Compulsive Gambler Just Can’t Win

written by I. Nelson Rose
#155© Copyright 2009, all rights reserved worldwide. Gambling and the Law® is a registered trademark of Professor I Nelson Rose,

Renee Marie Bumb, a New Jersey lawyer, became a United States District Judge on June 6, 2006. A little more than two years later, Judge Bumb issued the most complete and comprehensive judgment ever about whether a compulsive gambler can sue an Atlantic City casino.
The short version of her 10-page-long legal analysis: “No.”
Judge Bumb had the unintented assistance of another lawyer, now disbarred: the compulsive gambler who had brought the suit, Arelia Margarita Taveras. Taveras, representing herself, filed a federal lawsuit against most of the casinos in New Jersey, as well as many of their owners and employees. She alleged that “the Defendants facilitated Plaintiff’s gambling addiction and induced her to gamble away money belonging to her and others . . .” She pleaded 12 separate causes of action, including negligence, negligent and intentional infliction of emotional distress, breach of contract, unjust enrichment, and violations of the federal racketeering statues and the Bank Secrecy Act.
Taveras should not be criticized for her kitchen-sink Complaint. Trying to figure out every legal right that the defendants might have violated is the plaintiff lawyer’s job. A doctor conducts tests and asks questions to eliminate all other possibilities to reach a single diagnosis. A lawyer’s role is to do the opposite, to uncover as many legal claims and defenses as possible that she can raise in good faith. In fact, a lawyer who fails to include a cause of action in a Complaint might very well find herself barred from bringing it up later.
Admittedly, some of Taveras’s claims were a stretch. For example, she alleged that the casinos owe her money because they failed to report some of her high-stakes gambling to the Treasury Department. Specifically, she alleged that they did not report her cash transactions of more than $10,000.
Treasury has expanded the Bank Secrecy Act to include casinos as “financial institutions.” Casinos have to file forms CTR-C, “Currency Transaction Report – Casino,” for virtually every cash transaction over $10,000 except slot machine winnings. It is difficult to believe in these post-9/11 days that any casino would not file a required CTR-C, expecially when the federal regulators have made it clear they will fine the casino $10,000 for every report not filed.
But assuming a casino did not file its required reports, there is the fundamental question of what effect that had on Taveras. Judge Bumb rightly rejected Taveras’s allegation “that Defendants’ failure to report her high-stakes gambling activity precluded state and federal authorities from interceding to curb her behavior.”
Rather than try to figure out exactly how reporting currency transactions would act as a Bat-Signal to alert unknown government rescuers to leap into action, Judge Bumb simply looked at the law and precedents and concluded that Taveras “has no private right of action under these statutes.” In other words, when Congress created the Bank Secrecy Act, it wanted reports filed with the federal government, not to create a new type of private lawsuit. Even if a casino failed to file a form with the Treasury Department, that does not give a player the right to sue.
It is this raising of every possible claim where Taveras made her major contribution to New Jersey law. The gaming defendants filed motions to dismiss for failure to state a claim. This means the judge is required to examine every single claim, in the light most favorable to the plaintiff, to see if the law would allow the suit to go forward.
Judge Bumb had the additional problem of trying to figure out what the law is. She is a federal judge, so she is free to interpret federal statutes, like the Bank Secrecy Act, bound only by the decisions of higher federal courts. But many of Taveras’s causes of action were based on New Jersey state law, including all of her claims dealing with possible torts and breaches of contract. Under the American legal system, many state claims can be brought in federal court, but a federal judge can never make a final determination of state law. Judge Bumb’s role was to decide how the New Jersey Supreme Court would answer legal questions, often questions that the state court had never considered.
Judge Bumb’s analysis was straight-forward. Looking first at the claim of negligence, she started with the rule that, for this cause of action to survive, “the Court must find as a matter of law that Defendants owed Plaintiff a duty.” Taveras argued that casinos have a duty to keep their premises safe, and “that her continued gambling was an unreasonable danger foreseeable to Defendants.”
There are lots of problems with this claim. But Judge Bumb focused on New Jersey’s “extraordinary, pervasive and intensive regulations over virtually every facet of casino gambling.” Her conclusion: If the state had wanted to impose a duty on casinos to rescue compulsive gamblers from themselves, it would have said so.
Judge Bumb similarly rejected Taveras’s request to create a duty somewhat like that imposed on bars to not serve drinks to obviously drunk patrons. “Plaintiff’s theory would, in effect, have no limit . . . [it] would impose a duty on shopping malls and credit-card companies to identify and exclude compulsive shoppers.”
One of the more interesting parts of the Opinion was Taveras’s claim that gambling is an “abnormally dangerous activity.” Looking at cases such as dumping toxic waste into environmentally sensitive areas, Judge Bumb concluded: “Needless to say, gambling can indeed be a safe activity, gambling is common, and state-regulated casinos are not inappropriate locations for gambling.”
The Opinion contains other statements that can prove useful for the casino industry both legally and politically. In rejecting Taveras’s claims for emotional distress, Judge Bumb held, “In allowing, even encouraging, Plaintiff to continue gambling, Defendants acted well within the bounds of the community norms reflected in state law.”
And in dismissing the counts based on fraud, for supposedly misleading Taveras “into thinking that gambling would result in high returns and rewards,” Judge Bumb ruled, “Plaintiff fails to identify with particularity (by quoting, for example) even a single falsehood or misleading statement . . .”
There is no doubt that compulsive gambling can destroy lives. But the legal problem for compulsive gamblers, at least those in the United States, is that the decision by a state to legalize casinos means the state has consciously weighed the pros and cons.
So long as casinos, and their executives, obey the rules, they should not be legally responsible for the harm compulsive gamblers do to themselves.
© Copyright 2009. Professor I Nelson Rose is recognized as one of the world’s leading experts on gambling law. He is a consultant and expert witness for federal, state and tribal governments and industry. His latest books, Internet Gaming Law (1st & 2nd editions), Blackjack and the Law and Gaming Law: Cases and Materials, are available through his website,

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