and distributed among the winners as the applicable gamepieces are revealed. Petitioner therefore knowsoverthelife of any individual sweepstakes game exactly how muchit will pay out to winners of that game. Based on these undisputed differences, had the Court of Appeal followedprior case law, Petitioner would have prevailed. But the Court of Appealrejected prior law, and adopted a new, subjective “look and feel” test to determine whetherthe “chance” element of Penal Code Section 330b The Court of Appeal attempt to explain its “look and feel” test misses the mark. The Court of Appeal stated: If this were not the case, then even a casino-style slot machine wouldbelegal as long as it was operated by a computer system that had previously arranged the sequence of entry results in a fixed order. Such a computer system might conceivably frontload hundreds of millions ofdiscrete entry results into a predetermined sequence. A customer using that device would be surprised to learn that merely becausethere is a preset sequence,heis not playing a game of chance. Of course,in reality, that is exactly what he is doing. As aptly remarked in People ex rel. Lockyer v. Pacific Gaming Technologies, supra, 82 Cal.App.4th at page 701, “if it looks like a duck, walks like a duck, and soundslike a duck,it is a duck.” (Fn. omitted.) (Opinion,at p.20 fn. 24.) This analysis over-simplifies the issues, and ignores an important point — a casino-style slot machine loaded with millions of pre-determinedentries likely would not be legal if a customer had to payto play; i.e., if consideration were required for the chance to win 22 a prize. If the customerhadto pay, then, at the very least, the slot machine loaded with millions of pre-determined entries wouldbe anillegal lottery in violation of Penal Code Section 319. The key distinction is the requirement of consideration, which is absent from Petitioner’s sweepstakes. (See California Gasoline Retailersv. Regal Petroleum Corp. (1958) 50Cal.2d 844, 858-859 (so long as anyone can receive sweepstakesentries without making a purchase, the element of consideration necessary for a lottery does not exist).) Here, it was undisputed that patrons did not pay to play the sweepstakes; they paid for retail products and services. The sweepstakes entries were used as a promotionaltoolto sell those products and services. And, it was undisputed that people could play the sweepstakes for free. The Court of Appeal’s logic, therefore, has zero application to the facts of this case, and ignores the provisions of Penal Code Section 319. Ultimately, because Penal Code Section 330b does not purport to regulate the look andfeel of a device or apparatus, the Court of Appeal exceededits judicial authority in interpreting that Section to include a subjective component. Again, review is warranted not only to clarify the appropriate test under Section 330b, but also to clarify the properrole of the appellate courts in interpreting statutes. 23 C. Review is Proper Because the Court of Appeal’s Decision Runs Counter to Established Law By Reading the Long- Standing “Consideration” Requirement out of Penal Code Section 330b The Court of Appeal’s decision also runs afoul of well-established law becauseit finds a violation of Penal Code section 330b even though no consideration is required to participate in Petitioner’s sweepstakes. The Court of Appealstated: Defendants suggest that the devices in question cannot qualify as slot machines or devices under section 330b dueto a lack of an adequate showing ofconsideration. Wefind the argument unpersuasive. Unlike section 319 (regarding lotteries), section 330b does not directly specify that consideration is an element. Therefore, it would seem that as long as the express statutory elements of section 330b are satisfied, no separate showing of consideration is needed. In other words, to the extent that consideration is a factor under section 330b,it is simply subsumedbythe existing statutory elements. Since those elements were shown here, nothing more was required. (Opinion, at p. 24.) In reaching this conclusion, the Court of Appeal once again deviated from established precedent, and review is warranted to clarify the law. Section 330b (d) of the California Penal Code defines “slot machine or device”as a “machine, apparatus, or device that is adapted, or may readily be converted, for use in a waythat, as a result ofthe insertion of any piece ofmoney or coin or other object, or by any other means, the machineor device is caused to operate or may be operated... .” (Cal. Penal Code § 330b(d) (emphasis added).) By referring to the insertion of 24 “money orcoin or other object,” subdivision (d) of section 330b makes clear that some valuable consideration must be given in exchangefor the chance to operate the slot machine or device. To read the phrase “moneyor coin or other object” more expansively, as the Court of Appeal did here, would mean that home computers and personal phones, which other valid sweepstakes require the use of in order to enter their sweepstakes promotion, would beillegal slot machines. (See also Section D, infra.) That cannot be the case, meaning that consideration is the touchstoneofan illegal slot machine. Thus, if no consideration is necessary to play a sweepstakes on a device, a device is not an illegal slot machine. That conclusion is supported by the language of section 330a, which makes a misdemeanorthe possession of “any slot or card machine, contrivance, appliance or mechanical device, upon the result ofaction of which money or other valuable thing is staked and hazarded, and whichis operated, or played, by placing or depositing therein any coins, checks, slugs, balls, or other articles or device, or in any other manner....” (Penal Code § 330a(a) (emphasis added).) Requiring some valuable consideration to be given in exchange for the chanceto playis also consistent with existing case law. California law historically has recognized, and continuesto recognize, three distinct forms of gambling: “gaming,lotteries and betting.” (Western Telcon, Inc.v. 25 California State Lottery (1996) 13 Cal.4th 475, 484.) Chapter 10 oftitle 9, Part 1 of the Penal Code, which includes sections 330 through 337z, addresses gaming. A slot machine or device, defined by sections 330a and 330b, therefore falls under the category of “gaming.” (Trinkle II, supra, 105 Cal.App.4th at 1412.) This Court has defined gamingas “the playing of any gamefor stakes hazarded by the players.” (Western Telcon, Inc., supra, 13 Cal.4th at 484 (emphasis added); see also Trinkle I, supra, 105 Cal.App.4th at 1407.) Accordingly, for a slot machine or any other type of gamingto exist, a player must hazard stakes(i.e., offer valuable consideration). Petitioner’s computers are not slot machines or other gambling devices because no stakes are hazarded by the players. The evidence offered by Petitioner, and not contradicted by the People, showsthat no purchase wasnecessary to play Petitioner’s sweepstakes. Sweepstakes entries are not sold; they were offered as a promotion in conjunction with retail purchases of products and services. Thus, because customers and non-customersalike hadthe ability to participate in the sweepstakes without furnishing anything of value in consideration for the chance to play, the first element of a slot machine or other gambling device — consideration — is not met. By reading the consideration requirement out of the analysis, the Court of Appeal created a conflict in the law that must be resolved. 26 D. Review is Warranted Because,if the Court of Appeal’s Decision Stands, it Calls Into Serious Question the Continuing Legality of Well-Established Sweepstakes and Other Games Whose Validity Were Previously Beyond Question By focusing on the customer’s perspective, and broadly interpreting the term “apparatus” within the meaning of Penal Code Section 330b, the Court of Appeal’s decision calls into question the legality of sweepstakes promotionsroutinely used throughoutthe State. As noted above, under previously-established law whether a customerusing a particular device understands how the device works or can predict whetherhe or she will win is not determinative of the element of chance. For example, a customer buyinga lottery ticket from a vending machine does not know whetherhe or she will win when buyingtheticket, but the lottery vending machinestill is not an illegal slot machine. Similarly, customers entering a code on their phoneor personal computer in order to play a sweepstakes game do not know if they will win when they enter that code, but that does not make their phone or computeran illegal slot machine. Unfortunately, however, these are the direct (and probably unintended) results of the Court of Appeal’s analysis. It is common knowledge that manyretail establishments, like McDonald’s, Carl’s Jr., Pepsi, Coca-Cola, Subway, andothers, routinely use sweepstakes programs to promote their products and services. These programs all share common features for a valid sweepstakes as required by 27 California law, including: no purchase necessary,all entries