GAMBLING IN THE TWENTY-FIRST CENTURY: JUDICIAL RESOLUTION OF CURRENT ISSUES

                                       John M. Norwood*

Introduction

       Few industries in the past five years have enjoyed as rapid a growth as the gaming industry.[1] Virtually every state allows some form of licensed gambling, from casinos, to dog and horse racing, to state lotteries.[2] The increase in gaming opportunities has resulted in an increase in gambling related litigation. The recent reported cases deal with such diverse topics as jurisdiction, conflicts of law, contracts, bankruptcy, administrative law, criminal law and many others. This paper will discuss and analyze gambling related cases decided by American courts since the year 2000. These cases demonstrate that basic principles of law have been and likely will continue to be applied by American courts in cases involving gambling transactions.

What is gambling?

       A gambling contract has been defined as “a contract in which two parties wager something, especially money, for a chance to win a prize.”[3] According to Professor Corbin, people have been known to hazard a bet on all manner of unpredictable eventualities, including horse races, ball games, elections, the turn of a die, the fall of a card, or the sex of a mysterious personage.[4] In the twenty-first century the financial rewards associated with operating gambling establishments are well known, and the temptation to engage in such activities despite the prohibitions of law cannot always be resisted. In such circumstances, entrepreneurs will often endeavor to offer gambling opportunities to customers, all the while maintaining that their activities do not in fact constitute gambling. A good illustration of this is the case of Twenty-Nine (29) Gambling Devices v. Texas.[5] In this case an establishment known as “Mr. Bigs Amusements” offered customers the opportunity to play “games of chance” which generated a ticket once a certain number of points was won.[6] Each ticket could be redeemed for a five dollar gift certificate from one of several local merchants, including Wal-Mart.[7] Pursuant to a sting operation, officials confiscated the machines and sought forfeiture as gambling devices.[8] The defendants argued that the seized machines were not gambling devices as they were covered by the “fuzzy animal” exclusion[9] permitting the dispensing of “noncash merchandise prizes, toys or novelties.”[10] Unfortunately for the defendants, only a few weeks before the Texas Court of Appeals issued its decision in this particular case, the Texas Supreme Court in Hardy v. Texas[11] ruled that gift certificates from retailers did not qualify as noncash prizes under the “fuzzy animal” exception.[12] The court of appeals therefore affirmed the trial court's summary judgment in favor of the state and upheld the forfeiture.[13]

       A similar unsuccessful effort to evade the gambling laws was reported in the case of Commonwealth v. Wintel, Inc.[14] Here video slot machines were confiscated by the Philadelphia Police Department.[15] The machines were constructed in such a way as to allow the player to push a button on one side of the machine which would generate a receipt, and this receipt would be taken to the office for payment.[16] Prior to collecting any money, the player had to sign a document stating that the award was given to her at no cost.[17] Confronted with the very real possibility that this somewhat simplistic ploy would be unavailing, the operators of the business claimed that they were exempt from the gambling laws due to the fact that a portion of the proceeds were paid to charities, and hence lacked the required “consideration” aspect of a gambling transaction.[18] The court rejected this argument, stating:

   The machines are constructed for gambling . . . . [T]he element of consideration is present. This conclusion is not altered by the fact that some of that consideration is used for charitable purposes. Were we to accept Appellant's argument, the owner of a per se gambling device could evade 18 Pa. C.S. § 5513 simply by making a token contribution to a charity out of the revenue generated by the machine's use.[19]

       The court also rejected the argument that the machines could not be considered gambling devices since they were in part intended to encourage charitable gift giving, noting that even if this were the case it would not provide an adequate defense.[20] The court stated that “[t]he standard is not whether the machines could possibly be used for a purpose, such as charitable gift giving, but whether they are `intrinsically connected' to gambling. We conclude that the machines are gambling devices per se, and Appellant did not meet its burden of proving lawful possession . . . .”[21]

