Self-Exclusion: Legal and Policy Considerationsmassgaming.com/wp-content/uploads/10-Self...Taveras v. Resorts International Hotel, Inc., et al. • In 2007, PG Arelia Taveras, a former

Center for Gambling Studies

Self-Exclusion: Legal and Policy Considerations

Lia Nower, JD, PhD Associate Professor and Director,

Center for Gambling Studies Rutgers University


Introduction

• Self-exclusion programs vary significantly by jurisdiction.

• Litigation surrounding these programs has largely resulted in dismissals or settlements.

• Settlements are typically sealed (private). • This presentation will:

– Review legal issues in select published cases. – Suggest areas for future consideration. – Posit suggestions for the development of a

comprehensive, liability-minded self-exclusion program.


Possible Causes of

Action


Possible Causes of Action

Accidental Conduct: • Show harm was not reasonably foreseeable. • Research has established that a disproportionate

amount of gambling revenue comes from problem gamblers SO: – Casino must establish it cannot identify individual

problem gamblers; – If problem gambler, can’t take reasonable steps to

prevent pg from harming themselves.

Sasso, W.V. & Klajdzic, J. (2006) Do Ontario and its gaming venues owe a duty of care to problem gamblers? Gaming Law Review, 10(6), 552-570.


Possible Causes of Action Intentional Misconduct: • Knowing with substantial certainty the

consequences of their actions (intentional direct marketing, credit, other enticements to self-excluded person).

Negligence: • Should have reasonably foreseen harm and

avoided conduct that led to harm. • Is operator under legal duty to exclude or

otherwise respond to those who exhibit characteristics of pg?



The Underlying Analogy


Gambling Versus Intoxication • Most jurisdictions don’t allow intoxicated patrons

who have suffered injury to recover from a bar UNLESS: – Bartender or waitress served an obviously intoxicated

person; – The Injury was to third party.

• Courts have reasoned: Since a drinker can’t recover from bar that served him, gambler shouldn’t recover from casino who let him gamble.

Bauer (2006) Self-exclusion and the compulsive gambler: The house shouldn’t always win. Northern Illinois University Law Review, 63, 63-94.


Gambling Versus Intoxication

• Alcohol cases turn on “proximate cause”: – Proximate cause is the liquor not the bartender.

• However, with gambling: – Harm could be seen to occur the moment gambler is

“fed” dangerous substance (e.g gambling) by casino; – If person self-excluded, harm is “foreseeable.”

Bauer (2006) Self-exclusion and the compulsive gambler: The house shouldn’t always win. Northern Illinois University Law Review, 63, 63-94.


Gambling Versus Intoxication

• However, unlike with alcohol: – There is no law expressly prohibiting casino operators

from permitting disordered gamblers to gamble; – No express rights of action or other civil remedies

provided to disordered gamblers or persons affected by them.



Interesting Cases


Casino Austria

• Christian Hainz, a pg, visited two Casinos Austria casinos more than 100 times between 1997 and 2000.

• Court said casino was guilty of “gross malfeasance and negligent behavior” by not restricting someone who exhibited all signs of pg.

• Ordered to reimburse about $680,000, which was 20% of his losses.



Joe McNeely Case

• McNeely, a Mississippi resident and Louisiana college football star, sued four Louisiana casinos federally.

• McNeely’s lawyer had contacted the casinos, informed them he was a disordered gambler, and asked casinos not to contact the client, let him gamble, or obtain credit.

• No self-exclusion initiated. • Only one casino honored the request. • File sealed.


Taveras v. Resorts International Hotel, Inc., et al.

• In 2007, PG Arelia Taveras, a former NY attorney, who lost $150,000 in one weekend, sued six New Jersey casinos for $20 million, alleging breach of a duty of care after she identified as a pg.

• Also sued under Racketeering Influenced and Corrupt Organizations Act (RICO) [collaborated to lure her out of NJ to gamble outside NJ].

• Suit dismissed in 2008 because no duty of care on casinos failed to plead mail fraud on federal charge.


Merrill v. Trump Indiana, Inc.

• Mark Merrill, problem gambler in treatment in 1996. • Clinic contacts casino as “guardian/custodian/trustee”

to inform them to enter into oral contract to bar him. • Merrill writes casino and asks for self-exclusion (no

reg until 2000). • 1998, returns to gamble and isn’t barred. • Loses, robs banks, federal prison. • Court granted summary judgment for casino:

– Casino no duty of care to Merrill because reg not in effect and didn’t contemplate private cause of action, civil liability only fines etc.


Williams v. Aztar Indiana Gaming Corp.

• David Williams, a former auditor, gambled at Casino Aztar in Evansville, IN.