have the same chance of winning,all prizes are final, and limited sweepstakesperiod. More importantly, many of the well-known sweepstakes promotions in California openly use computers, cell phones, or other electronic devices not only to allow participants to submit their sweepstakes entries, but also to reveal the results of such entries. The sweepstakes programs run by McDonald’s and Coca-Cola, for example, require the participant to enter a code on a computeror other electronic device to enter the sweepstakes and revealthe results thereof. (See http:/(www.mycokerewards.com/home.do.) A sweepstakes program recently run by Carl’s Jr., called the “Wheel of Awesome,”also required the use of a computeror an electronic device, and used a simulated casino-like spinning wheelto reveal the results of the sweepstakes entry. (See http://vimeo.com/24063584.) Underthe Court of Appeal’s analysis, such use ofa computer or phoneto revealthe results of a sweepstakes entry makes that sweepstakes promotionillegal. That is not, and cannotbe, the case. But again,thatis the result of the Court of Appeal’s decision. The Court of Appeal found: Asshould be apparent from the above analysis, we are treating each defendant’s complex of networked terminals, software gaming programs and computerserversasa single, integrated system. Undersection 330b, subdivision (d), an unlawful “slot machine or device’”is not limited to an isolated or stand-alone piece of physical hardware, but broadly includes “a machine, apparatus, or device thatis adapted” for use as a slot machineor device. (/bid., italics added.) As defined in dictionaries, the ordinary meaning for 28 the term “apparatus” includes “a group or combination of instruments, machinery, tools, or materials having a particular function” (Random House Webster’s College Dict. (1992) p. 66), as well as “[t}he totality of means by which a designated function is performedor a specific task executed” (Webster’s II New College Dict. (2001) p. 54). Here, each defendant’s system of gaming software, servers and computer terminals plainly operated together as a single apparatus. (§ 330b, subd. (d).) While it is true that the end terminals or computer monitors used by patrons—if considered in isolation—maynotintrinsically or standing alone contain all the elements of a slot machine, in eachcase theyare part of an integrated system or apparatus wherein the variousparts or components work together so as to operate in a mannerthat does constitute an unlawful slot machine or device. (Opinion,at pp. 23-24.) Byso broadly defining the term “apparatus” under Penal Code Section 330b, and by further holding that the “chance” element of Penal Code Section 330b is measured by the end user’s perspective and not the inner-workings of the machine or device, the Court of Appeal effectively has called into question the legality of any sweepstakes promotion that permits a customer to determine whether they wona prize by using any electronic device or apparatus, including a personal computerorcell phone. Under the Court ofAppeal’s analysis, the “system” of integrated instrumentsortools - i.e., the computer server operated bytheretail establishment, the computer or cell phoneutilized by the end user, and the software or mobile application used by the customerto reveal sweepstakes results — constitutes an “apparatus” within the meaning of Penal Code Section 330b. And, because the Court of Appeal held that the “chance” 29 element dependson the end-user’s experience, that “apparatus” now constitutes an illegal slot machine. Accordingly, underthis scenario, both the retailers and customers are guilty of possessing an illegal slot machine in violation of Penal Code Section 330b. Clearly, this result is well beyond the Legislature’s intention, and the consequencesare likely well beyond the intention of the Court of Appeal. But that is the real impact of the Court of Appeal’s analysis, which further demonstrates why the Court of Appeal’s decision cannotstand. E. The Court of Appeal’s Decision Runs Counter to the Rule of Lenity “Therule of statutory interpretation that ambiguous penal statutes are construed in favor of defendants is inapplicable unless two reasonable interpretations of the same provision stand in relative equipoise,i.e., that resolution of the statute’s ambiguities in a convincing manneris impracticable.” (People v. Jones (1988) 46 Cal.3d 585, 599) The rule does not apply every time there are two or moreinterpretationsavailable, but rather only whenthat the court can do no morethan guess what the legislative body intended in passing the law. (People v. Avery (2002) 27 Cal.4th 49, 58.) Essentially,it is a tie-breaking principal. (People v. Manzo (2012) 53 Cal.4th 880, 889; People v. Nuckles (2013) 56 Cal.4th 601, 611.) If the Court can discern the Legislature’s intent from legislative history or 30 other extrinsic aids to statutory construction, the rule oflenity will not comeinto play. (/d.) Moreover,“[i]t is fundamental that crimesare not to be “built up by courts with the aid of inference, implication, and strained interpretation and penalstatutes must be construed to reach nofurther than their words; no person can be made subjectto them by implication.” (People v. Vis (1966) 243 Cal.App.2d 549, 554 (emphasis added) (internal citations and quotations omitted).) “In other words, criminal statutes will not be built up ‘by judicial grafting uponlegislation... [I]t is also true that the defendantis entitled to the benefit of every reasonable doubt, whetherit arise out of a question offact, or as to the true interpretation of words or the construction of language usedina statute.” (/d. [citing People v. Ralph (1944) 24 Cal.2d 575, 581].) “Indeed,it is ‘the policy ofCalifornia ... to construe and apply penalstatutes asfavorably to the defendant as the languageofthe statute andthe circumstancesofits application may reasonably permit.’” (Id.) (Emphasis added.) Theserulesstrict construction of criminal statutes apply equally to civil proceedings, such as the proceeding here. (Walsh v. Department of Alcoholic Beverage Control (1963) 59 Cal.2d 757, 765; Vis, supra, 243 Cal.App.2d at 554 (“the foregoing principles apply even when the underlying action is civil in nature”).) 31 The Court ofAppeal’s analysis violates these fundamental principles. In essence, the Court of Appeal ignored existing law, redefined Penal Code Section 330b by graftingits “look and feel” and “trappings and experiences”tests into the statutory analysis, and then applied its new interpretation of Penal Code Section 330bto Petitioner. Petitioner, in other words, has been found guilty of violating a statute based on an interpretation ofthat statute that not only did notexist at the time ofhis conduct. Even worse, Petitioner has been found guilty ofviolating a statute even though his conduct wasnotillegal underthe interpretation of Penal Code Section 330b set forth in published appellate decisions. Such application of Penal Code Section 330b against Petitioner exceeds the Court of Appeal’s authority, violates the rule of lenity, and violates the fundamental notion that courts must “construe and apply penalstatutes as favorably to the defendant as the languageofthestatute and the circumstancesofits application may reasonablypermit.” (Vis, supra, 243 Cal.App.2d at 554.) To the extent any doubt exists about whether the Court ofAppeal’s application of its new interpretation of Penal Code Section 330b to Petitioner was improper under the above authorities, currently pending in the California State Assembly is proposed legislation — Assembly Bill 1439 — which would expressly make the type of sweepstakes offered by so-called Internet café’s illegal. The very fact that this proposedbill is pending in the 32 | Legislature reveals that existing law does not clearly prohibit such activity or, at a minimum,that the legality of Petitioner’s activity was notentirely clear underexisting law. Either way, underthe principles of statutory construction set forth above, Petitioner wasentitled to the benefit of the doubt. Through its opinion, however, the Court of Appeal jumpedthe gun, and improperly attemptedto legislate, instead of adjudicating based on existing law. This again was error warranting review. CONCLUSION The Court ofAppeal’s published decision expressly rejects existing precedent from the Third Appellate District in Trinkle II, and adopts a new interpretation of Penal Code Section 330b. The Court of Appeal’s novel interpretation violates fundamental principles of statutory construction, creates numerous unintended consequences, and violates fundamental notions of due process by applying the novel interpretation to Petitioner. The Court of Appeal’s decision, in short, has the potential to create far more problemsthan it solves. Review by this Court is warranted. Dated: April 16, 2014 sy Tory E. Griffin - HUNT JEPPSON & GRIFFIN Attorneys for Petitioner John Stidman 33 CERTIFICATE OF WORD COUNT (California Rules of Court, Rule 8.204(c)(1) The text of this brief consists of 8,160 words as counted by Microsoft Word, the word-processing