       In the cases previously cited there was little doubt that a winning player would receive something of value (either cash or merchandise), so that the holding that the machines were in fact “gambling devices” was an easy one. In the case of Mississippi Gaming Commission v. Henson[22] the Mississippi Supreme Court addressed the more troubling issue of whether a gambling device could be confiscated even without proof that consumers could receive a payoff from the machine.[23] In this case the court held that under Mississippi law it was unlawful for anyone to possess a “slot machine” (in this case a slot machine called a “Cherry Master”) even if the only “payout” was additional games.[24] The court reasoned that “[t]he award of credits by the Cherry Master to play free additional games is likewise something of value, as a credit to play a free game necessarily has the same value as the amount it would cost to play that game.”[25] The court cited decisions from a number of states, including one from Ohio in which the Ohio Court of Appeals was confronted with the same “Cherry Master” machine as the Mississippi court.[26] The Ohio court stated that “amusement has value and added amusement has additional value, and where added amusement is subject to be procured by chance without the payment of additional consideration thereof, there is involved in the game the elements of gambling, namely, price, chance and a prize.”[27]

       The Mississippi court was also confronted with the question of whether a “quarter pusher” machine was an illegal gambling device.[28] The court had no trouble ruling that this was indeed a gambling device as it involved the elements of prize (the money to be won), consideration (the quarter invested by the player), and chance (the possibility of the quarters falling).[29] With regards to the issue of whether this was a game of chance or skill, the court quoted from a federal case in which it was stated that:

There is virtually no skill involved in operating these quarter fall machine[s]. The movable slot gives the appearance that one can control the fall of the quarters in [a] meaningful manner. This, however, is illusory. The player cannot control the sweepers, and really has no control over when and how quarters fall into the payoff shute. The payoff depends exclusively on how the coins are piled up at the time the player inserts quarters. It is clear that these machines are intended to deliver quarters as a result of an element of chance. Therefore, they are gambling devices under 15 U.S.C. § 1171(a)(2).[30]

       It is unclear why the court was so concerned with the issue of whether the game was one of “chance” as opposed to “skill.” While the federal law at issue in the quoted case did apply only to “games of chance,” the Mississippi law was not so limited. It could be argued that even if the court had determined that the “quarter pusher” game involved substantial elements of skill, it could still be considered an illegal gambling device under Mississippi law.

       The supreme court of the state of Arkansas also had occasion to consider the question of whether certain pieces of equipment constituted illegal gambling devices. In State v. 26 Gaming Machines,[31] the state confiscated a number of machines, four of which were upright, free standing machines,[32] and three of which were counter-top Megatouch machines with touch screens.[33] With regards to the free standing machines, the lower court ruled that the devices constituted “gambling devices” per se and both the machines and the money contained therein were subject to seizure.[34] This ruling was not appealed, so the only matter before the court related to the counter-top machines.[35] The Megatouch machines contained fifty to seventy different games, including poker and blackjack.[36] There was no pay out mechanism (such as chutes or pre-printed tickets).[37] Consequently, both the trial court and the state supreme court held that these machines could not be considered gambling devices per se.[38] The remaining question was whether the three machines as actually used constituted gaming devices.[39] The court affirmed the lower court ruling that this was not the case.[40] No tokens, money, or prizes were offered to the winning player.[41] However, the court noted that on two of the machines a program had been installed which rewarded the winning player by allowing him or her to view a virtual person take off his or her clothes.[42] The state argued on appeal that this visual reward resulted in the machines being considered gambling devices.[43] The supreme court disposed of this issue by noting that this argument had not been made to the lower court, and hence could not be considered on appeal.[44] However, the court stated that even if the argument could be considered “this court has never held that an intangible reward, such as viewing nudity, qualifies as a reward for gambling purposes.[45] In essence, the machines as used were nothing more than amusement devices in which “a player inserts money and can play gambling-like games but never receives anything in return except amusement.[46]

