Contracts and Poker: Advertising Poker Tournaments

A poker player in Vermont saw an ad for a series of 12 tournaments to be held in a New Jersey casino that stated “$150,000 in prize money.” The player booked a hotel and traveled to New Jersey, planning to play in the tournaments.

After the first tournament was played, the casino canceled the rest of the series due to lack of interest. The player sued the casino, claiming that the false and deceptive advertising induced him to spend money on travel that was wasted. Will the player recover?

That question recently came to the intermediate appellate court in New Jersey after the lower court held against the player. But the court did not answer the question. On TV lawyer shows, it seems like courts are quick to answer legal questions without much fuss. But when you are unfortunate enough to be involved in litigation, you find that real cases often get mired in questions of procedure that prevent or delay the substantive question from getting answered.

That is what happened in this case. To understand why, it is important to realize that it is not easy to sue a casino. The gaming industry is one of the most heavily regulated businesses in the country. The regulations are enforced by a regulatory body – in New Jersey, by the Division of Gaming Enforcement. If you claim the casino harmed you by violating one of these regulations, that does not necessarily give you a claim against the casino, for only the regulatory agency and not the public can enforce the rules.

In this case, however, the player did not claim that the casino violated the gaming regulations; rather, he claimed that it violated the state’s Consumer Fraud Act. Every state has such a consumer protection act, which essentially forbids businesses from engaging in unfair or deceptive acts or practices in consumer transactions.

Since both the Consumer Fraud Act and the gaming regulations prohibited false advertising, the procedural issue in this case was which rules governed. That is, when the New Jersey legislature established its regulatory scheme, did it intend the Division of Gaming Enforcement to be the exclusive source of regulation of the gambling industry, in which case claims could not be brought under other laws, or was its jurisdiction non-exclusive, in which case claims could be brought under other laws, such as the Consumer Fraud Act or the common law?

The trial court ruled that the Division had exclusive authority, but the appellate court ended up splitting the baby. It held that while the Division had the exclusive authority to regulate what the statute refers to as “gaming-related advertising,” the particular issues raised by this advertisement were not gaming-related. That is, it was not “advertising that related to the technical aspects of gaming in which the Division’s expertise was essential.” So while the plaintiff won this round, the case now has to go back to the trial court for a decision on the substantive issue – whether the ad was deceptive.

What is the likely outcome? It is a close call. The ad did not state that the $150,000 in prize money was a guarantee, but may have implied as much. Most advertisers have the sense to make clear that such amounts are estimates, perhaps based on past events; in the absence of such qualifying language, it could be held to be a misleading statement.

The casino’s canceling of the tournaments could not be excused under the theory of force majeure discussed in a previous column, for lack of attendance is not an unanticipated event like a flood or a governmental order to close because of a virus.
However, the casino claimed that the player should not have been misled because the ad also stated, “Management reserves all rights to change or cancel at any time.” The player claimed that he never saw that language, which was in fine print at the bottom of the ad. Whether he saw it is not the question, however. The question is whether a reasonable person would have seen it, which would probably depend on just how fine the print was.

If the player did succeed in proving this was false advertising, what would his damages be? The Consumer Fraud Act requires a refund of money, but the player is claiming money spent on travel, food, and lodging rather than money paid to the casino. However, in New Jersey, the Consumer Fraud Act prohibits deceptive advertising even if no one is damaged by it. In many jurisdictions, if you can prove a violation of a consumer protection act but can’t prove what your damages were, the act provides for some minimum amount of damages; in New Jersey, that amount is $500. This rewards the consumer for exposing the false advertising even if they can’t prove they were damaged by it. In addition, consumer protection acts provide for attorney’s fees for an attorney who successfully brings a case; this rewards attorneys for acting in the public interest. But beware – under some of these acts, if the consumer does not prevail, the consumer may end up paying the attorney’s fees of the defendant.

I’ll keep an eye on this case, and let you know if there are further developments. Meanwhile, casinos, be careful about what you say in your ads or it may come back to bite you! ♠

Scott J. Burnham is Professor Emeritus at Gonzaga University School of Law in Spokane, Washington. He can be reached at [email protected].