software used to generatethis brief. WyNy TORY’E. GRIFFIN Attorney for Petitioner John Stidman DATED: April 16, 2014 By: 34 EXHIBIT A. COURT GF APPEAL FIFTH APPELLATE DISTRICT Pil AL, é [} | | MAR OT 2014 CERTIFIED FOR PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIFTH APPELLATE DISTRICT THE PEOPLE, F065450/F06545 1/F065689 Plaintiff and Respondent, (Super. Ct. Nos. CV-276959, v. CV-276958, CV-276961) KIRNPAL GREWALet al., OPINION Defendants and Appellants. APPEALfrom a judgmentof the Superior Court of Kern County. William D. Palmer, Judge. Weston, Garrou & Mooney, John H. Weston, G. Randall Garrou and Jerome H. Mooneyfor Defendants and Appellants Kirnpal Grewal and Phillip Emest Walker. William H. Slocumb and Christopher T. Reid for Defendant and Appellant John C. Stidman. Lisa S. Green, District Attomey, Gregory A. Pulskamp and John T, Mitchell, Deputy District Attorneys, for Plaintiff and Respondent, DowneyBrand, Stephen J. Meyer, Tory E. Griffin and Kelly L. Pope for Net Connection Hayward as Amici Curiae on behalf of Defendants and Appellants. -00Qo0- In these three consolidated cases,! the People of the State of California by and through the Kern County District Attorney (the People) filed civil actions under the — unfair competition law (Bus. & Prof. Code, § 17200 et seq.), seeking to enjoin several Internet café? businesses from continuing to engage in practices that allegedly violated the gamblingprohibitionsset forth atPenal Codesections 319 (unlawfullottery) and 330a, 330b and 330.1 (unlawful slot machines or devices). When the People requested preliminary injunctions, the owners andoperators of the Internetcafé businesses in question (1.e., Kirpal Grewal, Phillip Ernest Walker & John C. Stidman;collectively defendants) opposedsuchrelief on the groundthat their businesses did not conduct lotteries but merely offered lawful sweepstakes that promoted the sale of their products. Additionally, while acknowledging that customers could reveal sweepstakes results by playing (on terminals provided on premises) a computer game program that simulated the J Two additional related cases(i.e., People v. Nasser, case No. F066645 & People v. Elmalih, case No. F066646) will be addressed by us in a separate opinion. Wenote the only difference in those cases from what is considered hereis that a telephone card (rather than Internet time) was the product purchased to gain sweepstakes points used on game programsat the businesses’ computer terminals. With no material differences, the samerationale and disposition follows in those cases as is stated here. 2 Broadly speaking,the term.“Internet café” depicts a café or similar establishment that sells computer use and/or Internet accessonits premises. As commentators have pointed out, many such businesses now promote the sale oftheir products (e.g., computer time,Internet access or telephone cards) by offering.a sweepstakes giveawaythat allows customers to ascertain their winnings,if any, by playing specialized game programs on the businesses’ owncomputer terminals. Typically, these programs simulate casino slot machines or other gambling games. (See e.g., Dunbar & Russell, The History ofInternet Cafes and the Current Approach to Their Regulation (2012) 3 UNLV GamingL.J. 243, 243-245; Silver, The Curious Case ofConvenience Casinos: How Internet Sweepstakes Cafes Survive in a Gray Area Between Unlawful Gambling and Legitimate Business Promotions (2012) 29 J. Marshall J. Computer & Info. L: 593, 594-599.) 3 Unless otherwise indicated, all further statutory references are to the Penal Code. look and feel of a slot machineor other game of chance, defendants maintained that the required statutory elements of an unlawful slot machine or gambling device were not present. Thetrial court disagreed with that assessmentand granted the preliminary - injunctions as requested by the People. Defendants have appealed from the orders granting such preliminary injunctions, raising the same arguments they madein thetrial court.4 Because we conclude the People will likely prevail on the claimsthat defendants violated prohibitions against slot machines or gamibling devices under section 330b, we shall affirm the relief granted below. FACTS AND PROCEDURAL HISTORY Since our opinion concemsthree distinct Internet café businesses, we begin by summarizing the factual background of each ofthe underlying cases.5 Defendant Stidman’s I Zone Internet Café Defendant Stidman owns and operates a business knownasthe I Zone Internet Café (I Zone) in Bakersfield, California. I Zonesells Internettimeto the public at a price of $20 per hour, which time may be used on a system of computer terminals located on the I Zone premises. In addition, I Zone sells copying services, packaging services and refreshments. To promote the sale of Internet time and other products, I Zone offers a sweepstakes to customers whenever they make a purchase. According to the sweepstakes rules, noncustomers mayalsoenter the sweepstakes;that is, no purchase is necessary to 4 After separate appeals werefiled, we ordered the three cases consolidated. Theconsolidated cases herein are Peoplev. Grewal, case No. F065450, People v. Walker,case No. F065451 and People y. Stidman, case No. F065689. 5 Although the facts and circumstances shown below were as ofthe time ofthehearings below, for ease of expression we primarily use the presenttense. enter.© The sweepstakes is effectuated through a computer software system provided by a company knownas Capital Bingo. Underthe sweepstakes as operated by the software system, a person who purchasesInternettime or other products at I Zone receives sweepstakespoints for each dollar spent. A customeris also given sweepstakespoints for his first purchase ofthe day as well as for being a new customer. For example, a new customer who buys $20 of | Internet timereceives a total of 3,000 sweepstakes points, consisting of 2,000 sweepstakes points for the purchase of Internet time, 500 sweepstakes points for thefirst $20 of Internet time purchased for that day, and 500 sweepstakes points for being a new customer. Additional sweepstakes points may be receivedifthe customer buys refreshments. Awhite plastic card with a magneticstrip is provided to the customer, whichcard is activated by an I Zone employee at the register. When the customer swipes the card at an open computerterminal, he is given the option of using the Internet function or playing sweepstakes computer games. Ifhe choosesthelatter, the time spent playing sweepstakes computer games doesnot reduce the amount of Internet time available.” Both options are touch-screen activated and do not require a keyboard or mouse. In playing the sweepstakes computer games, I Zone customersuse their sweepstakes points in selected incfements (simulating bets) on games with names suchas 6 To enter a sweepstakes without purchasing Internettime or other products, an individual mayrecéiveup to four free entries from the cashier each day upon request. Four additional entries are available by mailing a form with a self-addressed, stamped envelope. 7 Detective Craig Checklenis of the Bakersfield Police Departmentinitially reported that Internet time was reduced when he played the sweepstakes computer games. He later corrected himself, stating that “Internet time is not lost when playing the sweepstakes games.” “Buck Lucky,” “Tropical Treasures” or “Baby Bucks.” Accordingto the I Zone sweepstakesrules, each incrementlevel available for play “represents a separate sweepstakes.”8 As shown by photographic evidence, gambling-themed games resembling slot machines are prominently displayed on the J Zone terminals. According to the observations of Detective Checklenis,“{i}t appeared the subjects were playing | casino style slot machine games on the computers.... The audible sounds werethat of casino style slot machines.” On a later inspection of I Zone, he surveyed the room and noted that no one wason the Internet, but rather “all the people using the computer terminals were playing the sweepstakes games.”? Participants in the I Zone sweepstakes have a chance to win cash prizes in various amounts ranging from small sumsto a top prizeof $3,000. . In opposing the motion for preliminary injunction, Stidman presented evidence and argument regarding how the sweepstakes functioned. His position was essentially that the computer sweepstakes games played onthe I Zone terminals were merely an entertaining way for customers to reveal a sweepstakes result. A customer could also reveal a sweepstakesresult by other means, such as by using a special function on the computer terminal or by asking an I Zone employeeat the register to print out a result on paper. As described in Stidman’s opposition, “Telach time a customerrevealsthe results of a sweepstakes entry, {regardless of the means used], the next available sweepstakes entry in the ‘stack’ is revealed,” in sequence, from a prearrangedstackofentries. The 8 Based on the description provided by Stidman of howthe software systemconducts the sweepstakes program,this statement indicates that each incrementlevelavailable for play would accessa distinct “batch of sweepstakes entries” stacked in aparticular order or sequence.