       This issue of “skill” or chance” was confronted by two New York City judges in the cases of People v. Mohammed[47] and People v. Denson.[48] Both cases involved the classic New York City game known as the “shell game” or “three card monte.” In the “shell game” the operator manipulates shells (usually three) and a single ball or similar small device, and then encourages players to guess under which shell the ball is located. “Three card monte” involves similar sleight of hand, in which the player must correctly guess where the “winning” card is located out of three possible choices. Street “performers” in New York City are so skilled that it is virtually impossible for a player to successfully pick out the winning card or shell. Both games are specifically made illegal by the New York Administrative Code.[49] But do such activities violate New York state gambling laws? In the Mohammed case, the defendant was charged with violating New York Penal Law section 225.05, which defines gambling as when one “stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence.”[50] The defendant argued that the shell game (or its counterpart three card monte) was a game of skill, not of chance, and therefore not within the definition of gambling in the Penal Law in question.[51] The court accepted this defense, and dismissed the state gambling charge.[52] The court stated that:

   This court agrees . . .  that three card monte, and by inference the shell game, is not a game of chance. When played fairly, the game is one of skill where the accuracy of the eye of the player competes with the speed of the hand of the dealer. It is noted that fans at Yankee Stadium are entertained between innings by an electronic version of the shell game projected on the stadium scoreboard. The fans attempt to follow the image of a baseball over which is superimposed one of three Yankee baseball caps shuffled at increasing speed.[53]

       In the Denson case the court was confronted with the same question, but came up with an entirely different answer. The court rejected the precedent set in Mohammed, and stated that:

[T]his court agrees with the analysis in People v. Turner, and finds that even “when played fairly” three card monte is essentially a game of chance, wherein the player has a one-in-three chance of selecting the “right” card if he can resist the operator's manipulations and simply choose randomly. Moreover, it is worth mentioning that the game does not enjoy a reputation for being played fairly even as a game of chance. “Not content to have the odds two to one in their favor, history and practice reveal a number of swindles and hustles in order to insure the operator's success.[[54]] Three card monte masquerades as a game of skill in order to lure players, but in reality, it is at best a game of chance.[55]

       It has often been argued that certain kinds of extremely speculative business arrangements have the characteristics of gambling, but so long as there is an underlying business activity courts have not categorized such activities as gambling. In the case of Korea Life Insurance Co. v. Morning Guaranty Trust Co.,[56] a federal trial judge stated that “[d]erivatives transactions, forward contracts and swap agreements in currencies and commodities are not considered illegal gambles, and do not violate New York's gambling statute.”[57]

Jurisdiction and Conflicts of Law

       Gambling activities involving parties from different states and/or situations in which two parties from the same state go to a third state to gamble have long presented interesting jurisdictional and conflicts of law issues. One case involving jurisdictional issues and the use of a “forum selection clause” is Paradise Enterprises Ltd. v. Sapir.[58] In this case the defendant, a resident of New York, was given a complimentary trip to the Bahamas by the plaintiff, a Bahamian corporation having its principal place of business at Atlantis Paradise Hotel in the Bahamas.[59] Plaintiff's affiliate, Sun Marketing, was registered to do business in New Jersey.[60] The contract signed by the defendant as part of the junket gave the defendant a line of credit, and included a forum selection clause that designated New Jersey as the agreed forum for settling any disputes.[61] The defendant's gambling activities proved to be less than successful, as indicated by the fact that he was sued for $1,120,000 as a result of markers signed during his four day visit to the Bahamas.[62] The defendant moved to have the case dismissed on the basis of the forum non conveniens doctrine.[63] The lower court agreed with this argument and dismissed the case, pointing to the fact that the defendant was from New York, the plaintiff was from Florida (this in fact was incorrect: the plaintiff was a Bahamian corporation), the plaintiff did not operate any business in New Jersey and the credit agreement was signed in the Bahamas.[64] The appellate court reversed, holding that the lower court failed to correctly apply the law pertaining to forum selection clauses.[65]

