Patron Disputes:

A Review of the Perils

By Tina Rose Singletary, Singletary & Thrash, P. A.

Patron disputes have become common in the gaming industry. What are the responsibilities, legal obligations, and business consequences faced by the gaming licensee?

Casinos are an entertainment and accommodations industry that seeks to satisfy patrons and prevent dissatisfied customers. However, when disputes occur—which they do—there are specific actions required to maintain the integrity of the industry. Patron disputes and claims can arise from slot machine jackpots, table game payments, promotional drawings, and self-exclusion regulations.

Knowledge of casino procedures and state regulatory requirements is necessary to be successful in dispute resolution. The majority of patron disputes occur when a patron’s winnings are denied by the casino. This article will examine several actual patron dispute scenarios to identify the pitfalls and proper procedures.

Patron Delay to Report

At times, players may dispute a case where they failed to report a discrepancy in winnings until it is too late. For example, a dispute arose over a player’s claim that, while she was playing a 50-cent “Double Gold” slot machine, she hit a winning combination of three “Double Red 7s” which entitled her to win the top jackpot of 5,000 coins, or $2,500. She was paid for only 400 coins—$210—the payout for a Three “Red 7s” lineup.

At the time, she was paid by the slot floor person. She expressed no dissatisfaction with the $210 payout and made no claim that she had instead won $2,500. Following the payout, the slot floor person reset the machine for play and the player continued to play the machine.

Two days later, the player contacted the slot supervisor and reported that she had hit three “Double Red 7s,” which should have paid her $2,500. The slot supervisor notified the surveillance department of the patron dispute, which immediately contacted the gaming commission. An agent promptly arrived at the casino to investigate the game and its resulting dispute.

This case shows a failure on the part of the player to timely report the dispute. The machine had been played numerous times since the patron’s disputed play; therefore, there was no means to determine from the machine’s memory what combination the patron had hit on her play. By accepting the payout and permitting the machine to be reset, the player did not protect the payout for review by the casino and the gaming commission.

The executive director issued a written decision in favor of the casino. The patron then filed her petition with the commission, requesting a hearing for reconsideration of the adverse decision¹.

The patron’s dispute was denied by the hearing officer and affirmed by the gaming commission.

Unpreserved Evidence

In one case, a patron won a jackpot at a casino, and casino employees stated that the machine had malfunctioned. The patron requested a gaming agent be called. Prior to the agent’s arrival, a casino employee opened the machine with a key, spun the reels several times, and stopped on a combination that had no payout. The employee also removed a printout and closed the machine.

When the agent arrived two hours later, he examined the machine and told the patron he could not make the casino pay. The patron later received a letter from the commission stating that the investigation concluded that he had not won the jackpot because the machine had “entered a tilt condition and ceased to function.”

The patron applied for a hearing, at which time the hearing officer affirmed the decision of the enforcement agent, and ruled that the patron did not win the jackpot. Thereafter, the patron requested a review of the hearing officer’s decision by the gaming commission.

The commission adopted the hearing officer’s decision.

The patron appealed to the circuit court, which reversed the decision of the commission and awarded the patron the $509,000 jackpot. The casino then appealed to the Supreme Court, contending that the findings of the circuit court were improper in light of the evidence and law.  The Supreme Court found that the circuit court properly reversed the decision of the commission since the patron’s substantive due process rights were prejudiced.

The court noted that the casino had control and possession of the machine and failed to preserve relevant evidence in blatant violation of the gaming regulations. The court ruled the casino should have called the commission as soon as the alleged jackpot dispute occurred, and not after opening and removing the data in the machine. Because evidence was destroyed by the casino and an inadequate investigation was conducted by the commission, the court held that the appropriate remedy was for the casino to pay the patron².

Proper Casino/Patron Procedure

A player’s right to his or her money is usually revealed after timely and efficient measures have been taken. A patron was playing a maximum bet on a $5 Double Top Dollar slot machine. The awards glass on the machine clearly displayed that the maximum jackpot amount that could be won was $8,000 if the reels aligned in a combination of three Double Diamonds.

The patron’s play resulted in a reel combination of three Double Diamonds on the payline, which was a winning combination, and with the maximum credits wagered, entitled her to the $8,000 jackpot.

However, after the winning combination was hit, the machine “locked up,” the bells rang, and the candle began flashing a progressive jackpot win of $1 million.

The slot floor person immediately notified surveillance to provide coverage of the area of the machine and notified the gaming commission of the dispute. The manufacturer of the machine was also notified. The casino employees sealed the machine and removed it from play. The gaming agent timely arrived to investigate the dispute. Representatives of the casino, gaming commission, and manufacturer reviewed the internal data history of the machine play.

The executive director found in favor of the patron. The executive director factually held that the inspections and tests revealed no malfunction because the machine simply registered the jackpot in accordance with how it had been programmed by the manufacturer as a progressive game with a $1 million payout.

