Beating the house: patrons' claims against casinos may seem like standard cases, but they're not. Learn what you need to know to win.

Joe Client, playing a casino slot machine, is surprised when he hits the jackpot. Bells go off and other gamblers congratulate him. Suddenly, casino employees gather around the machine. After a brief inspection, they tell Joe that he did not, in fact, win a jackpot, but the machine malfunctioned. They offer little explanation and begin tampering with the machine. The next day, Joe walks into your office. Does he have a legal claim against the casino?

Inquiries like Joe's are becoming more common. Gambling--sometimes referred to by the less threatening term "gaming"--is on the rise in the United States and expanding at au unprecedented rate. From 1990 to 1998, casino revenues grew from $8.7 billion to more than $22.2 billion, while the number of counties with casino gaming increased from 26 to almost 200. (1) Currently, casinos operate in 24 states. (2)

As more tourists and gamblers flock to casinos, litigation against these establishments is increasing and spreading to new parts of the country. Claims range from highly regulated jackpot disputes to traditional premises liability actions. To successfully handle an action against a casino, you need specialized knowledge of casino procedures and state regulatory schemes.

Jackpot disputes

Some disputes, like Joe's, arise when a casino visitor feels cheated by a particular game or by casino employees. These usually involve slot machines, table games, or casino promotions or drawings. (3) Disputes involving slot machines are the most common. (4)

Jackpot disputes involve contract law. Gambling necessarily involves a contractual agreement, which includes offer, acceptance, and consideration. For example, with a slot machine, the patron accepts the casino's offer to gamble by inserting a coin into the machine. The coin is the consideration. The casino's obligation to pay is contingent on the reel combination at the end of the game. Thus, jackpot disputes focus on contract terms and performance, such as how many coins were played or whether there was a winning combination on the machine reels. (5)

Unlike normal contract cases, casino jackpot disputes are usually subject to an administrative proceeding before relief can be sought in the courts. Generally, the state gaming board or commission has authority over the administrative proceeding. (6) In fact, plaintiffs might be statutorily barred from obtaining relief if they don't seek the proper administrative remedy first. (7) Therefore, it is essential that you understand the regulatory procedures specific to the state where the claim arose.

As in many areas of the law, casino regulation differs among the states, but there are certain similarities. The following general regulatory scheme has been adopted in several jurisdictions, including Mississippi and Nevada.

Under the law, 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 jurisdictions. (8) In disputes involving lesser amounts, the casino generally has a duty to inform the patron of the light to request an investigation by the state regulatory commission. If the casino fails to do this, the commission can usually bring a disciplinary action against it.

Whether or not the casino informs the state gaming commission, the patron should always request an investigation. In some jurisdictions an official called the executive director will conduct the investigation. The commission will appoint an investigative officer or agent to gather information and form opinions. The executive director will usually notify, the parties of the final decision within 30 days. (9)

If the patron (or the casino) is dissatisfied with the executive director's decision, he or she should immediately petition for a hearing before the gaming commission. (10) If the petition is not filed within the period required by statute, the plaintiff might be barred from further action. A hearing examine appointed by the gaming commission will conduct the hearing. Generally the gaming commission has discretion to review the examiner's decision before issuing a final order.

Only after all these administrative steps are exhausted and the gaming commission has issued a final order can the plaintiff seek a remedy in court. However, the court action will not be like a traditional lawsuit. Generally, the state court will merely review the commission's decision, without empaneling a jury, to confirm whether there is evidence to support the commission's findings. (11)

When examining a casino's actions after a dispute has arisen, focus on the stops the casino took to ensure a prompt and accurate investigation. Discovering any casino hostility or inactivity will benefit the plaintiff's claim. (12)

Always remember that the casino has all the evidence and must make it available for use in the dispute. Immediately after the initial meeting with a client, write a letter to casino representatives asking that they preserve the evidence. Send a copy to the state gaining commission. Also develop contacts with the gaming commission, particularly the investigating agents: You will be glad to have them when you need help recovering and protecting the evidence.

When a slot machine is the focus of the dispute, the casino must seal off the machine and discontinue play until the commission conducts its investigation. (13) The casino also should photograph the machine and question witnesses. Always request all documents relevant to the incident, including the gaming commission's report of its specific findings.