• His girlfriend repeatedly contacted state officials and the casino for intervention; after reporting he was contemplating suicide, Aztar's Responsible Gaming Committee approached Williams. He sought help and was committed for suicidality.

• Aztar send a “cease admissions” letter. He had gambled away about $160,000 since girlfriend’s first call.

• Williams abstinent for a year, then returned to casino and gambled until identified. He had lost an additional $15,000 to $20,000.

• Williams sued under RICO, alleging promotional materials from casino constituted mail fraud.

• Case ultimately dismissed as “frivolous” by court of appeals.


The Relevance of FinCen


FinCEN’s Investigations for alleged violation of Bank Secrecy Act

• Increased scrutiny by U.S. Treasury Departments Financial Crimes Enforcement Network.

• Sands Corp (Venetian/Palazzo) $47.4 million settlement with US Justice Department in August 2013 for failing to identify $58 million in suspicious transactions. – Failed to flag about $45 million in wire transfers and $13

million in cashier’s check deposits between Feb 2005 and March 2007 by Zhenli Ye Gon, a Chinese national accused of trafficking narcotics.


Primary Issues in

Self-Exclusion


Issues with Current Self-Exclusion Programs

State regs say licensees must maintain a list and submit internal control procedures BUT • This is usually vague: doesn’t require the use of

facial recognition software, license plate monitoring, or other specific procedures;

• Sanctions may or may not be imposed for violations.

• If imposed, sanctions may only be levied for those who are caught versus should have been caught.

• Casinos are permitted to keep winnings but not required to return losses.


Issues with Current Self-Exclusion Programs

May lead to lawsuits because/when: • Perceived as win/win for casinos (i.e. no incentive

to identify unless winning) (unjust enrichment) • Responsibility only on patron despite perceived

contract – I agree to stay out, you agree to try to keep me out – Belief that casino should have to return losses for failure

to identify as well as keep winnings.


Considerations for Future Regulations


Considerations for Self-Exclusion

The Need for a Centralized System • Missouri versus New Jersey:

– Missouri: Self exclusion run by the Missouri Gaming Commission; agents at casinos throughout the state.

– New Jersey: Casino Control Commission has list for casinos; so do individual casinos; no centralization. Race tracks have their own and don’t enforce it.

• Recommendation: Self-exclusion should be state-run, utilizing a centralized register that imposes uniform registration, identification, and breach procedures and documentations across gambling venues and forms of gambling.


General Considerations • How long should a ban last?

– Lifetime bans: • Pros: Once a disordered gambler, why take the

chance? Third party harm. • Cons: Enforcement nightmare. People move,

change their names, die. The list grows unmanageable.

• Under what circumstances revoke? – At will? – After finishing some intervention/treatment? – Counselor certification?

• Minimum length of time? • Role of third parties?


Considerations for Operator • Checking requirements? (e.g. check cashing, slot

club memberships, IRS for W-2G) – If they can do it for FinCEN…

• Mandatory promotion of program? How visible does it have to be?

• ID system requirements – digital pictures for use with facial recognition, ID system, player tracking?

• Penalties for both gambler and venue upon violation of the program?

• Training of casino employees? • Require operators to remove self-excluders from

marketing lists and close players accounts? – Penalty for failure to comply?


Essential Components of Self-Exclusion Agreement

• Gambler certifies s/he is a disordered gambler and want to self ban;

• Gambler agrees that casino has no independent knowledge of the veracity of that claim;

• Casino agrees to allow the patron to self exclude and to remove the patron or have them arrested for trespass in the event the gambler is found on the premises;

• Gambler understands that returning to the premises constitutes a material breach of the contract;


• Gambler agrees to notify the Casino within 24 hours of the breach;

• Gambler agrees that his/her failure to comply with this voluntary ban may result in trespass arrest and prosecution;

• Gambler agrees that his/her winnings will be forfeited in the event that s/he is identified;

• Gambler understands that forfeited winnings will be donated to [state, organization];



• Casino agrees that any losses incurred by a self-

excluded gambler following a ban will be donated to [state, organization];

• Gambler releases and forever discharges the casino and the commercial operators and any of the operator’s parent companies, from any and all liability, causes of action, claims and demands whatsoever arising from gambler’s failure to comply with voluntary ban.



http://www.lianower.com

[email protected]

Many thanks to Professor Joseph M. Kelly, JD of SUNY Buffalo Law School for his help with this presentation.

http://www.lianower.com/

Documents

Self-Exclusion: Legal and Policy Considerationsmassgaming.com/wp-content/uploads/10-Self...Taveras v. Resorts International Hotel, Inc., et al. • In 2007, PG Arelia Taveras, a former