“ 9 Consistent with the detective’s observation, Stidman’s evidence revealed thatatleast some ofthe I Zone patrons had a considerable surplus balanceofInternettime ontheir accounts. - “next available sweepstakes entry” contains a predeterminedresult that would be the same regardless of which method wasused to reveal it. Thus, when the customer engages the sweepstakes computer games, the outcome is determined by theparticular sweepstakesentry that is being revealed at that time, not by the workings of the game itself. That is, the game simply reveals the predetermined result of the next sequential sweepstakesentry. | Stidman provided a further operational description of how the software system used by I Zone conducted the sweepstakes. The descriptive information was primarily based on declarations from Stidman’s expert, Nick Farley, and an attorney opinion letter providedto Stidman (purportedly from Capital Bingo’s attomey) disclosing the Capital Bingo operational “model.” Allegedly, there weré three distinct servers, referred to as (1) the Management Terminal, (2) the Pointof Sale Terminal, and (3) the Internet Terminal. As summarized in thetrial court by Stidman’s counsel: “It is at the Management Terminal whereall sweepstakes entries are produced and arranged. Each batch of sweepstakes entries has a finite number of entries and a finite number of winners and losers. Once a batch of sweepstakes entries is producedat the Management Terminal, it is ‘stacked’ ... and then transferred to the Point of Sale Terminal in exactly the sameorder as when it left the Management Terminal. Each time a customer reveals the results of a sweepstakes entry, either at the Internet Terminal orat the Point of Sale, the next available sweepstakesentry in thie ‘stack’ is revealed. In other words, the Internet Terminal simply acts as a reader and displays the results of the next sequential sweepstakes entry in the stack as it was originally arranged and transferred from the Management Terminal—it is never the object of play. In fact, exactly the sameresults [are displayed] for a specified sweepstakes entry whether the customer chooses to have the results displayed in paper format at the Point of Sale Terminal orin electronic format at an Internet Terminal.” Additionally, Farley’s declaration asserted that neither the Point of Sale Terminalnor the Internet Terminal had a random number generator and could not be “the objectofplay,” since those servers could not influenceor alter the result of a particular sweepstakes entry, but merely displayed that result. Defendant Walker’s OZ Internet Café and Hub Defendant Walker ownsand operates a businesscalled the OZ Internet Café and Hub(the OZ)in Bakersfield, California. Among otherthings, the OZ sells computer and Internet access (hereafter, Internet time) on computer terminals on its premises, The OZ promotes the sale of Internettime and other products with a sweepstakes giveawaythatis implemented through a software system provided by a company known as Figure Eight Software. Participants in the sweepstakes have the chance to win cash prizes varying from small amounts to a top prize of $10,000 as set forthin the sweepstakes’ oddstables. Internet time may be purchasedat the OZ for $10 per hour. WhenInternet timeis purchased, a personal identification number (or PIN)is assigned to that customer by an employee of the OZ, who creates an account by whichthe customer mayaccessthe computers and Internet as well as play sweepstakes computer games. Customers are not charged for Internet time while they are playing the computer sweepstakes games. At the time of purchase, the customerreceives 100 “sweepstakes points” for each dollar spent. As asserted by Walker, “[c]ustomers purchase product/s} consisting mostly of computer and Internet time at competitive prices and receive free sweepstake points in addition to the product purchased.” Additionally, a customer may receive 100 free sweepstakes points every day that the customer comesinto the OZ,andfirst-time customers receive 500 additional sweepstakes points. These sweepstakes points can be “used to draw the next available sequential entry from a sweepstake contest pool.” This may be done and the result revealed in one of three ways: (i) asking an OZ employeeto reveal a result, (ii) pushing an instant reveal buttonat the computerstation,or(iii) playing computer sweepstakes games“that have appearancessimilar to common games of chance”at the computer terminals. The sweepstakes rules provide that no purchaseis necessary to enter the sweepstakes. According to Walker, noncustomers may obtain free sweepstakes entries by asking an employee at the OZ or by mailing in a request. When Detective Checklenis investigated the OZ, he asked Walkerif customers had to sign a form to access the computers. Walker respondedin the affirmative and showed Checklenis a “Computer Time Purchase Agreement.” Onthe form, each customeris required to acknowledge that he understands the following matters before using the OZ computers:(i) that he is purchasing computertime and (ii) that the sweepstakes computer gamesare “not gambling,”but are a “promotional game” in which all winners are predetermined. On the form,the customeralso affirmsthat he understands“(t]he gameshave no[e]ffect on thé outcome ofthe prizes won,”but are merely an “entertaining way to reveal [his] prizes and [he] could have them instantly. revealed and would havethe sameresult.” In opposing the motion for preliminary injunction, Walker’s declaration explained what happens whena customeruses the sweepstakes computer game: “If a customer utilizes the pseudo-interactive entertaining reveal interface[,] the customer can encounter some games that have appearances similar to common gamesofchance.” However, before any “spinning wheels or cards” appear on thescreen,“the sweepstakeentry has already been drawn sequentially from a poolof entries and is predetermined. There is no random componentto the apparentactionof the images in the interface even though it simulates interactivity. Instead, the images will display a result that matches the amount of any prize revealedin the entries. [Citation.] it Astold to the customersin the rules and in disclaimers, the pseudo interactive interface does not ‘automatically’ or ‘randomly’ utilize any play to obtain a result.” Walker’s opposition also described in greater detail the operation of the software system utilized by the OZ to run the sweepstakes. Walker asserted by declaration that under that software system, the issue of whether a customer has won a cash prize is determined at the point in timethathis entry isdrawn from a sweepstakes pool. Each such entry has a previously assigned cash prize of zero or greater. Entries are drawn sequentially from one of 32 sweepstakes pools created by the software company.) The entriesin each poolare prearranged in a set order or sequenceby the software company, and the OZ has no control overthe order or sequenceofthe entries or the corresponding results. Access to a particular sweepstakes pool is determined by how many points the customer chooses to use (or bet) at any one time. Each pool hasits ownprizes andits own separate sequenceofentry results. When a customerselects a sweepstakes pool, the software system assigns to him the next available entry result in that pool, in sequence. Atthat point, the result is established and cannotbeaffected by the computer gameplay, which merely reveals the established result. Additionally, Walker asserted that a specific sequential entry will yield the same result regardless ofthe method a customer used to draw andrevealit. Defendant Grewal’s A to Z Café | Defendant Grewal is the owner and operator of the A to Z Café in Bakersfield, California, Grewal’s opening brief describes the sweepstakes conducted at his A to Z Café in identical termsto the sweepstakes operated by Walker. Ourreview ofthe evidentiary record confirmsthat the sweepstakes program used by the A to Z Café was in all material respects the same as the one described above regarding Walker’s business, theOZ,and the parties likewise agreethat the facts and circumstancesofthe two cases are in essence the same. Therefore, rather than engage in an unnecessary repetition of facts, we simply note that the material facts regarding the A to Z Café are the same as 10 The printed sweepstakesrules also refer to such pools as “multiple finite deals of entries.” described above concerning the OZ. When we discuss Walker’s system, the sameis true of Grewal’s. Procedural Background All three cases were commencedon June 2 1, 2012, by the Kem County District Attomey’s Office on behalf of the People, filed as separate civil actions against Stidman, Walker and Grewal, respectively. Each complaint sought injunctive relief under Business and Professions Code section 17200 based on defendants’ alleged violations of antigambling provisions of the Penal Code in the operation oftheir respective Internet café businesses.!!