       The court began by noting that forum selection clauses are “prima facie valid and enforceable in New Jersey.”[66] The only exceptions recognized in New Jersey are: 1) fraud or “overweening” bargaining power; 2) enforcement would violate public policy; and 3) enforcement would seriously inconvenience the trial.[67] The court found that none of the exceptions applied in this case. Furthermore, the court noted that the lower court looked only to the law associated with the forum non conveniens doctrine.[68] The court noted that

   [t]here seems to be no clear rule as to whether forum non conveniens analysis is required in a case where an express forum selection clause exists . . . . Settled principles of New Jersey law with respect to forum selection agreements provide adequate protection for private and public interests, so that where such an agreement exists it is unnecessary to rely on forum non conveniens doctrine.[69]

The court then stated that even if the doctrine were used there were no factors which would outweigh the choice of forum which was made via the forum selection clause.[70] The court also rejected the defendant's argument that since he was a New York resident and had not personally visited Sun Marketing in New Jersey, the choice of law in the forum selection clause was unreasonable.[71] The court held that the New Jersey contacts were not insignificant.[72] The evidence indicated that the defendant was in fact in New Jersey at the time he was first approached about the trip, and furthermore Sun Marketing had its principal office in New Jersey.[73] In addition, the evidence showed that the defendant “reached out” to the New Jersey office numerous times regarding the Bahama trip, so that contacts were far more than what was minimally required for the forum selection clause to be enforced.[74]

       Jurisdictional issues can even arise in cases where both parties are from the same state, and the litigation is initiated in that state. In Williams v. Aztar Indiana Gaming Corp.,[75] the plaintiff, a resident of Indiana, sued the defendant, the owners of an Indiana riverboat casino, in federal court.[76] He claimed that the casino caused him harm by permitting him to gamble in their casino even though he was known to have mental health problems.[77] He also claimed that the casino mailed him materials which fraudulently suggested that he could win if he would come and gamble at defendant's casino, and that this constituted a violation of the federal Racketeer Influenced and Corrupt Organizations (RICO) Act.[78] The trial court issued a summary judgment in favor of the defendant.[79] The appellate court also ruled in favor of the defendant, but on jurisdictional grounds.[80] The court held that the allegations of RICO violations were “so feeble, so transparent an attempt to move a state-law dispute to federal court . . . that it does not arise under federal law at all.”[81] The court further noted that the plaintiff did not appeal the trial judge's dismissal of his RICO claim, which was the sole basis for invoking federal jurisdiction.[82] The court then remanded the case back to the district court with instructions to dismiss the case for lack of subject matter jurisdiction.[83]

       A conflicts of law issue was raised in the case of Bedle v. Kowars.[84] This case involved two women who resided in Ohio and who set out for a casino in Lawrenceburg, Indiana.[85] Prior to their departure they allegedly agreed to split all of their winnings.[86] One of the two pulled a lever on a slot machine that returned a jackpot in excess of $130,000.[87] As might be expected there then arose a dispute as to whether there was an agreement to split the winnings.[88] The plaintiff brought suit in Indiana, even though both of the parties lived in Ohio.[89] The defendant filed a motion to dismiss claiming a lack of subject matter jurisdiction and that the plaintiff failed to state a claim upon which relief could be granted.[90] The trial court granted the motion to dismiss, but it is unclear whether the dismissal was related to a lack of jurisdiction or based upon failure to state a claim upon which relief could be granted (a substantive issue).[91] In any event, the appellate court devoted most of its attention to the question of conflicts of law.[92] This is due to the fact that in Ohio an agreement to share gambling winnings is legally unenforceable,[93] whereas in Indiana an agreement to share gambling winnings would have been enforceable.[94] The court applied the classic “most significant contacts” test to decide the case.[95] According to the court, the factors to be considered are: 1) place of contracting; 2) place of negotiation of the contract; 3) place of performance; 4) location of subject matter; and 5) domicile of the parties.[96] In this case, all of the facts suggested that Ohio had the most intimate contacts (the contract was made there, it was negotiated there, the money would have been divided up there, and both parties resided there). Applying Ohio law, the agreement, if it was in fact made, was not legally enforceable.[97]