The casino had ordered a standalone machine, not a progressive machine. Contractual terms of the purchase agreement required the manufacturer to hold harmless, indemnify, and defend the casino. The manufacturer assumed the defense of the patron dispute. The facts were undisputed. The casino complied with all gaming rules and regulations.

The manufacturer defended the dispute before the hearing officer, based on the contractual agreement between the patron and the casino. At the time of the wagering contract, upon the patron accepting the casino’s offer by playing her credits on the machine, both parties’ expectations were that if the patron obtained a reel combination of three Double Diamonds on the payline, with maximum credits wagered, she would be entitled to an award of $8,000³. Any award over $8,000 would constitute unjust enrichment.

Thus, as a matter of law governed by the principles of contract jurisprudence, the terms of the patron’s contract were established by the signage on the machine and the patron should not, due to an error, recover more than what was contracted.

Unlike normal contract cases, casino patron disputes are usually subject to an administrative proceeding before relief can be sought in the court. However, the court action is unlike a traditional lawsuit. The appeal is limited to the testimony, evidence, and the record made at the hearing before the administrative gaming agency. Therefore, it is critical for the casino to take prompt action to ensure an accurate investigation.

When a slot machine is the focus of the dispute, the casino must contact the gaming commission immediately, seal the machine, and discontinue play until the commission conducts its investigation. The casino also should photograph the machine, question witnesses, and preserve all surveillance tapes.

Promotional Cash Give-A-Ways

A dispute arose as a result of a “Winter Winners” $60,000 Cash Give-A-Way. A drawing for a cash prize was held each hour from 1 p.m. to 9 p.m.

The final drawing at 9 p.m. was for $35,000. Prior to the drawing, the casino submitted the rules to the gaming commission. The printed and posted rules required: “The holder of any winning ticket must produce the matching half of the ticket within five minutes of the time that the winning ticket number and name is announced.” If the ticket could not be produced within the five minutes, another ticket would be drawn until there was a winner.

Shortly before 9 p.m., a casino employee announced the $35,000 drawing was about to take place. Hundreds of patrons gathered for the drawing. At 9:02 p.m., the name of the patron was announced, along with the winning number. Both the name and ticket number were repeated before for the five minute countdown.

The crowd vocally assisted in counting down the last remaining ten seconds. The patron was unable to produce his winning ticket and was denied the prize money. The patron made no complaint at that time, nor did he ever present to anyone at the casino his alleged winning ticket.

After the patron left the drawing area, another ticket was drawn, and this time a player produced the winning ticket within the five-minute time limit and was paid the $35,000 cash prize. Four days later, the unhappy patron without the winning ticket filed a dispute with the gaming commission that he should have won the $35,000.

The hearing officer found in favor of the casino⁴.

Overpayment to Patron        

A casino blackjack dealer overpaid the patron $25,000. The patron accepted the chips and left the casino. The dealer requested verification from surveillance, which showed the overpayment.

The gaming commission was notified and agents reviewed the video. A few days later, the patron returned and attempted to cash the chips. The casino refused to cash the chips and demanded their return, and the patron left the casino with the chips. The gaming commission affirmed the casino’s dispute, but found it had no authority to seize the chips. The casino notified all area casinos not to redeem any of its chips without prior notice to the casino.

The casino filed suit against the patron under general contract theories and conversion. The case is pending.

Generally, the state gaming commission has authority over administrative proceedings⁵. The losing party will be statutorily barred from obtaining relief and seeking judicial review if they do not seek the proper administrative remedy through the gaming commission⁶. It is essential to understand the regulatory procedures specific to the state where the claim arose. Casino regulations differ among the states, but there are certain similarities.

The casino must follow certain procedures whenever a patron disputes a game. Beyond fulfilling the general duty to provide fair games, casinos must notify the gaming commission of disputes whose value exceeds a statutory amount, for example, $500 in some jurisdictions⁷.

In disputes involving lesser amounts, the casino generally has a duty to inform the patron of his right to request an investigation by the state regulatory commission. If the casino fails to do this, the commission may bring a disciplinary action against the casino⁸.

The commission will appoint an investigative officer or agent to gather information and draft an opinion. The executive director will notify the parties of the final decision within 30 days from notification of the dispute.

If the patron or the casino is dissatisfied with the executive director’s decision, they must immediately petition for a hearing before the gaming commission or hearing officer⁹.

If the petition is not filed within the period required by law, either party may be barred from further action.

A hearing examiner appointed by the gaming commission will conduct a hearing. Generally, the gaming commission has discretion to review the examiner’s decision before issuing its final order. Only after all administrative remedies are exhausted and the gaming commission has issued a final order can the patron or casino seek judicial review by appeal to the court. Patron disputes are inevitable. The casino will meet its legal obligation to the commission, its business responsibility to the patron, and preserve the integrity of the gaming industry, by strict compliance with the established rules and procedures.