Slot machine experts can provide valuable information to plaintiff attorneys on the game's electronic operation and how to interpret the electronic data it generates. These experts are vital to properly handling a slot-machine-jackpot case.(14) You should hire the expert during the investigative phase to help obtain and analyze all relevant evidentiary questions. The expert should also review the investigative findings of the commission and the casino in forming expert opinions.

Jackpot disputes are often winnable. Joe Client's story is token directly from a case in which the plaintiff was awarded the full jackpot. (15)

Premises liability

John and Jane Client travel to a casino looking for a good time and hoping to win big bucks. As he walks through the casino parking lot, John trips on a depression in the asphalt and suffers serious injuries. The casino's video surveillance cameras capture the incident and confirm not only that the asphalt contained the indentation that John tripped on, but also that several other holes and depressions were noticeable in the surrounding area. Meanwhile, inside the casino, Jane is injured when she trips over boxes that were stacked according to casino procedure. Her fall, like John's, was captured by surveillance cameras.

John and Jane come to you tot help. What should they know about possible claims?

Due to the large number of casino visitors each year and to the abundance of free alcohol that casinos provide, slip-and-fall claims are common. Dimly lit parking garages and criminal activity around casinos may also lead to claims for failure to maintain reasonable security measures. Unlike jackpot disputes, premises liability claims are not required to go through a special administrative process. the casino has a duty to provide a reasonably safe environment for its guests. As in any premises claim, the standard concepts of duty breach, causation, and damages apply.

In a premises case against a casino, familiarize yourself with the facility's policies and procedures. For example, casinos often have a timetable for destroying surveillance videos. Because casinos have been notorious for destroying videos and other evidence, immediately request videotapes and any other discoverable information that the casino has in its possession. (16)

In an effort to prevent crime and cheating, casinos employ well-funded security teams. Because of high employee turnover in casinos, workers' loyalty to the casino is usually limited. Framer employees can often provide valuable information on security practices and policies and other incidents.

As in any negligent security case, experts are critical. Casino security is much more technically involved and sophisticated than security in many other business establishments, so be sure to hire an expert with special expertise in this area. (17) The expert should obtain and analyze the casino's internal security rules and regulations.

In addition, security issues are often complicated by the extensive state regulation of casino security. (18) Casinos must make detailed disclosures to the state gaming authority to show compliance with state regulations.

Dram shop claims

As Jeff Client was driving to work one morning, another vehicle jumped the median and struck his car, and Jeff was seriously injured. An investigation revealed that the other driver, who was coming from a local casino and had been served numerous free alcoholic beverages during the night, was very drunk. Jeff calls you from the hospital. What action can he take?

Many states have enacted "dram shop" laws that place liability on a bar owner who serves alcohol to an obviously intoxicated person. This liability extends to that person's negligent acts. In one such claim, the estate of a patron who died in a car crash after becoming drunk at a casino sued the establishment. The evidence proved that the casino had notice of the patron's drunkenness: He could not legibly sign his own name on a check, and a casino employee wrote the patron's name for him on a promotional game slip. The plaintiff settled out of court, showing that some such actions can be successfully maintained for damages.(19)

However, some states allow only innocent third parties, such as those injured by a driver who became intoxicated at the casino, to bring dram shop claims. These states specifically prohibit claims by voluntarily intoxicated people. (20)

In a twist on traditional dram shop litigation, some gamblers have argued that casinos should be liable when a patron suffers gambling losses after becoming drunk at the casino. They say casinos have a duty to refuse to allow obviously intoxicated people to gamble. This argument has been clearly rejected in most jurisdictions. (21) In reality, successfully maintaining a dram shop claim on behalf of din intoxicated person, instead of a third party; is extremely difficult.

Detainment or eviction 

James Client won jackpots at several slot machines. While he was sitting calmly at a machine, casino security--suspecting that he was using a metal device to cheat--tackled him from behind. They threw him to the ground in front of many witnesses, handcuffed him, and took him to a holding area, where he was detained for two hours. After further investigation, security officials determined that he had no illegal device.

