• Federal Lawsuit Targets Electronic Gambling Devices
  • May 26, 2004
  • Law Firm: Reed Smith LLP - Pittsburgh Office
  • For 10 years, a group of gamblers has pursued a class action lawsuit alleging that the gambling industry has not been candid in its disclosure about the chances of winning while playing slot machines. The suit, pending in the United States Court of Appeals for the Ninth Circuit, claims that casinos, slots manufacturers and cruise ship operators, the major players in the gaming industry, have deceived gamblers by clever use of computer technology, marketing and fraud. Noted attorney David Boies represents the plaintiffs.

    The lawsuit claims that the defendants are engaged in a course of fraudulent and misleading acts and omissions to induce people to play their video poker and electronic slot machines based on a false belief concerning how those machines actually operate. Plaintiffs argue that "astronomical odds" are disguised and that games are designed to make gamblers believe that a win is imminent. Several counts of the complaint concern advertising and marketing practices.

    But others say the gaming industry does not need the oversight or burden of a lawsuit in order to act responsibly. Scott Harshbarger, former president of Common Cause, a citizens lobbying group, and attorney general in Massachusetts, says that the gambling industry is "open," and "willing to engage in debate." Further, he notes that "there has been no serious organized public opposition," to slot machines.

    The gaming industry has a "code of conduct" that emphasizes training employees, voluntary exclusion of problem gamblers and advertising "responsibly." The group sponsors an annual conference that brings together both gambling executives and health researchers and emphasizes research over government regulation. Significantly, American Gaming Association points out that over the past 20 years, while there has been an increase in gaming, there has not been a concomitant increase in the number of pathological gamblers.

    Lawyers for International Game Technology and casino companies defend on the grounds that the industry is already highly regulated and that state regulators are responsible for ensuring fairness.

    Why This Matters: As with the food and tobacco industries, the gaming industry has come under attack by plaintiff's lawyers seeking to impose regulations that don't appear to be the concern of legislators or other enforcement authorities. Such suits, however, are serious and there is no guarantee of dismissal, adding more headaches to an already heavily regulated industry.