NO WAIT! U.S. courts say casinos have no 'duty of care' to halt compulsive gamblers from playing..... and the key difference between the two is? Can anyone say REVENUE?
Indiana tax auditor David Williams had never gambled when, in 1996, he got a coupon in the mail for Aztar, a riverboat casino in Evansville. He went, lost, and kept losing. By March 1998, he had surrendered $160,000 to the casino's slot machines.
After two desperate appeals from Williams' girlfriend, who feared the now-pathological gambler was suicidal, the casino put Williams' name into its computerized self-exclusion list. Aztar also sent Williams a "cease admissions" letter insisting that, before gambling at the casino again, he had to show proof from a doctor that betting no longer posed a threat.
Williams got treatment, and managed to stay away for nearly a year. But when he showed up at Aztar again in early 1999, no one stopped him. He returned often during the next 18 months, repeatedly playing the slots with his "Fun Card," which identified him to the casino's computers, tracked his betting and triggered promotional mailings touting "free money" and urging him to "Come get your share!" He lost $20,000 more before an Aztar security guard in August 2000 finally told him to leave.
Williams, who had gambled away his life's savings, sued the casino, claiming, among other things, that the "cease admissions" letter was a fraud and that Aztar broke its obligation to keep him out. But a federal appeals court dismissed the case, noting that Aztar's letter didn't say Williams would be barred from entering and gambling, just that the casino could stop doing business with him if it chose.
The Williams case and others like it show that, in the eyes of American courts, casinos have no legal requirement to stop compulsive gamblers from gambling.
The rulings are vindication for the casino industry, which insists -- as do some gambling counselors -- that the liability for stopping excessive gambling rests with the player.
But the U.S. courts' refusal to assign casinos any protective obligation -- the legal term is "duty of care" -- confounds others who see it as a failure of civic responsibility, compassion, and common sense.
In light of the court decisions, "the best thing a casino could do in terms of return on their money may be to somehow get a list of compulsive gamblers and invite them to come," because they spend the most, said Indiana attorney Terry Noffsinger, who represented Williams and who last year lost another high-profile duty-of-care case. "How can that be right?"
States that allow casino gambling typically require that casinos have "self-exclusion" programs allowing addicted gamblers to request temporary or permanent banishment.
The state regulations require casinos to make a "reasonable" effort to enforce the ban, but absolve the casino -- and the state -- from legal liability if a problem gambler gets back in. The self-exclusion form that a gambler signs contains similar language.
Judges have interpreted the state-granted protection for casinos as evidence that state lawmakers meant for pathological gamblers, not casinos, to bear the responsibility of preventing themselves from gambling. If casinos aren't making a "reasonable" attempt to keep self-excluded gamblers away, the legal reasoning goes, they should be penalized by state regulators, not by lawsuits.
But Noffsinger notes that in the Williams case and his other losing effort -- in which an Elizabeth, Ind., riverboat casino provided free limousine rides, hotel rooms, food, alcohol and credit to Genny Kephart, a gambler the casino knew was addicted, then sued her to recover the $125,000 she lost in one night and couldn't repay -- the Indiana Gaming Commission did not sanction either casino. (Kephart had not asked to be banned.)
"The elephant in the room is the fact that the state of Indiana gets $350 million a year from gaming taxes," Noffsinger said.
That potential bias bothered Indiana Appeals Court Judge Terry Crone, too. "It seems clear that both the casinos and the state share a common interest in gamblers -- pathological and otherwise -- losing as much money as quickly as possible," Crone wrote in his dissent of the court's verdict favoring the casino in the Kephart case.
Public policy to protect the vulnerable, as well as the riverboat's "repugnant" pursuit of Kephart to gamble, warrant the establishment of a duty of care by casinos toward pathological gamblers, Crone concluded.
But his appellate court colleagues disagreed, ruling that there's nothing wrong with a casino enticing an addicted gambler, because "common sense tells a reasonable person and all gamblers, compulsive or otherwise, that the house usually wins." The Indiana Supreme Court upheld the decision.
The Hoosier cases have helped set the tone in other U.S. jurisdictions for casino victories in duty-of-care cases. Internationally, the outcomes have been similar, although countries whose governments operate casinos -- especially Canada -- have shown increasing sensitivity to the issue of who's responsible for pathological gambling.
Last year, the Quebec gambling commission reportedly paid millions of dollars to settle a class-action lawsuit by a group of pathological gamblers who claimed the government failed to warn them about the addictive potential of slot machines.
