Oregon SC upholds Lottery's authority in paying retailers

By Chris Rizo | Mar 28, 2008

SALEM -- The Oregon Supreme Court unanimously ruled Thursday that state agencies have the authority to write administrative rules that put state laws into effect.

In a 6-0 decision, the high court upheld changes the Oregon Lottery Commission made in 2004 to reduce the payments made to its video-poker retailers.

Larry Wolf, president if the Oregon Education Association, brought the suit, along with others.

Petitioners contended that the state Lottery Commission overstepped its authority by paying bars, taverns and other lottery retailers too high a commission, and thus failed to maximize revenues for the state.

The lottery rule, among other things, provided that the compensation amount the state pays to an Oregon Lottery retailer for the sale of video lottery game shares is calculated on a percentage of net receipts during a business year.

The rule allowed retailers to choose one of two options for payment. Petitioners contended the lottery did not have statutory authority to draft the rule.

In 2006 the Oregon Court of Appeals ruled in the Oregon Education Association's favor. But the Supreme Court ruled that the state appeals court exceeded its authority.

"It was error for the court to consider the record in the way that it did, and further error to utilize that record as a justification for striking down the Lottery's rule," Justice W. Michael Gillette wrote for the court. "The governing statute, ORS 183.400(3), could not be phrased more plainly."

The 2004 rule applies to bars, taverns, restaurants and other lottery retailers that offer only video poker games. Retailers who offer the lottery's line games fall under other rules.

Justice Virginia Linder, who heard the case as a member of the state appeals court in 2006, did not take part in the court's decision.

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