Casino Ventures v. Stewart

183 F.3d 307 (1999)

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Casino Ventures v. Stewart

United States Court of Appeals for the Fourth Circuit
183 F.3d 307 (1999)

  • Written by Brett Stavin, JD

Facts

Casino Ventures (plaintiff) sought to operate a day-cruise business whereby Casino Ventures would pick passengers up from a dock in South Carolina and travel to waters beyond South Carolina’s jurisdiction. Once in extraterritorial waters, Casino Ventures would offer gambling to the passengers. In South Carolina, state law had long restricted gambling, and Casino Ventures had concerns that its business would violate the state’s ban on lotteries, unlawful games and betting, and possession and use of gaming tables and machines. To prevent future prosecution, Casino Ventures filed a lawsuit in federal district court against Robert Stewart, chief of the State Law Enforcement Division, and Charles Condon, South Carolina attorney general (defendants), seeking a declaratory judgment that South Carolina’s gambling laws were preempted by federal law, specifically, the Johnson Act. As originally enacted, the Johnson Act codified a general federal prohibition against gambling within the maritime jurisdiction of the United States. In 1992, after the Justice Department interpreted the Johnson Act in a way that put American leisure cruises at a disadvantage compared with their foreign competitors, Congress amended the Johnson Act to make clear that it applied to foreign-documented vessels. Congress also enacted an exception to the general ban on the maritime use of gambling devices if such use occurred outside the boundaries of a state’s territorial waters, unless occurring on day cruises that began and ended in a state that had enacted a statute prohibiting the use of gambling devices on that voyage. Casino Ventures argued that the Johnson Act, as amended in 1992, created a federal right to operate such a casino cruise, and that South Carolina’s gambling restrictions were thus preempted by federal law. The district court granted Casino Ventures’ request for a declaratory judgment, finding that the 1992 amendments to the Johnson Act created such a federal right, and that although the Johnson Act included a mechanism for states to still restrict gambling, South Carolina’s statutory restrictions could not be effective because they were not passed after the 1992 amendments took effect. Stewart and Condon appealed.

Rule of Law

Issue

Holding and Reasoning (Wilkinson, C.J.)

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