       A similar case was decided by the Bankruptcy Appellate Panel for the Ninth Circuit. In this case, Bradley v. Miller (In re Miller),[98] the debtor, a resident of California, signed a $40,000 casino marker in favor of the Mandalay Bay Casino in Las Vegas.[99] The marker was defaulted, and the debtor filed for bankruptcy.[100] The bankruptcy judge dismissed the claim on the basis of the fact that gambling debts were not enforceable in California.[101] However, this ruling was reversed on appeal.[102] The court stated that:

   With certain exceptions not relevant here, and in the absence of an effective choice of law by the parties, the validity of a contract is determined in accordance with § 188 of the Restatement. Under that section, “[t]he rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which . . .  has the most significant relationship to the transaction and parties.”[103]

       In this case the court took into account the factors of: a) the place of contracting (Nevada); b) the place of negotiation (Nevada); c) the place of performance (Nevada); d) the location of the subject matter (not indicated); and e) the domicile of the parties (both).[104] The court concluded by stating that “the fact that debtor traveled to Nevada and sought out a loan there from Mandalay tips the balance in favor of applying Nevada law.”[105]

       In the case of Mashantucket Pequot Gaming Enterprise v. Renzulli[106] basic conflicts of law principles resulted in a New York court enforcing a gambling debt even though New York law would not support such an award.[107] In this case plaintiff was the operator of Foxwoods in Connecticut, the largest casino in the world.[108] The entity is entirely owned by the Mashantucket Pequot Tribe, a sovereign Indian Nation.[109] During a visit to Foxwoods the defendant executed two casino markers totaling $5,000.[110] The markers were not paid, and plaintiff obtained a default judgment against the defendant in a Tribal Court.[111] When the judgment was not paid the plaintiffs filed a complaint against the defendant in state court in New York.[112] The New York court ruled that even though gambling debts were not enforceable in either New York or Connecticut, they were enforceable under the Tribal-State Compact.[113] The court noted an obligation to “look to the laws of the jurisdiction where the debt was incurred to determine the validity and enforceability of such debt.”[114] As a matter of policy, it was noted that “[t]he [c]ourt is cognizant of the holding in Intercontinental Hotels [v. Golden] that `injustice would result if citizens of this State were allowed to retain the benefits of the winnings in a State where such gambling is legal, but to renege if they were losers.'”[115]

Contracts

       In the Mashantucket case, as well as several others previously discussed, it was mentioned that in those jurisdictions where gambling is legal, contracts predicated upon legal gambling are as enforceable as any other form of contract.[116] It has also been held that an agreement to share gambling winnings is legally enforceable, even though the agreement was entered into in a jurisdiction that does not permit gambling.[117] However, the Bedle case held that such sharing of winnings was not permitted based upon the statutory law of the state of Ohio.[118] Another case which involved an alleged agreement to share gambling winnings is Iacono v. Lyons.[119] In this case plaintiff and defendant had been friends for almost thirty-five years, but this friendship came to an end as a result of a disagreement as to whether the two had agreed to share gambling winnings.[120] The plaintiff contended that she was invited to accompany the defendant on a trip to Las Vegas because the defendant thought that the plaintiff was “lucky.”[121] In addition, the plaintiff claimed to have had a dream in which she hit it big on a Vegas slot machine.[122] The plaintiff asserted that she agreed to go on the trip only if the two agreed to split any winnings fifty-fifty.[123] While in Vegas the two started playing the slots at Caesars Palace.[124] The plaintiff contended that after losing forty-seven dollars the defendant wanted to quit and go see a show, but the plaintiff persuaded her to continue.[125] She even identified a slot machine that looked like the one in her dreams.[126] The machine did not pay on the first try, but just after saying to the plaintiff “this one's for you, Puddin” defendant dropped in one more coin, and the result was a $1,908,000 payout.[127]

