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Iowa’s Coin-A-Matic Off the Hook for “Gratuitous Promise” to Pay $41 million


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4/27/2015
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I grew up in a community where the gambling industry was operated by the Mob. This is the way the gambling business was handled in Rhode Island during the 50’s, 60’s, 70’s and 80’s. In 1975 I moved to Iowa to attend college and immediately liked it for what it wasn’t – a haven for gamblers, thieves and loan sharks. Then in the 80’s the Governor’s Office enlightened us by telling us that horseracing really wasn’t gambling it was a sport and that we would never have a lottery because it was gambling. I heard one of my law partners say this was a distinction without a difference. I agreed. I knew firsthand the truth of that statement because while growing up in Rhode Island there had been a horse track, a dog track, jai alai and later a “legal” lottery. The real money was made in the off-track betting. The off-track was the fringe where gambling rules were a bit hazy, not written down anywhere and where even the Boys playing poker upstairs at Sal's knew you didn't question the "the Man" or his decisions. 

The first rule of gambling is, the odds are stacked in favor of the house.

Growing up in Bristol gambling was all around us. In high school we could get a job “running the numbers” although this had certain occupational risks that ended with the ACI. Perhaps this is one of the reasons why I'm not a gamber. 

On Friday’s at Kelly’s Hamburgers one guy would come in after the banks closed to get his check cashed so he could head off the track. He really liked to gamble, so much so that years later they found parts of him floating under the Mt. Hope Bridge. He must have gotten behind in his loan payments. Perhaps this is another reason why I don't gamble.

After my shift at Sal’s Bakery we’d stop at the diner for breakfast before heading home or off to our second jobs. In the diner it wasn’t unusual to see a guy eating eggs and bacon, with a folded newspaper trying to figure out the odds of the winning the trifecta that afternoon at the Narragansett Race Track. "Hey Freddie, who is going to win in the third?" When someone won big, many had the same tip and they too won a pot of gold. The tip might have been about the horse being juiced. Of course that might be dangerous because the Mob out of Providence owned gambling and if you crossed their path you normally would lose more than just the bet. Back then governments chased mob guys or were on the take to look the other way. In Iowa we think we are different. I am not so sure we are much different.

The second rule of gambling would be this, the odds are in favor of the gambler losing most of the time.

Here in Iowa, following the grain embargo under the Carter Administration we were playing catch up with the rest of the nation. As New England’s manufacturing jobs moved offshore, tax revenues declined. Here in Iowa as grain prices and land values drifted lower and lower elected officials desperate to prop up revenues decided that racing at Prairie Meadows really wasn’t gambling it had to be a sport. And then after issuing bonds and watching the dog track dream become just a dream, the legislature decided that the Meadows would be transformed to a place where the good people of Polk County would warehouse slot machines and poker tables. When the Meskwaki Indians offered Polk County a million dollars a month to not have gambling tables all bets were off and the race was on. We were all in. The race ended when within a matter of months the $62 million in racetrack bonds were retired. At that point the dream did exist and lotteries and casino’s then became like horseracing; a pretend sport of some sort.

Rule number three would be this; when you win big, review rule numbers one and two. Because it doesn't matter that YOU play by the rules. We make the rules up and even if you think you won, you don't win until the "The Man" says you won. 

Today state legislatures have replaced the Mob and they now make the rules governing winners and losers. I haven’t heard of anyone from the Justice Department breaking any legs, but one thing is still true and it is the Golden Rule. The Golden Rule is a rule of life. It holds that he who holds the gold makes the rules. And when it comes to gamblers and the government-run gambling halls, the Iowa legislature and the Courts hold the gold. Like the Mob, when you are not connected, promises mean little. 

The Promise: Come in and gamble, you could win big! You could be living the dream!

So when an Illinois grandmother playing the penny slots at the Casino just outside of Waterloo was signaled by her slot machine that she’d won $41 million the Golden-Rule Rulebook had to be opened. Rule "Whatever" said otherwise. Or as they used to say on the Charlie Tuna commercial, "Sorry Charlie". She sued the casino and the Courts ruled that the promise of $41 million was only a ‘gratuitous promise’ that the casino wasn’t obligated to pay. Apparently it was a software error of some sort. Which to the gandmother simply means, you don't win unless we say you won. Sort of like our good friend Raymond might say back in Providence.

This case requires us to apply ordinary contract principles to an extraordinary event. While playing a penny slot machine, a casino patron obtained a win of 185 credits, or $1.85, based on how the symbols had lined up. However, at the same time a message appeared on the screen stating, “Bonus Award - $41797550.16.” The casino refused to pay the alleged bonus, claiming it was an error and not part of the game. The patron brought suit against the casino, asserting breach of contract, estoppel, and consumer fraud. The district court granted summary judgment to the casino. The patron appealed.

Read the decision Pauline McKee vs Isle Of Capri Casinos, Inc and IOC Black Hawk County, Inc., Iowa Supreme Court, April 24, 2015. No. 14-0802.

Sorry Charlie, and you to grandma, because some things never change.


Thoroughbreds In This Horse Race:

Stephen J. Powell of Swisher & Cohrt, P.L.C., Waterloo, and Steven R. Enochian of Low McKinley Baleria & Salenko, Walnut Creek, California, for appellant, Pauline McKee.

Stacey L. Cormican of Nyemaster Goode, Cedar Rapids, and Mark A. Schultheis of Nyemaster Goode, P.C., Des Moines, for appellees, ISLE OF CAPRI CASINOS, INC. and IOC BLACK HAWK COUNTY, INC.

Odds of Winning Against the Casino: Who knows, that is anybody's guess, since all bets are now off when all we have to say is it is a software error.

And the winner is? Stacey Cormican by two lengths. Powell never even got out of the gate. What can I say, eat more oats Steve.



Category: Lottery, Gaming and Games of Chance


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