## Facts

- Casino Ventures planned to operate “cruises to nowhere” departing from and returning to a South Carolina port without intermediate stops.
- The vessel would offer gambling only after passing beyond South Carolina’s territorial waters.
- South Carolina criminal law broadly prohibited gambling activities, including lotteries, unlawful games and betting, and possession or use of certain gaming devices.
- Casino Ventures alleged these state prohibitions exposed it to prosecution if it operated the cruises.
- Casino Ventures sought declaratory and injunctive relief, arguing the Johnson Act, 15 U.S.C. § 1175, as amended in 1992, preempted South Carolina’s gambling laws as applied to its proposed operations.
- The 1992 amendments to the Johnson Act created a limited exception permitting gambling devices outside state territorial waters, while allowing states to prohibit gambling devices on “cruises to nowhere” by statute.

## Issues

1. Whether the Johnson Act, as amended in 1992, preempts South Carolina from enforcing its criminal gambling prohibitions against cruises to nowhere departing from and returning to South Carolina ports.

## Decision

- The Fourth Circuit reversed the district court.
- The court held the Johnson Act does not preempt state regulatory and criminal authority over gambling for cruises to nowhere.
- The court concluded South Carolina remained free to enforce its gambling prohibitions against the proposed cruise operations.
- The court rejected the view that only post-1992 state statutes could qualify as state prohibitions under the Johnson Act’s cruises-to-nowhere framework.

## Legal Principles

- Federal preemption of state criminal gambling regulation is disfavored absent a clear congressional statement.
- The Johnson Act is principally prohibitory, with limited exceptions; it does not create an affirmative federal right to conduct gambling operations immune from state law.
- Where a federal statute includes an express mechanism that gives effect to state policy choices (such as permitting states to bar gambling on cruises to nowhere), the statute is read to preserve state authority rather than displace it.
- No field preemption applies where the regulated area (gambling) has traditionally been governed by the states and Congress has not occupied the field.
- No conflict preemption applies where state enforcement does not make federal compliance impossible and does not defeat Congress’s objectives, especially when the federal scheme contemplates state restrictions.

## Conclusion

The Fourth Circuit held that the Johnson Act’s 1992 amendments did not preempt South Carolina’s gambling prohibitions for cruises to nowhere; the federal scheme left states free to prohibit and prosecute such gambling activity despite the federal exception for gambling devices outside territorial waters.


Casino Ventures v. Stewart, 183 F.3d 307 (4th Cir. 1999)