       When the defendant refused to share any portion of the winnings, the plaintiff sued for breach of contract.[128] The trial court rendered summary judgment in favor of the defendant on the basis of lack of consideration as well as failure to satisfy the Texas statute of frauds.[129] The court of appeals reversed on both points, and remanded the case back to the lower court for trial.[130] With regards to the consideration issue the appellate court held that the agreement by the parties to split their winnings constituted consideration.[131] In the words of the court:

   The plaintiff alleged she promised to share one-half of her winnings with the defendant in exchange for the defendant's promise to share one-half of her winnings with the plaintiff. These promises, if made, represent the respective benefits and detriments, or the bargained for exchange, necessary to satisfy the consideration requirement.[132]

       With regards to the statute of frauds, the defendant argued that the agreement, if any, was unenforceable as it could not be performed within one year.[133] The winnings from Caesars Palace were to be paid out to the winner over twenty years.[134] The court noted that this portion of the statute of frauds “does not apply if the contract, from its terms, could possibly be performed within a year—however improbable performance within one year may be.”[135] The court ruled that in this case the agreement to share winnings could have been performed within one year if some lesser sum (such as $200) had been won.[136] Under those circumstances payment would have been made by the casino to the player immediately. Hence, in the eyes of the court it was possible for the contract to be performed within one year depending upon the amount of the winnings, so the statute of frauds did not apply.

       An interesting case involving the refusal by a casino to pay a winning player was Gottlieb v. Tropicana Hotel & Casino.[137] In this case the plaintiff waited in line for about five minutes in order to take a spin on Tropicana's “Fun House Million Dollar Wheel.”[138] The plaintiff contends that immediately after swiping her player's card, the wheel was spun, with the result that the wheel landed on the “grand prize” of $1 million.[139] The casino says that the wheel never landed on the $1 million prize.[140]

       The court began its decision by discussing the “conflicts of law” issues.[141] After reviewing the substantive issue of “consideration” the court concluded that “it simply does not matter which law we apply.”[142] Moving on to the facts of Gottlieb and the issue of consideration, the court held that the various actions required of the plaintiff in order to participate in the game constituted consideration as a matter of law.[143] The court stated:

   Ms. Gottlieb had to go to the casino to participate in the promotion. She had to wait in line to spin the wheel. By presenting her Diamond Club card to the casino attendant and allowing it to be swiped into the casino's machine, she was permitting the casino to gather information about her gambling habits. Additionally, by participating in the game, she was a part of the entertainment that casinos, by their very nature, are designed to offer to all of those present. All of these detriment[s] to Ms. Gottlieb were “the requested detriments to the promisee induced by the promise” of Tropicana to offer her a chance to win $1 million.[144]

       Based upon this analysis, the defendant's motion for a summary judgment was denied, and the case was held over for trial in order to resolve the factual question of whether or not the plaintiff did in fact win the “grand prize” as a result of the spin of the wheel.[145]