The physical assault caused James several minor physical injuries, and he believes the incident damaged his reputation in the community. He comes to you for help.

Casino security guards often detain or evict patrons for unruly or illegal behavior, which may result from the patrons' consumption of free alcohol. Casinos also must guard against patrons cheating and underage gamblers trying to sneak in. Often, guards are not properly trained to handle every situation that might occur, and they are sometimes overzealous in detaining or evicting patrons.

Because of this, intentional tort claims against casinos are relatively common. Claims involving security personnel often include false imprisonment, malicious prosecution, defamation, and assault and battery. Courts will often examine whether the casino guards' actions, particularly the force used, were reasonable. Some courts use an objective-reasonableness test, looking at the total circumstances."

Generally, as long as the plaintiff can set out some factual assertions, the court will allow the jury to decide the factual elements of an intentional tort claim. (23) Whether the guards initially tried to settle the problem calmly could he important to the outcome of the case. One court found a casino liable for false imprisonment and malicious prosecution where security guards detained and charged with disorderly conduct a patron who had acted in a calm and orderly manner after being instructed to leave. (24)

In a case involving casino security staff, you should request surveillance videos, training materials, and personnel data as early as possible. These materials will help you make sure the relevant security procedures were followed. Also, if the security procedures were inadequate, a claim for negligent instruction may result. If the guards did indeed act overzealously, an intentional tort claim can be successful.

As casinos continue to spread across the country and more Americans enjoy the recreational opportunities they offer, more casino-related cases will inevitably arise. In these cases, the first days are critical. When you act early and make a diligent effort to obtain the vast amount of information casinos retain--their policies and procedures as well as data on both patrons in general and injuries in particular--you can achieve favorable results for your client.

Notes

(1.) Earl L. Grinols & David B. Mustard, Business Profitably Versus Social Profitably: Evaluating Industries with Externalities, The Case of Casinos, 22 J. MANAGERIAL & DECISION ECON. 143, 143 (2001).

(2.) Arizona, California, Colorado Connection, Illinois, Indiana, Iowa, Kansas, Louisiana. Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota. Oregon, South Dakota, Washington, and Wisconsin. See I. Nelson Rose, Gambling and the Law: Status of Gambling Laws (Aug. 3, 2003), available at www. gamblingandthelaw.com/status.html (last visited Apr. 27, 2004).

(3.) See Thomas W. Sheridan, Litigating Casino Promotion Claims, 2001 ATLA ANNUAL CONVENTION REFERENCE MATERIALS 1883: Gottlieb v. Tropicana Casino & Resort, 109 F. Supp. 2d 324 (E.D. Pa. 2000).

(4.) LIONEL SAWYER & COLLINS, NEVADA GAMING LAW [section] 275 (2d ed, 1995); see also Joseph M. Kelly, Casino Gaming Disputes, 2001 ATLA ANNUAL CONVENTION MATERIALS 1851.

(5.) LIONEL SAWYER & COLLINS, supra note 4, at [section] 275.

(6.) See e.g., NEV. REV. STAT. [subsection] 463.361-463.366 (2001); MISS. CODE ANN. [subsection] 75-76-159-75-76-165 (2001 & Supp. 2003; see also Campione v. Adamar of N.J., Inc., 714 A.2d 299, 306 (N.J. 1998) (granting primary jurisdiction to New Jersey Casino Control Commission). See generally I. Nelson Rose, Winning a Jackpot Dispute in Mississippi, 7 GAMING L. REV. 175 (2003(); see also National Gambling Impact Study Commision's Gambling Statutes Database, available at govinfo.library.unt.edu/ngisc.reports/statues, html (last visited Apr. 27, 2004).

(7.) See Cook v. Mardi Gras Casino Corp., 697 So. 2d 378, 381 (Miss. 1997).

(8.) See, e.g., MISS. CODE ANN. [section] 75-76-159 (2001 & Supp. 2003); NEV. REM STAT. [section] 463.362 (2001).

(9.) See, e.g., MISS. CODE ANN. [section] 75-76-159 (2001 & Supp. 2003).

(10.) See. e.g., MISS. CODE ANN. [section] 75-76-161 (2001 & Supp. 2003) (allowing petition to be filed within 20 days of receipt of executive director's decision).