1.     See: Section 75-76-163 of the Mississippi Code of 1972, (the party seeking reconsideration [in a patron dispute case] bears the burden of showing that the executive director’s decision should be reversed or modified.” The applicable burden of proof is proof by a preponderance of the evidence.) Mississippi Gaming Commission v. Freeman, 747 So. 2d 231, 246 (Miss. 1999).

2.   See: Grand Casino Biloxi v. Hallmark, 823 So. 2d 1185, 1187 (Miss. 2002) (finding manipulation of the machine prior to the gaming agent’s arrival; failure to notify the executive director immediately of the dispute; casino employee erased the relevant portion of surveillance tape; failure to preserve integrity of the slot machine and failure to follow gaming procedures constituted spoliation by casino, resulting in adverse presumption against the casino;  See: Pickle v. IGT, 830 So. 2d 1214 (Miss. 2002) (Pickle claimed she won the $4,724,894.39 progressive jackpot, since the bells and whistles activated indicating a progressive win. The machine showed her play did not land on a winning combination. The gaming commission found a technical machine problem occurred and ruled in favor of the casino. The court affirmed the commission’s ruling, finding that the investigation was thorough; the gaming agent was at the machine within an hour; surveillance tapes were maintained; all entries into the machine were monitored, and its integrity preserved for testing, therefore, no due process violation occurred. Pursuant to Section 75-76-171 (3) of the Mississippi Code of 1972, as amended, the court held the proper standard was the “unsupported by any evidence rule” and there was  substantial evidence to affirm the gaming commission’s decision.

3.     See:  Lionel Sawyer & Collins, Nevada Gaming Law 300, at 301 (2000) (if both parties in a gaming contract share a common expectation, the law will give effect to the expectation). See: Sonny Marquez v. Gold Strike Hotel & Gambling Hall, Nevada State Gaming Board Decision, Case Number: 98-7812L (March 16, 1999) (there was no evidence presented which indicated that the actual intended outcome of the patron’s disputed game could have ever exceeded $400, and thus the patron is not entitled to the unjust enrichment he claimed).

4.   See: Mississippi Gaming Commission Industry Letter No. 2006-06, Notice of Tournaments and Promotions. Licensees do not need to receive approval to conduct tournaments and promotions. However, notice of the proposed activity must be submitted to the district offices of the Mississippi Gaming Commission at least ten working days prior to the commencement of the activity. The notice should include all rules, regulations, and procedures. Any changes, including cancellations, must be submitted at least three days prior to the commencement of the activity. Additionally, the following verbiage must appear in the rules and regulations of tournaments, promotions, and drawings submitted to the Mississippi Gaming Commission and appear in the rules and regulations displayed in the casino.

• The Mississippi Gaming Commission reserves the right to investigate any and all complaints and disputes regarding tournaments, promotions, and drawings. Such disputes and complaints will be resolved in accordance with the Mississippi Gaming Control Act and the Mississippi Gaming Commission Regulations. • Management reserves the right to cancel, change, and modify the tournament, promotion, or drawing with prior notification to the Mississippi Gaming Commission, but must do so at least three days prior to the commencement to the activity.

5.     See:  Sections 75-76-159 through 75-76-175 of the Mississippi Code of 1972, as amended; and Mississippi Gaming Regulations III, H. §§ 1 through 18, player disputes of the Mississippi Gaming Regulations, which sets forth the rules and procedures related to Player Disputes); See the Mississippi Gaming Commission website: www.mgc.state.ms.us, for further information on player disputes, statutes, rules and regulations, complaint/dispute filing procedure, and gaming patron complaint forms. See: Nevada Revised Statutes §§ 463.361- 463.366 (2001).

6.   See: Cook v. Mardi Gras Casino Corp., 697 So. 2d 378, 381 (Miss. 1997). See: Section 75-76-167 through 175 of the Mississippi Code of 1972, as amended, which provides that any person aggrieved by a final decision or order to the commission made after hearing by the commission pursuant to Section 75-76-159 through 75-76-165, inclusive, may obtain a judicial review thereof in the circuit court of the county in which the dispute between the licensee and patron arose.

7.     See: Section 75-76-159 of the Mississippi Code of 1972, as amended. In Mississippi, if the dispute involves at least $500, the casino shall immediately notify the executive director. If less than $500, the casino must inform the patron of his right to request an investigation by the state regulatory agency. See: Nevada Revised Statutes 463.362 (2001).

8.   See: Section 75-76-103 through 75-76-119 of the Mississippi Code of 1972, as amended, which provides that failure of a Mississippi casino to notify the executive director of the commission or patron of the right to request a commission investigation is grounds for disciplinary action against a Mississippi casino.

9.   See: Section 75-76-161 of the Mississippi Code of 1972, as amended (allowing petition to be filed within 20 days of receipt of executive director’s decision).