Rights and Obligations of Licensed Casinos

       Card Counters: The previous case involved the claim that a casino is legally obligated to pay a winning player. In recent years courts have consistently ruled that such gambling related contracts are legally enforceable provided that they were the result of legal activities in a licensed casino.[146] A number of recent cases have addressed other issues dealing with the rights and duties of licensed casinos. One such issue relates to “card counters” at the game of blackjack. It is well known that a skillful blackjack player who can effectively count the cards may in fact have a statistical edge over the house. For this reason, casinos attempt to identify “card counters” and either bar them completely, or take measures designed to eliminate the card counter's advantage over the house. The state of Nevada permits card counters to be barred based upon the notion that a casino is private property, and gambling in this private facility is a privilege and not a right.[147] In the case of Chen v. State Gaming Control Board[148] the plaintiff (Chen) was asked for identification by the Monte Carlo casino when he began playing blackjack, whereupon he produced a Burma passport which turned out to be fictitious.[149] After a time the casino identified Chen as a card counter, and he was instructed to cash in his chips and leave the casino.[150] An agent of the Nevada Gaming Control Board was summoned, and he instructed the Monte Carlo to provide Chen with a receipt for the total amount of chips in his possession, pending a criminal investigation.[151] Following the investigation (which resulted in no criminal charges) the agent told the Monte Carlo it could release the full amount to Chen; however, the Monte Carlo returned only the amount of his original buy-in and did not allow him to keep his winnings, which amounted to $40,400.[152] The Gaming Control Board upheld this decision, and Chen brought suit.[153] The district court denied Chen's claim for judicial review, but the Nevada Supreme Court reversed.[154]

       The court held that the main issue of the case was whether the plaintiff had committed a fraud on the Monte Carlo.[155] The court stated that:

To establish fraud, the Monte Carlo must show that Chen provided a false representation of a material fact, which he knew to be false; that Chen intended the Monte Carlo to rely on the representation; that the Monte Carlo detrimentally relied on the misrepresentation; and that the misrepresentation proximately caused damages.[156]

       The court held that the Monte Carlo failed to prove that it detrimentally relied on Chen's misrepresentations.[157] The court noted that the only reason that the casino asked for identification was to comply with gaming regulations requiring identification for any gambler seeking more than $10,000 in chips.[158] Their purpose was not to help identify card counters, and there was no evidence that casino employees attempted to cross-check the identification produced by Chen with any sources that might identify card counters.[159] In addition, the court held that the proximate cause of Chen winning at blackjack was his skill in playing the game, not his false identification.[160] Hence, there was no proof that Chen's misrepresentation proximately caused the casino's damages.[161] As a result, it was the court's finding that “the Gaming Control Board's determination that Chen committed fraud is contrary to law because the Monte Carlo did not establish all of the elements of fraud.”[162]

       The dissenting opinion took the position that the Gaming Control Board's decision was not arbitrary, capricious, or contrary to law.[163] Judge Maupin stated that:

[G]aming establishments have the unquestioned right to protect themselves against so-called “card counters” who have developed expertise in the game of blackjack (“twenty-one”). On the other hand, neither card counting nor the use of a legal subterfuge such as a disguise to gain access to this table game is illegal under Nevada law. I conclude, however, that the misrepresentation here, the use of a fraudulent passport for identification, was not a legal subterfuge and enabled appellant access to high stakes play for the purpose of frustrating legitimate attempts by the respondent to prevent this from occurring.[164]

       Essentially the dissenting judge felt that the use of false identification was not a “legal” subterfuge, and this was what enabled the player access to high stakes blackjack play.[165] The judge felt that this misrepresentation was specific and material to the caliber of play involved, so that the player should be barred from receiving his winnings.[166]