_ The Penal Code provisions at issue underthe pleadings were those relating to unlawful lotteries (§ 319) and unlawful slot machines or gambling devices (§$§ 330a, 330b & 330.1). On July 23, 2012, hearings were held on the People’s motions for preliminary injunctions by which the People sought to prohibit the sweepstakes operations until or unless otherwise ordered by the court aftera trial on the merits. The trial court granted the requestedrelief as against each defendant. Formal written orders granting the preliminary injunctions were entered bythetrial court on August1, 2012, from whicheach defendant separately appealed. Weorderedthe three appeals consolidated. DISCUSSION I, The Issue in the Trial Court and Our Standard of Review The decision to grant a preliminary injunctionrests in the sound discretion of the trial court. (/T Corp. v. County ofImperial (1983) 35 Cal.3d 63, 69.) Ordinarily, “two interrelated factors” are evaluatedby thetrial court in deciding whetherto exercise its discretion to issue a preliminary injunction: “The first is the likelihood that the plaintiff nN Otherrelief, such as civil penalties, was also sought in each of the underlying complaints filed by the People. 10. will prevail on the merits at trial. The second is the interim harm that the plaintiff is likely to sustain if the injunction were denied as compared to the harm that the defendant is likely to sufferif the preliminary injunction were issued.” (/d. at pp. 69-70.)!2 An order granting or denying such interlocutory relief reflects the trial court’s evaluation of the controversy on the record beforeit at the timeofits ruling; thus,“it is not an adjudication ofthe ultimate merits ofthe dispute.” (People ex rel. Gallo v, Acuna (1997) 14 Cal4th 1090, 1109.) In view ofthat latter principle, we base our opinion upon the state of the record that was before the trial court in granting interlocutory relief, and although onthoseinitial facts we reach certain conclusions, we leave open the possibility—however remote it may be heré—thata trial on the merits based on a more fully developed factual record may cast these matters in a different light. Wereview an order granting a preliminary injunction under the abuseof discretion standard. (People ex rel. Gallo v. Acuna, supra, 14 Cal.4th at p. 1109.) If the evidenceis in conflict, we interpret the facts in the light most favorable to the prevailing party. (Cinquegrani v. DepartmentofMotor Vehicles (2008) 163 Cal.App.4th 741, 746.) To the extent that the grantof a preliminary injunction was based on Statutory construction, we review the issue of statutory construction de novo. (ibid.) The question of whether, under a given state of facts, a particular device is an unlawfulslot machineis one oflaw. (Trinkle v. California State Lottery (2003) 105 Cal.App.4th 1401, 1405 (Trinkle I).) We review that question of law de novo. 12 Where, as here, a governmental entity seeks specifically provided injunctiverelief to prohibit an alleged violation ofa statute, once that governmental entity makes a showingthatit is likely to prevail attrial, a rebuttable presumptionarises that the potential harm to the public outweighs the potential harm to the defendant. (77 Corp.v. County ofImperial, supra, 35 Cal.3d. at pp. 71-72; see Bus. & Prof. Code, §§ 17203 [providing for injunctiverelief against unlawful business practices], 17202 [includes specific or preventiverelief to enforce penal law].) ll. In the instant appeal, defendants contendthatthetrial court erred or abusedits discretion in issuing the preliminary injunctions because, allegedly, there was no likelihood that the People wouldbe able to prevail on the merits, Weproceedonthis understanding of defendants’ claims. (See Tosi v. County ofFresno (2008) 161 Cal.App.4th 799, 803-804.) Ii. Statutory Construction of Penal Code Sections Because ourreview ofthe trial court’s rulings requires that we interpret or apply certain Penal Code provisions on the record before us, we briefly set forth the relevant principles of statutory construction.- {T]he objective of statutory interpretation is to ascertain and effectuate legislative intent. [Citations.] To determine legislative intent, we turn first to the words of the statute, giving them their usual and ordinary meaning. [Citations.] When the languageofa statute is clear, we need go no further.” (People v. Beaver (2010) 186 Cal.App.4th 107, 117.) When the language is susceptible ofmore than one reasonable interpretation, however, we look to extrinsic aids, including the objects to.be achieved, the evils to be remedied,the legislative history, public policy, and the statutory scheme of which the statute is a part. (/bid.; accord, People v. Woodhead (1987) 43 Cal.3d 1002, 1008.) - | Underthe rule of lenity, which defendants argue should be applied here, any doubts as to the meaning of a criminal statute are ordinarily resolved in a defendant’s favor. (See, e.g., People v. Overstreet (1986) 42 Cal.3d 891, 896: Walsh v. Dept. Alcoholic Bev. Control (1963) 59 Cal.2d 757, 764-765).15 However, that rule of statutory 3 Therule is sometimes also described as a principle ofstrict construction. (See, e.g., People v. Overstreet, supra, 42 Cal.3d at p. 896; People v. Avery (2002) 27 Cal.4th 49, 58.) 12. interpretation 1S only applied wherethe statute is reasonably susceptible of two constructions that are in relative equipoise—thatis, resolution ofthe statute’s ambiguity — in a convincing manneris impracticable.- (People v. Lee (2003) 31 Cal.4th 613, 627; | People v. Avery, supra, 27 Cal.4th at p. 58: People v. Jones (1988) 46 Cal.3d 585, 599.) “Thus, although true ambiguities are resolved in a defendant’s favor, an appellate court — shouldnotstrain to interpret a penalstatute in defendant’s favorifit can fairly discern a contrary legislative intent.” (People v. Avery, supra,at p. 58 [citing § 4}.)14 As recently stated by our Supreme Court, “tthe Tule of lenity does not apply every timethere are two or more reasonable interpretations of a penalstatute. [Citation.} Rather, the rule ecapplies “‘only if the court can do no more than guess what the legislative body intended; there must be an egregious ambiguity and uncertainty to justify invokingthe rule.’” [Citation.]’ [Citation.]” (People v. Nuckles (2013) 56 Cal.4th 601, 611.) Nosuch ambiguity exists in this case, as will become apparentin the discussion that follows and, therefore, the rule of lenity does not apply.45 II. An Unlawful Slot Machine or Device Was Shown by the Record We begin with the issue ofwhether the devices in question (i.e., defendants’ software systems operating the computer sweepstakes games on the networked terminals 14 Section 4 provides: “Therule ofthe common law, that penal statutes are to be strictly construed, has-no application to this code. All its provisions are to be construed according to the fair import of their terms, with a view to effectits objects and to promote _ justice.” . 15 Even assuminga strict construction, however, that would not require the statutory wording to bestrained or distorted to exclude conduct clearly intended to be within its . scope, where the wordsare giventheir fair meaning in accord with the evidentintent of the Legislature. (Trinkle v. Stroh (1997) 60 Cal.App.4th 771, 783 [so holding, construing provision relating to slot machines]; People v. Shira (1976) 62 Cal.App.3d 442, 460 [same, construing statute relating to lotteries}; cf. § 4 [penal provisions construed according to their fair import.) . 13. provided to customers) were unlawful slot machines or gamblingdevices under the applicable penal statutes, . . Sections 330a, 330b and 330.1 contain distinct but overlapping provisions that prohibit “slot machine[s] or device[s}” as defined in each section.!® The definitional language in each sectionis similar, but not identical. (Cf. §§ 330a, subd. (a), 330b, . subd. (d) & 330.1, subd.(f).)!7 Arguably the broadest ofthethree is section 330b, which eeedefines a “‘slot machine or device’” in the following terms: “TA] machine, apparatus, or device that is adapted ... for use in a way that, as a result ofthe insertion of any piece of moneyor coin or other object, or by any other means, the machineor deviceis caused to _ operate or may be operated, and by reason of any element ofhazard or chance or of other outcomeof operation unpredictable by him orher,the user may receive or become entitled to receive any piece of money... or thing of value ....” (§ 330b, subd. (d).)38 The People center their discussion on section 330b; we will do the same. 16 Section 330a wasenacted in 1911, while sections 330b and330.1 were both enacted in 1950. (Stats. 1911, ch. 483, § 1, p. 951 [re: § 330a]; Stats. 1950, Ist Ex. Sess., ch. 17, § 1, p. 452 [re: § 330b]; Stats. 1950, Ist Ex. Sess., ch. 18, § 1, p. 454 [re: § 330.1].) . . 17 Our courts have recognized the three provisions are “similar” in their terms (e.g., Hotel Employees & Restaurant Employees Internat. Union v. Davis (1999) 21 Cal.4th 585, 593), but also have differences (e.g., People ex rel. Lockyer v. Pacific Gaming Technologies (2000) 82 Cal.App.4th 699, 703, fn. 6; but see Trinkle I, supra, 105 Cal.App.4th at pp. 1409-1410,fn. 7 [treating §§ 330b & 330.1 as identical]). 