#137 ©Copyright 1999, all rights reserved worldwide. Gambling and the Law® is a registered trademark of Professor I. Nelson Rose, Whittier Law School, Costa Mesa, CA.

We occasionally hear about players who think they have won fabulous jackpots, only to be told that they have not really won, because the slot machines malfunctioned.

Casinos have posted signs reading, AMalfunction voids all plays and pays.” So, these players do not normally get paid.

But, what if they were already paid? May the casino sue the players and get its money back?

This case actually went to trial last year. The Chumash Casino filed small claims cases in Santa Barbara County Superior Court alleging that one of its slot machines malfunctioned, resulting in three patrons wrongfully receiving thousands of dollars.

The Santa Ynez Band of Chumash Indians is a federally recognized tribe, with sovereign immunity. This means it cannot be sued. But, in California and many other states, tribes have the right to sue others.

Judge Rick Brown heard testimony and received exhibits, and concluded that the evidence appeared to support the casino’s factual claims.

For at least these three patrons, playing in this casino on February 28, 1998 was every gamblers’ dream.

The prior day, a video gaming device had stopped accepting one dollar bills. A casino employee put in a new bill acceptor.

The employee made only one, little mistake. Instead of replacing the slot machine’s bill acceptor with an identical one, programmed like the original to give one play for one dollar, the new bill acceptor gave four plays for one dollar.

This does not mean players will win every time. But, it sure does change the odds.

If the gaming device was set at an 85% payback schedule, players would receive, on average, over the long-run, 85 cents for every one dollar bet. But, with the new bill acceptor, players now received 85 cents for every 25 cents bet. This changes the game from an 85% payback to a 340% player advantage.

Between 2:11 a.m. and 9:30 a.m., when the mistake was finally caught, that machine saw a lot of use.

The tribe’s casino investigators spent hours comparing the time-marked videotape of the patrons playing the machine with the time-marked tapes from the device itself, which recorded every dollar put in and paid out. They found that one player received $3,105; a second $3,270; and a third $3,561.

And they recognized the players.

I suppose the casino first politely asked for its money back. Then it sued.

Judge Brown found the casino might be right on the facts, but could it collect under the law?

The problem for the casino is that gambling debts are not collectable in a court of law.

The usual cases involve patrons claiming they had winning bets. Keith Copher, chief of enforcement for the Nevada Gaming Control Board, told the Las Vegas Sun in October 1998 that the agency averages one claim a day from disgruntled players.

Of course, most claims are small and are settled on the spot by casino management. Larger table game disputes can be resolved by reviewing videotapes.

But, casinos will not pay even small amounts, if they believe the patron is a “claimer,” someone lying or actually creating the malfunction in the hope the casino will pay them off.

If patrons claim they are owed money and casinos refuse to pay, the players can only complain to the casinos’ government regulators. In Nevada, it is the Gaming Control Board; for Indian casinos, this means going before the tribal gaming agency, a part of the same tribe that owns the casino.

For 300 years, the law has been clear: Players may not sue casinos for non-payment in a court of law. But, this did not really matter, if the player had truly won the wager. Regulators can order casinos to pay, and can take away their licenses if they refuse. None have.

But here, the casino was suing the players. Regulators have no power to make patrons pay.

The tribe knew that gambling debts are unenforceable, so it argued that these were not gambling debts at all. From the casino’s point of view, this was theft.

Judge Brown said the players’ “conduct might be considered immoral or wrong.” But, they “did not commit any act which can be clearly labeled as theft, such as tampering with the video machine… Instead, defendants played by the rules of the machine, which allowed four plays to the dollar instead of one.”

Every time a big winner has a jackpot snatched away, because the gaming device malfunctioned, we hear the inevitable grumblings, “How come it is only a malfunction when the player wins?”

For all those players who never received the prizes they thought they had won, it is nice to know that sometimes the slot machine malfunctions, and it is the casino that does not get paid.

[Professor Rose can be reached at rose@sprintmail.com]

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