       The state of New Jersey does not permit a casino to bar a player from playing blackjack merely because he or she is a “card counter.”[167] As a result, New Jersey casinos have taken a number of “countermeasures” to combat the threat of card counters. These counter measures include such tactics as shuffling the cards earlier than would ordinarily be the case if the casino believes that the remaining cards in the deck are player favorable. Other tactics include limiting card counters to one wager at a time, imposing a lower betting limit than stated on the table, and using “shills” to occupy all seats at a table where the card counter wishes to play. In Doug Grant, Inc. v. Greate Bay Casino Corp.[168] a large number of blackjack players sued numerous casinos claiming that these countermeasures were illegal.[169] Specifically, the plaintiffs alleged that the countermeasures constituted racketeering activities under the federal RICO statute.[170] The district court found, and the appellate court agreed, that the primary complaint of the plaintiffs related to early shuffling.[171] Unfortunately for plaintiffs, both the district and appellate courts held that state regulations specifically permitted the casino to shuffle the cards at any time after the conclusion of a round of play.[172] The regulatory body even anticipated that this tactic might be used to combat card counters, and if the reshuffling occurred only in positive point count situations (favoring the player), the casino advantage against all players would increase.[173] Despite the fact that this countermeasure might adversely affect all players, the court held it to be an allowed practice.[174] The court also found that the other countermeasures were explicitly or implicitly permitted by the appropriate regulations.[175] The court noted that while the plaintiffs might take issue with the policies established by the regulatory body, “a casino following it before its invalidation hardly could be subject to RICO liability for that conduct.”[176] In the end, the court held that it had “reached the conclusion that appellants' allegations that the casinos or any appellee ha[d] committed predicate RICO acts [were] completely insubstantial and border on the frivolous.”[177] Perhaps adding to the frivolity, the plaintiffs also alleged violations of the Equal Protection Clause and the Due Process Clause of the New Jersey Constitution.[178] The court rejected these arguments by simply noting that the casinos were private parties and hence were not subject to constitutional requirements of equal protection and due process.[179] The court indicated that “[s]tate regulation and the CCC's authorization of casino activities do not transform the casinos into state actors.”[180] The court also stated that even if the Constitution did apply, under a “rational basis” approach “the countermeasures used by the casinos and authorized by the CCC are rationally related to the legitimate state interest in protecting the financial viability of the casino industry.”[181]

       In the case of Ziglin v. Players MH, L.P.[182] a blackjack player on a Missouri riverboat casino brought suit against the casino when he was barred from playing blackjack at the casino.[183] In this case the player argued that in barring him from playing blackjack, the casino breached a contract which they had with him.[184] He asserted that the casino was making an offer when it advertised its willingness to entertain guests who wished to play blackjack, and that he accepted its offer when he appeared at the casino ready and willing to play.[185] The trial court rendered a summary judgment in favor of the casino, and this was affirmed on appeal.[186] The court noted that in most cases advertisements do not constitute offers, but only invitations to negotiate.[187] The court saw no reason to vary from the general rule in this case, holding that:

   The advertisements were not specific, definite, or certain, and could not reasonably be construed as offers. Rather, the advertisements were merely invitations to make an offer, to enter into negotiations, or to patronize Casino. Because there was no offer, there could be neither an acceptance nor a breach of contract.[188]

The plaintiff also claimed a violation of the Missouri Unlawful Merchandising Act.[189] The court rejected this argument by noting that the Act only applied in circumstances where the consumer purchased or leased something, and merely placing a bet at a game of blackjack did not constitute a purchase or lease.[190] Finally, the player claimed that by not notifying him in advance that card counters could be barred, the casino was liable for negligent misrepresentation or for fraudulent misrepresentation.[191] This claim was also rejected.[192] The court stated that “[p]atron failed to demonstrate that Casino had a legal duty to disclose that `card counters' may be excluded from playing blackjack. While Casino had superior knowledge of its views on `card counting,' Patron made no showing that he could not discover the information through the use of reasonable means.”[193]

       Duty to bar problem gamblers: There have been a number of cases in which it has been argued that a casino owed damages to a gambler as a result of its failure to eject the gambler from the premises due to his status as a “problem gambler,” his obvious intoxication, or his known mental health problems. Recall that in the Williams case a federal court dismissed the plaintiff's claim on jurisdictional grounds.[194] In an Iowa case, Logan v. Ameristar Casino Council Bluffs, Inc.,[195] the player alleged that he was drinking and gambling excessively at the defendant casino.[196] The plaintiff alleged that his friend explained the situation to the pit boss and begged him to bar plaintiff from the premises.[197] This did not occur, the plaintiff continued to gamble and lose, and the plaintiff claimed that the casino's failure to bar him from the casino was wrongful and caused him substantial harm.[198]

       The first basis for the plaintiff's claim was regulatory in nature.[199] The plai