8 Section 330.1, subdivision (f), defines a “slot machine or device”in relevant part as “one that is, or may be, uséd or operated in such a way that, as a result of the insertion of any piece of moneyor coin or other object the machine ordeviceis caused to operate or may be operated or played, mechanically, electrically, automatically, or manually, and by reason of any elementofhazard or chance, the user may receive or becomeentitled to receive anything of value....” . Section 330a, subdivision (a), prohibits “any slot or card machine, contrivance, appliance or mechanical device, upon the result of action of which moneyor other 14. California courts have found section 330b to prohibit a variety of devices where © . | prizes may be won based on chance. In People ex rel. Lockyer v. Pacific Gaming Teechnologies, supra, 82 Cal.App.4th 699, a vending machinethat dispensed telephone cards for $1 included a “sweepstakes” feature with audio-video displays resembling a slot machine. When customers purchased a phone card for $1, they weregiven a chanceto wan a cash prize ofup to $100. A “preset computer program” determinedthe results of the sweepstakes; the user could not control.oralter the results. (id. at pp. 701-702.) The Court of Appealheld the vending machine was a prohibited slot machine under the plain. | language of section 330b, because “[b]y the insertion of money and purely by chance _ (withoutany skill whatsoever), the user may receive or become entitled to receive money.” (id. at p. 703.) Similarly, in 7;rinkle v. Stroh, supra, 60 Cal.App.4th 771, a jukebox that dispensed four songs for $1 was found to be a prohibited slot machineor device under section 330b because the operators also received a chance to win a cash jackpot. Ua. at pp. 776-780; see also Score Family Fun Center, Inc. v. County ofSan "Diego (1990) 225 Cal.App.3d 1217, 1221-1223 [holding that an arcade video gamethat simulated card gamesviolated § 330b becauseoperators could,as a matter of chance, win free games or extended play)].) | | Based ontheseauthorities, the People argue that an unlawful slot machine or device under section 330b wasinvolved in each of defendants’ businessesat issue in this consolidated appeal. Accordingto the People, this conclusion follows from the facts that, under defendants’ sweepstakes software systems as operated on their computer networks valuable thing is staked or hazarded, and which is operated, or played, by placing or depositing therein any coins, checks, slugs, balls, or other articles or device, or in any other manner and by meanswhereof,or as a result of the operation of which any merchandise, money... or any other thing of value, is wonor lost, or taken from or obtained from the machine, whentheresult of action or operation of the machine, contrivance, appliance, or mechanical device is dependent upon hazard or chance....” 15, and terminals, uponthe payment of money (i.e., the purchase ofInternet time), patrons can activate computer sweepstakes games on the terminals and, based on “chance” or “other outcome of operation unpredictable by” the patron, win cash prizes. We agree with that analysis. That is, on the question of whether it was appropriatefor thetrial court to grant the preliminary injunctions, we concludethatthe record below was adequate to show the People would likely prevail on the merits under section 330b. Weexplain our conclusion by examining each of the statutory elements of an unlawful “‘slot machine or device’” under section 330b. Before we begin that task, a brief commentis needed concerning our approach. One Court of Appeal decision provided the following distillation of the three elements necessary to constitute a slot machine or device undersection 330b: “(1) the insertion of moneyor other object which causes the machineto operate, (2) the operation ofthe machineis unpredictable and governed by chance, and (3) by reason ofthe chance operation ofthe machine, the user may becomeentitled to receive a thing of value.” (Trinkle I, supra, 105 Cal.App.4th at p. 1410).) We take issue with this formulation because section 330b, subdivision (d), refers to chance “or” unpredictable outcome, while Trinkle II uses the conjunctive “and” in its articulation of the second element. As noted in Score Family Fun Center v. County ofSan Diego, supra, 225 Cal.App.3d, at page 1221, those termsare clearly in the disjunctive. As a result, this elementofthe statute (commonly referred to as the chance element) can be satisfied by showingthata prize may be won by reason of an “outcome of operation unpredictable”to the user (§ 330b, subd. (d), italics added; Score Family Fun Center v. County ofSan Diego, supra, at p. 1221). No furtheror additional proof relating to “chance”is needed. !° Additionally, we disagree with. Trinkle II’s description 19 The disjunctive statutory wording does not mean that chance and unpredictability are entirely separable, but only that they may be distinguished in terms of what must be shown. Obviously, when the outcome ofoperation of a device is entirely unpredictable 16. of the manner in which the chance element mustbe realized in order to constitute a slot machineor device under section 330b. Specifically, Trinkle I held that the chance element must be created by a randomizing process occurring at the momentthe machine or deviceis being played. (Trinkle II, supra, at p. 1411 .) As will be explained below, we think that holding was in error. Since we disagree with 7rinkle I on these significant matters relating to the statutory elements, we adopta different approach here than what wasarticulated in that case. In light of the foregoing, and in view of the complexities of the present case, we believeit is best to frame our discussion of the elements of section 330b in termsthat are | closely tethered to the languageofthestatute itself. We now tum to those statutory elements as revealed in the Statutory language. The first element specified in the statute is that “as a result ofthe insertion ofany piece ofmoney orcoin or other object, or by any other means, the machine or deviceis caused to operate or may be operated ....” (§ 330b, subd. (d),italics added.) Defendants argue that this elementis lacking because no coin or similar object wasinserted into a slot by customers at the computerterminalto cause the sweepstakes computer games to operate. Wereject that argument. Here, the insertion of a PIN orthe swiping of a magnetic card at the computer terminal in orderto activate or access the sweepstakes games and thereby usepoints received upon paying moneyat the register (ostensibly to purchasea product) plainly came within the broad scope ofthe statute. Thestatute to the user, it is also involving chance, since for purposes of our'gambling laws ““[c]hance’” meansthat “winning and losing depend on luck and fortune rather than,or at least more than, judgmentand skill.” (Hotel Employees & Restaurant Employees Internat. Union v. Davis, supra, 21 Cal.4th at p. 592.) Here, we believe the statute is simply makingclearthatit is sufficient to establish this element of an unlawful slot machine or device if a prize may be won by reason ofan “outcomeofoperation unpredictable by [the user].” (§ 330b, subd. (d).) 297 17. expressly inchides the catchall phrase “by any other means.” (§ 330b, subd. (d), italics added.) Even though a coin, moneyor object (e.g., a token) was not inserted into a slot, the games were commenced by other means analogous thereto which effectively accomplished the sameresult and, therefore, this elementis satisfied. The second element ofa “slot machine or device”articulated in section 330bis that “by reason ofany elementofhazard or chance or ofother outcomeofoperation unpredictable by him orher, the user may receive or become entitled to receive any... money ... or thing ofvalue ....” (§ 330b, subd. (4),italics added.)?® This language describes the so-called “chance” element—that is, the requirementthat any potential to win a prize must be based on hazard, chance or other outcome of operation unpredictable to the user of the machineordevice. | ‘Here,it is clear that defendants’ customers may becomeentitled to win prizes under the software systems implementing defendants’ computer sweepstakes games based on “hazard or chanceor of other outcome of operation unpredictable” to the user. (§ 330b, subd. (d).) That is, we agree with the People that the chance elementis satisfied. Under California gambling law,“‘[cJhance’” meansthat “winning and losing depend on luck and fortune rather than,or at least more than, judgment andskill.” (Hotel Employees & Restaurant Employees Internat. Union v. Davis, supra, 21 Cal.4th at p. 592.) Since customers playing defendants’ computer sweepstakes games can exert no influence over the outcomeoftheir sweepstakes entries by meansofskill, judgmentor 20 Prior to 2004,this portion of the statute was wordedas follows: “by reason of any element of hazard or chance.or of other outcome ofsuch operation unpredictable by him ....”” (Trinkle IT, supra, 105 Cal.App.4th at p. 1409,fn. 6, italics added.) In 2004,as a result of housekeepinglegislation that made technical, nonsubstantive changes to numerous statutes, the word “such” appearing before the word “operation” was removed from section 330b. (Stats. 