(11.) See MISS. CODE ANN. [section] 75-76-171 (2001 & Supp, 2003); Sengel v. IGT, 2 P.3d 258, 261-63; (Nev. 2000) (upholding decision whole supported by any evidence); cf. IGT v. Kelly, 778 So. 2d 773, 776 (Miss. 2001) offering most favorable interpretation to patron).

(12.) See Grand Casino Biloxi v. Hallmark, 823 So. 2d 1185, 1187 (Miss. 2002); Thomas v. Isle of Capri Casino. 781 So. 2d 125, 133 (Miss. 2001) (finding failure to follow procedure to be spoliation by casino, resulting in presumption against casino).

(13.) See LIONEL SAWYER & COLLINS, supra note 4, at [section] 277.

(14.) See Hallmark, 823 So. 2d 1185, 1198-1200; Sengel, 2 P.3d 258, 263.

(15.) Hallmark, 823 So. 2d 1185.

(16.) See generally Rose. supra note 6, at 175.

(17.) Robert H. Thornburg, Face Recognition Technology: The Potential Orwellian Implications and Possible Constitutionality of Current Issues Under the Fourth Amendment, 20 J. MARSHALL J. COMPUTER & INFO. L. 321, 328 (2002).

(18.) See, e.g., N.J. STAT. ANN. [section] 5:12-99 (1996).

(19.) Bridges v. Park Place Entm't, 860 So. 2d 811 (Miss. 2003).

(20.) See id. at 813-14

(21.) See, e.g. Hakimogluv. Trump Taj Mahal Assoc., 70 F.3d 291, 293 (3d cir. 1998); See also Jessica L. Krentzman, Dram Shop Law--Gambling While Intoxicated: The Winner Takes It All? The Third Circuit Examines a Casino's Liability for Allowing a Patron to Gamble While Intoxicated, 41 VILL. L. REV. 1255, 1283 (1996); John Warren Kindt, "The Insiders" for Gambling Lawsuits: Are The Games "Fair" and Will Casinos and Gambling Facilities Be Easy Targets for Blueprints for RICO and Other Causes of Action?, 55 MERCER L. REV. 529, 556-57 (2004).

(22.) See e.g. Alpha Gulf Coast, Inc. v. Jackson, 801 So. 2d 709, 720-721 (Miss. 2001); see also Garza v. Traditional Kickapoo Tribe of Tex., No. 03-50209, 2003 WL 22391241 (5th Cir. Oct. 21, 2003) (holding that casino used reasonable force).

(23.) See Romanski v. Detroit Entm't, 265 F. Supp. 2d 835, 847 (E.D. Mich. 2003).

(24.) See e.g., Alpha Gulf Coast, 801 So. 2d 709, 720-21, (quoting Wallace v. Thornton, 672 So. 2d 724, 727 (Miss. 1996) (stating that false imprisonment is evaluated by "looking at the totality of the circumstances, [whether] the actions of the defendant were objective reasonable in their nature, purpose, extent, and duration")).

Related Article: Native American and floating casinos are a different game.

While land and dockside casino gaming are generally regulated by state statutes, two other types fall under other distinct areas of regulation. Native American gaming is often sheltered from state regulatory commissions. Riverboat and cruise ship gaming are sometimes regulated by admiralty law.

Gaming on reservations

The number of gaming establishments on Native American land is growing at a brisk rate. Revenue from these establishments grew from about $8.5 billion in 1998 to about $14.5 billion in 2002. (1)

Analysis of Native American casino litigation must begin with the U.S. Supreme Court's decision in California v. Cabazon Band of Mission Indians, disallowing state civil regulation of casino gaming on Native American reservations. (2) In response to this ruling, Congress passed the Indian Gaming Regulatory Act (IGRA), which enumerated three classes of gaming, each subject to different regulatory standards. (3) Class I includes social games for prizes of nominal value, including games associated with traditional Native American celebrations. Class II includes bingo and certain card games, but excludes most casino gaming. Regulation of class I and II gaming is generally left under the exclusive control of Native American tribes.