The Ontario gambling authority has settled similar suits, including a 2007 duty-of-care case that some observers say could have major legal consequences. Joe Treyes, a Parkinson's disease patient whose medication is known to make users vulnerable to compulsive gambling, asked to be banned from Ontario's casinos. He wasn't kept out, and lost $100,000 playing slot machines.
Though the case didn't go to trial, an Ontario Superior Court judge's ruling on how Treyes' lawyers should be paid noted that the self-exclusion agreement between Treyes and the casinos amounted to a contract.
In effect, the judge "concluded casinos have a duty of care to a self-excluded gambler," legal scholars Joseph Kelly and Alex Igelman wrote in a 2009 analysis. The judge's observation "might have opened the door to damage claims against a gaming operator by every self-excluded gambler."
Self-excluded gamblers who casinos allow to continue gambling are the lynchpins of duty-of-care lawsuits to date, because casinos know they're addicts; the gamblers have acknowledged their problems when they petition to be banned.
But only a small percentage of problem gamblers decide to self-exclude. In Pennsylvania, for example, 2,000 people have asked to be kept out of the state's casinos. but prevalence studies indicate the state has more than 378,000 addicted and at-risk gamblers. Nearly half of slots players in Nova Scotia, Canada, at any time were problem gamblers, according to the provincial government's survey.
American casino operators say they have no reliable way of determining who is a problem gambler. But some researchers say that the extensive "player tracking data" casinos collect from every slots gambler who plugs a loyalty card into a machine can be used to identify problem gambling behavior.
Opponents of legalized gambling scoff at the casinos' claim that they can't peg problem players. "They track how fast you play. They track how much you wager. The idea that they don't have profiles for people who are out of control is beyond naive," said Les Bernal, executive director of Stop Predatory Gambling, a national anti-casino gambling organization.
If plaintiffs' lawyers were able to get the data, they might be able to show that casinos are knowingly allowing -- or even targeting, with marketing come-ons -- a much larger number of problem slots players to gamble, some legal analysts suggest. The player data also could indicate whether certain slot machine models are more conducive than others to problem play.
"The recurring nightmare for every casino and slot machine executive is that an insider will come forward with the documentation," said John Warren Kindt, a University of Illinois professor of business and legal policy and gambling critic who studies casino liability issues. "The casinos are like tobacco -- they can't afford to lose one case on that issue, because if they do, the floodgates are open."
Cigarette makers' manipulation of nicotine levels while they publicly denied knowing that smoking was addictive helped trigger a wave of state-initiated lawsuits against the tobacco industry in the 1990s, to recover Medicaid payments for smoking-related illnesses. Settling the suits cost the industry hundreds of billions.
In a 1996 speech soon after he became president of the American Gaming Association, the U.S. casino industry's trade group, former Republican Party chairman Frank Fahrenkopf said gambling companies couldn't afford to make the mistakes of Big Tobacco. He vowed that the casino industry would "get ahead of the curve" by acknowledging problem gambling, helping determine its extent, and working to treat and prevent it.
Indeed, the industry has spent millions to support problem gambling research and public education efforts. It insists, however, that slot machines are not addictive, that pathological gamblers are responsible for controlling their own behavior, and that player tracking data can't be used to identify addicted patrons.
If compelling evidence emerges that casino operators are exploiting addiction, Kindt said state governments may be the only plaintiffs with enough money and manpower to successfully confront the well-funded gambling industry.
Terry Noffsinger, the Evansville, Ind., lawyer representing addicted gambler Genny Kephart, said the riverboat casino initially brought in a defense team of Louisville attorneys. "Two weeks later, Ropes & Gray, the huge Washington, D.C. firm, gets into it," Noffsinger said. "You know how many lawyers are on the other side? One. You sort of feel like the Lone Ranger."
But state-initiated lawsuits to recover the costs of problem gambling would face a complication unheard of in the cigarette cases: the state itself, along with the casinos, would be a defendant, because states license casinos and they share gambling profits.
"One problem is you're going to sue the government," said former Massachusetts attorney general Scott Harshbarger, who led his state's litigation against the cigarette industry. "We didn't have to do that in tobacco." If states had licensed and split cigarette revenues with tobacco companies, implying government consent of smoking, "I wonder if we would have been as successful."
There's no current sign that state attorneys general are inclined to take on Big Gambling. Harshbarger, who also was president of the National Association of Attorneys General, said that may represent still-evolving public attitudes about gambling, not a lack of political will.
The tobacco lawsuits "had the support of the business community, families, public health," Harshbarger said. "The public policy was ahead of the litigation. Almost all of us had the experience of being affected by tobacco. You're just beginning to get that impact with gambling. It's going to be more viable, tragically, [when] you have more data."
No comments:
Post a Comment