2003, ch. 264, § 1.) 18. how well they play the game,it follows that weare dealing with systems that are based on chance or luck. Moreover, by describing their promotional giveaways as sweepstakes, defendants have effectively admitted to the chance element because a ‘““‘[s]weepstakes’” is, by definition, “any procedure for the distribution of anything of value by lot orby chancethat is not unlawful underother provisions oflaw....” (Bus. & Prof. Code, § 17539.5, subd. (a)(12).)?1 Our conclusionis further supported by the official rules of defendants’ sweepstakes, which disclose odds or chances of winning andreiterate that the _ mannerofplaying the game doés not alter the outcome of an entry. (A) We Follow People ex rel. Lockyer v. Pacific Gaming Technologies Moreover, even though all sweepstakes entries were previously arranged in batches (or pools) that had predetermined sequences,that fact does not change our opinion of this issue(i.e., the chance element) because the results wouldstill be unpredictable and randomfrom the perspective of the user. Section 330b, subdivision (d), refers to chance “or of other outcome of operation unpredictable by him or her ....” (Italics added.)??_ The situation hereis clearly analogous to what was described in People ex rel. Lockyer v. Pacific Gaming T.echnologies, supra, 82 Cal.App.4th 699, where“[a] preset computer program determine[d] the results of the sweepstakes,” (Jd. at p. 702.) The machineor device in that case (a “VendaTel”that 21 The difference between a lawful sweepstakes and an unlawful lottery has nothing to do with the chance element. Rather, the differenceis that a sweepstakes does not require that consideration be paid to enter. (See § 319 [elements of lottery include consideration]; California Gasoline Retailers v. Regal Petroleum Corp. (1958) 50 Cal.2d 844, 861-862[promotional sweepstakes was not an unlawful lottery since consideration element was absent where no purchase necessary to enter].) 22 In the wordsofan out-of-state case addressing this same issue,“‘[w]hat the machine “knows”doesnotaffect the player’s gamble.” (Moore v. Miss. Gaming Com’n (2011) 64 So.3d 537, 541.) 19, distributed a telephone card to each customer while entering them in a chanceto win a prize) had a “‘10 percent payout structure’” where it would “pay[] out $500 in prizes for every $5,000 paid into the machine” with “predetermined winners’ spread out over a period of time.” (/d. at p. 702, fn. 4.) Under those facts, the Court of Appeal held that the users ofthe device becameentitled to receive cash prizes “purely by chance (without any skill whatsoever)” (/d. at p. 703, italics added.)?3 The sameis true here. Even if the sequenceofentries has been electronically frontloaded into defendants’ integrated system, patrons win cash prizes based upon “hazard or chanceor ofother outcome of operation unpredictable by [the patron]”in violation of section 330b, subdivision (d). Therefore, the chance elementis satisfied.24 Finally, whether viewed as a third elementor an aspectof the second,the statute requires that “by reason of” the chance element, a prize or thing of value may be won. (§ 330b, subd. (d), italics added.) Here,it is clear that defendants’ customers may becomeentitled to receive a thing of value(i.e:, cash prizes in varying amounts) by reason of the “chance”or “unpredictable” operation of defendants’ software systems that run the computer sweepstakes games. (/bid.) 23 As the Court ofAppeal queriedlaterin that samecase,“ifit isn’t chance, what is it that determines whether the customer wins $100 for his $1?” (People ex rel. Lockyerv. Pacific Gaming Technologies, supra, 82 Cal.App.4th at p. 707.) 24 If this were not the case, then even a casino-style slot machine would be legal as long as it was operated by a computer system that had previously arranged the sequence of entry results in a fixed order. Such a computer system might conceivably frontload hundredsof millions ofdiscrete entry results into a predetermined sequence. A customer using that device wouldbe surprised to learn that merely because thereis a preset sequence,he is not playing a game of chance. Ofcourse,in reality, that is exactly what he is doing. As aptly remarked in People ex rel. Lockyerv. Pacific Gaming Technologies, supra, 82 Cal.App.4th at page 701, “if it looks like a duck, walkslike a duck, and sounds like a duck,it is a duck.” (Fn. omitted.) 20. (B) WeDistinguish Trinkle IT In Trinkle I, the Court of Appeal reached the unsurprising conclusion that a vending machine that simply dispenses California State Lottery tickets in the sequential orderthat they were loadedinto the machineis not an unlawful slot machine. However, certain statements made by the Court of Appealin reaching that conclusion are specifically relied on by defendants herein. In explaining why the element of chance was not present, Trinkle /T observed: “Ifa player purchaseshis ticket from a [Scratcher’s vending machine, or SVM], the player obtainstheticket by inserting moneyinto the machine and pushing a button, which releases the nextticket in sequence, according to the order in whichit was printed and loaded into the SVM bin. Nothing about the machineorits operation by the customer alters the order in whichthe tickets were arranged at the time they were printed.” (Trinkle II, supra, 105 Cal.App.4th at p. 1411.) The court further observed that“SVM?s do not have computer programsthat generate random numbers or symbols, nor do they have any capability of conducting a process of random selection or other kind of chance selection.” (fd. at pp. 1411-1412.) Since the only elementof chance was dueto “the printing of the winning tickets and the placement of thosetickets in a predetermined sequence”at the timethetickets were manufactured, the SVMitselfhad no role in outcomes because nofurther element of chance was involved in connection with the operation or play of the machine. (id. at p. 1412.) In other words, Trinkle IJ explained that unless the element of chanceis generated by the machines themselves atthe time the customer plays or operates it (like the spinning wheels of the original mechanical slot machines or a computer programthat shuffles the entries), itis only a vending machine. Defendants insist that their sweepstakes Systems are on par with the vending machinein Trinkle IT, since customers playing defendants’ computer sweepstakes games merely receive the next available entry result from a stackthat is in a previously arranged, sequential order. Wedisagree. 21. Forat least two reasons, we hold that Trinkle II does not salvage the devicesat issue in the present appeal. First, we disagree that the chance element must always be generated by some randomizing action ofthe deviceitself whenit is being played. Section 330b only requires that prizes may be won “by reason of any element of hazard or chance or of other outcome ofoperation unpredictable by him orher....” (§ 330b, subd. (d).) Underthis broad wording,if the entries are arranged in a particular order beforehand, rather than rearranged eachtime the gameis played, it will still suffice. Either way, the next sequential entry/result that is dealt out by the software system will be, from the perspective of the player, by “chance or ofother outcome of operation unpredictable by him or her ....”25 (/bid.) Second, Trinkle I is distinguishable factually because, in the words ofa recent federal district court decision,it involved a passive vending machinethat “simply delivered a finished product—thelotteryticket.” (Lucky Bob’s Internet Café, LLC yv. California Dept. ofJustice, et al. (S.D.Cal. 2013) 2013 U.S. Dist. Lexis 62470, p. *8 (Lucky Bob’s).) Here,in contrast, all the trappings and experiences involvedin playing traditional slot machines are actualized in one form or another by defendants’ sweepstakes software systems and networked computer terminals, since in each case points are received upon making a purchase, a game program is activated by the customer at a terminal, points are used or bet in selected increments, audio-visual scenes are played out on the screento create the feel and anticipation of a slot machine or other gambling game, and prizes are won. Forthese reasons, the integrated systems in our case are in a different category than the vending machine in Trinkle I. The mere fact that winnings 25 To use an analogy, whether a deck of cards was shuffled the day before,or at the momentthe player sits downatthe table and places a bet, itis still a matter of chance whether the ace of spadesis the next card dealt. 