Class III gaming includes all other forms of gambling, including casino gaming, and is subject to certain federal regulations, as set out in the IGRA and further regulated in administrative proceedings. (4) For instance, Class III Native American gaming is allowed only in states that permit casino gaming. Also, the tribal governing body and the National Indian Gaming Commission must approve casino development plans. Most important, the IGRA requires a compact that must be agreed on by the state and the tribe, and then approved by the U.S. secretary of the interior. (5) This provision gives states the power to negotiate with tribes regarding new gaming establishments.

Once a Native American casino is opened, the state has essentially zero regulatory authority. Before bringing a patron dispute, attorneys generally have to first be admitted to the tribal court. (6) Also, Native American casinos are immune from traditional state or federal court tort actions, absent a waiver of sovereign immunity by the tribe or a congressional authorization to bring suit. (7) Without specialized knowledge regarding the National Indian Gaming Commission and local tribal regulatory procedures, patron disputes against Native American casinos are difficult undertaking. (8)

Riverboat and cruise ship gaming

Cases involving casinos on riverboats and cruise ships can be particularly challenging because they may fall under admiralty jurisdiction. Discerning whether a gambling boat fits the definition of a "vessel" under maritime law has often been a difficult factual question, especially where the casino is a nontraditional floating structure. (9)

Although the question has been tricky, it is relatively settled in a few courts. For example, the Fifth Circuit and the Mississippi Supreme Court have held that stationary dockside gaming structures do not fall under admiralty jurisdiction. (10) Other courts go in the opposite direction, placing riverboats under the authority of admiralty law. (11) Determine what precedent applies before agreeing to represent clients in actions against these types of casinos.

Notes

(1.) Nat'l Indian Gaming Comm'n, Tribal Gaming Revenues, available at www.nigc.gov (click on "Tribal Data," then "Gaming Revenues") (last visited Apr. 30, 2004).

(2.) 4801 U.S. 202, 221-22 (1987).

(3.) 25 U.S.C. [subsection] 2701-2721 (1994); see, e.g., 25 C.F.R. [section] 502.4 (2003) (defining Class III gaming).

(4.) 25 U.S.C. [section] 2703(8).

(5.) [section] 2710(d); see also Kevin K. Washburn, Recurring Problems in Indian Gaming; 1 WYO. L. REV. 427, 429 (2001).

(6.) See generally Nell Jessup Newton, Tribal Courts Praxis: One Year in the Life of Twenty Indian Tribal Courts, 22 AM. INDIAN L. REV. 285 (1998) (offering overview of Native American tribal courts).

(7.) See Peter Nicolas, American-Style Justice in No Man's Land, 36 GA. L. REV. 895, 954-56 (2000); Matthew Shafner, Innovative Approach to Indian Casino Cases--The Sovereign Immunity Problem, 2002 ATLA ANNUAL CONVENTION MATERIALS 1805.

(8.) See the National Indian Gaming Commission Web site, www.nigc.gov, for articles on tribal gaming and contact information for tribes that operate casinos.

(9.) See Allan B. Solomon & Gregory D. Guida, Riverboat Gaming: Legislation, Licensing; Site Selection, and Caselaw, 29 J. MAR. L. & COM. 215 (1998). See generally Jeff Nemerofski, What Is a Vessel? A Three Prong Approach, 46 CLEV. ST. L. REV. 705 (1998).

(10.) Pavone v. Miss. Riverboat Amusement Corp., 52 F.3d 560,570 (5th Cir, 1995). See also King v. Grand Casinos, 697 So. 2d 439, 441 (Miss. 1997) (stating that claim should not fall under maritime jurisdiction merely because casino structure can be moved across water); Gremillion v. Gulf Coast Catering Co., 904 F.2d 290, 293 (5th Cir. 1990) (setting out three-part test for judging vessel status).

(11.) See, e.g., Wiora v. Itarrah's Ill. Corp., 68 F. Supp. 2d 988, 992-94 (N.D. Ill. 1999).

BRIGGS SMITH if a partner with Smith, Phillips, Mitchell & Scott in Batesville, Mississippi. JASON Nabors is a law clerk with the firm and a third-year student at the University of Mississippi School of Law.