22. are based on a predetermined sequenceofresults programmedinto the software system, rather than on a randomly spinning wheel(or the like), does not change the nature and character of devices herein, which as integrated systems function as slot machines.26 As should be apparentfrom the above analysis, we are treating each defendant’s complex of networked terminals, software gaming programs and computer servers as a single, integrated system. Undersection 330b, subdivision (d), an unlawful “slot machine or device””is not limited to an isolated or stand-alone piece ofphysical hardware,but broadly includes “a machine, apparatus, or device that is adapted”for use ‘as a slot machine or device. (/bid., italics added.) As defined in dictionaries, the ordinary meaning for the term “apparatus” includes “a group or combination of instruments, machinery, tools, or materials having a particular function” (Random House Webster’s College Dict. (1992) p. 66), as well as “[t}he totality of means by which a designated function is performed ora specific task executed” (Webster’s I] New College Dict. (2001) p. 54). Here, each defendant’s system of gaming software, servers and computer terminals plainly operated together as a single apparatus. (§ 330b, subd. (d).) Whileit is true that the end terminals or computer monitors used by patrons—if considered in isolation—-maynotintrinsically or standing alone contain all the elements of a slot machine, in eachcase they are part of an integrated system or apparatus wherein 26 In Lucky Bob's, the district court correctly focused.on allof the componentsofan integrated system functioning togetherin that case: “Plaintiff's operating system can be distinguished from the vending machine in Trinkle by the integrative natureofits components. Here, the sweepstakes winnings necessarily involved the ‘value added’ of each componentofPlaintiffs integrative system—from the computers that readthe magnetic strip card; the database server controlling the games; and the point of sale computer that allowed the employee to create the accounts, add internet time and sweepstakesentries and play out redeemedentries.” (Lucky Bob’s, supra, 2013 U.S. Dist. Lexis 62470 at pp. *8-9.) 23. the various parts or components work together so as to operate in a mannerthat does constitute an unlawful slot machineor device. {C) Other Issues We briefly address two remaining issues. Defendants suggest that the devices in question cannotqualify as slot machines or devices undersection 330b dueto a lack of an adequate showingof consideration. We find theargument unpersuasive. Unlike section 319 (regardinglotteries), section 330b does not directly specify that consideration is an element. Therefore, it would seem that as long as the express statutory elements of section 330bare satisfied, no separate showing ofconsideration is needed. In other words, to the extent that consideration is a factor under section 330b,itis simply subsumedbythe existing statutory elements. Since those elements were shown here, nothing more was required. (Trinkle v. Stroh, supra, 60 Cal.App.4th at pp. 780-781.) Othercases have essentially followed this approach by concluding that even if consideration is necessary in slot machinecases, its existence will be found where a connection exists between purchasing a product from a vending machineor device and being given chances to win a prize. (Jd. at pp. 781-782; People ex rel. Lockyer v. Pacific Gaming Technologies, supra, 82 Cal.App.4th at pp. 705-706.) “‘Once the element|s] of chance [and prize]”” are added to a vending machine ordevice,it is reasonable to assume that “‘people are no longerpayingjust for the product regardless of the value giventhat product by the vender.’” (Zrinkle v. Stroh, supra, at p. 782; accord, People ex rel. Lockyer v. Pacific Gaming Technologies, supra, at pp. 704-707.) Thatis the case here as well, since points are given to play the computer sweepstakes games on defendants’ terminals based on dollars spent in purchasing products—that is, the elements of chance and prize are added to the purchase. Additionally, to the extent that defendants are raising the issue of consideration by analogy to the cases addressing lotteries (e.g., California Gasoline Retailers v. Regal Petroleum Corp., supra, 50 Cal.2d at pp. 851-862 [consideration element of § 319 lacking where no purchase necessary to enter]), that 24. argumentlikewise fails because“lottery cases (which are governed by § 319) are not controlling on the issue ofillegal slot machines,” since they are separate things underthe law. (Trinkle v. Stroh, supra, at p. 781.77 Finally, defendants argue their integrated systems cannot be slot machines on the - ground that they are not house-banked games in which the ownerhasan interest or Stake in the outcome. (See Trinkle II, supra, 105 Cal.App.4th at p. 1412 [so indicating].) We disagree with the premise that only a house-banked game may constitate an unlawful slot machine or device, Section 330 forbids persons from playingor conducting any “banking ... game played with cards, dice, or any device.” Sections 330a, 330b and 330.1 separately prohibit slot machines or devices as defined therein. No mention is made in the latter statutes of any requirementthat the slot machine or device be a house- banked game. Weare constrainedto follow the explicit definition of an unlawful slot machineor device provided in the applicable statutory language, whichis broad enough to include defendants’ devices whetheror not they are house-banked.28 (See Hotel Employees & Restaurant Employees Internat. Union vy. Davis, supra, 21 Cal.4th at pp. 593-594 [noting broad scope of slot machine statutes].) Weconcludeon the record before us that the Peopleare likely to prevail on the merits ofits claims that the particular devices at issue were unlawful“slot machine[s} or device[s]” under section 330b. Accordingly, weaffinn the trial court’s orders granting preliminary injunctions. Because the foregoing analysis provides sufficient grounds to — 27 Additionally, we note that section 330b, subdivision (d), explicitly states that a device meetingthe statutory criteria set forth therein constitutes an unlawful slot machine or device “irrespective” of whether a productis also sold by that same machineor device. (See also § 330.1, subd. (f) [same wording].) a8 To put it another way, we decline to insert a new elementinto section 330b (that the device be house-banked) that the Legislature did not put there. 25, affirm thetrial court’s orders, it is unnecessary to address the additional issue raised by the parties of whetherornot the sweepstakes programs may also have constituted unlawful lotteries under section 319. DISPOSITION Theorders ofthetrial court are affirmed. Costs on appeal are awardedto the People. | i Kane,J. WE CONCUR: Ect, Levy, Ming P.J. Prawn Franson,J. 26. 10 ll 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE CASE TITLE: People v. Grewal, et al. COURT: Supreme Court of California CASE NO.: : I am citizen of the United States, and I am employed in Placer County, State of California. Mybusiness address is 1478 Stone Point Drive, Suite 100, Roseville, CA 95661. I am over the age of 18 years and not a party to the above-entitled action. Tam familiar with HUNT JEPPSON & GRIFFIN, LLP’S office practice whereby the mail is sealed, given the appropriate postage and placed in a designated mail collection area. Each day's mail is collected and deposited in the U.S. mailbox after the close of each day's business. On April 16, 2014, I served the following: PETITION FOR REVIEW L_] on the party(ies) in this action by causing a true copy thereof to be placed in a sealed envelope with postage thereon fully prepaid and deposited in the designated area for outgoing U.S. Mail addressed as follows: L] on the party(ies) in this action by causing a true copy(ies) thereof to be delivered by hand as follows: [<] on the party(ies) in this action by causing a true copy(ies) thereof to be delivered to Overnight Delivery in a sealed envelope(s) with receipts affixed thereto promising overnight delivery thereof addressed as follows: {_] on the party(ies) in this action by causing a true copy(ies) thereof to be delivered by causing a true copy(ies) thereof to be sent by facsimile transmission as follows: Kamala Harris . John H. Weston Attorney General of the State of California G. Randall Garrou PO Box 944255 Jerome H. Mooney Sacramento, CA 94244-2550 Weston, Garrou & Mooney (Served pursuant to Business &Professions Wilshire Bundy Plaza Code §§ 17209 and 17536.5) 12121 Wilshire Blvd., Suite 525 Los Angeles, CA 90025 Attorneys for Defendants/Appellants Kirnpal Clerk of the Court Grewal and Phillip Ernest Walker Court of Appeal, Fifth Appellate District 2424 Ventura Street Fresno, California, 93721 Lisa S$. Green, District Attorney Gregory A. Pulskamp, Deputy District Attorney Clerk of the Court Kern County District Attorney’s Office Kern County Superior Court 1215 Truxtun Avenue 1415 Truxtun Avenue Bakersfield, CA 93301 Bakersfield, CA 93301 Attorney for the People of the State of California PROOF OF SERVICE 10 1] 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PEOPLE. V. GREWAL, ET AL. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct, and that this declaration is executed on April 16, 2014, at Roseville, California. ) : st\ MARIANA WIBBENHORST PROOF OF SERVICE Pp AGE
