Opinion
DOCKET NO. A-4409-13T3 DOCKET NO. A-0231-14T3
08-01-2016
IN THE MATTER OF THE BORGATA WINTER POKER OPEN, A GAMING TOURNAMENT CONDUCTED BY MARINA DISTRICT DEVELOPMENT COMPANY, LLC, d/b/a Borgata Casino Hotel and Spa between January 14, 2014 and January 18, 2014. JACOB MUSTEREL, FARID VAGHEFI and STEVEN CELESTE, individually and on behalf of all others similarly situated, Plaintiffs-Appellants, v. MARINA DISTRICT FINANCE COMPANY, INC. and MARINA DISTRICT DEVELOPMENT COMPANY, LLC, d/b/a BORGATA HOTEL CASINO AND SPA, MARINA DISTRICT DEVELOPMENT HOLDING COMPANY, LLC, BOYD ATLANTIC CITY, INC. and BOYD GAMING CORPORATION, Defendants-Respondents.
Randall J. Peach argued the cause for appellants Jacob Musterel, Farid Vaghefi and Steven Celeste in A-4409-13 and A-0231-14 (Bruce C. LiCausi, attorney; Mr. LiCausi and Mr. Peach, on the brief). Gerard W. Quinn argued the cause for respondent Marina District Development Company in A-4409-13 and A-0231-14 and Marina District Finance Company, Inc., Marina District Development Holding Company, Boyd Atlantic City, Inc. and Boyd Gaming Corporation in A-0231-14 (Cooper Levenson, PA, attorneys; Mr. Quinn, on the brief). David S. Frankel, Deputy Attorney General, argued the cause for respondent New Jersey Division of Gaming Enforcement in A-4409-13 (Robert Lougy, Acting Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Mr. Frankel, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Sabatino, Accurso and O'Connor. On appeal from the New Jersey Division of Gaming Enforcement and from Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-701-04. Randall J. Peach argued the cause for appellants Jacob Musterel, Farid Vaghefi and Steven Celeste in A-4409-13 and A-0231-14 (Bruce C. LiCausi, attorney; Mr. LiCausi and Mr. Peach, on the brief). Gerard W. Quinn argued the cause for respondent Marina District Development Company in A-4409-13 and A-0231-14 and Marina District Finance Company, Inc., Marina District Development Holding Company, Boyd Atlantic City, Inc. and Boyd Gaming Corporation in A-0231-14 (Cooper Levenson, PA, attorneys; Mr. Quinn, on the brief). David S. Frankel, Deputy Attorney General, argued the cause for respondent New Jersey Division of Gaming Enforcement in A-4409-13 (Robert Lougy, Acting Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Mr. Frankel, on the brief). PER CURIAM
These appeals, which were argued back-to-back and which we now consolidate for purposes of the opinion, arise out of a poker tournament hosted by Marina District Development Company, LLC, d/b/a Borgata Hotel Casino and Spa, which the Division of Gaming Enforcement cancelled when Borgata discovered a registered player had introduced counterfeit chips into tournament play.
In the administrative matter, appellants Jacob Musterel, Steven Celeste and Farid Vaghefi, who are also plaintiffs in the Law Division case, challenge the April 14, 2014 final order of the Director of the Division of Gaming Enforcement directing the distribution of retained entry fees, unpaid prizes and the remaining unallocated tournament funds among the 2,827 persons participating in the tournament. They contend the Director's distribution scheme was arbitrary and capricious and that their due process rights were violated by the agency's failure to hold a hearing.
In the Law Division matter, plaintiffs appeal from the entry of summary judgment dismissing their class action complaint against Borgata alleging negligence, consumer fraud, breach of contract, promissory estoppel, unjust enrichment and breach of the implied covenant of good faith and fair dealing for negligently permitting a player to introduce counterfeit chips into the tournament, tainting the games and depriving plaintiffs of a fair opportunity to win the tournament prize money as promised.
No motion for class certification was filed before the trial court dismissed the lawsuit on jurisdictional grounds. Accordingly, issues arising under Rule 4:32 are not before us.
Because we conclude the Director's distribution scheme was reasonable, not arbitrary or capricious, and amply supported by the record, and that plaintiffs cannot demonstrate any entitlement to a hearing, we affirm the Director's order of distribution of tournament proceeds. We further find the distribution of tournament proceeds in this instance provided plaintiffs an adequate administrative remedy to vindicate their damage claims against Borgata. Because plaintiffs received restitution in the administrative proceeding and any further award to compensate them for their alleged losses would be wholly speculative, and because jury determinations of culpability on other theories of liability would interfere with the agency's regulatory authority over gaming, we affirm the entry of summary judgment dismissing their Law Division action.
The Poker Tournament
Play began in Borgata's "Winter Poker Open," a three-week poker tournament consisting of multiple events, on January 14, 2014. Each player had paid $560 for a seat at one of the 170 tables positioned in three rooms at the Borgata. Sixty dollars of the entry fee went to Borgata for its costs to run the tournament; the other $500 went to the prize pool. Any player eliminated ("busting out") could pay another $560 fee and re-enter the tournament.
In the afternoon on the second day of play on January 16, 2014, State Police contacted the tournament director to advise that Harrah's had discovered 500-1000 Borgata chips in a clogged sewer line. Borgata security personnel took possession of what appeared to be Borgata tournament chips and, within a few hours, confirmed their initial suspicions that the chips were counterfeits. In an effort to determine whether any counterfeit chips had made their way into the tournament, Borgata personnel began looking at the chips on the tournament tables where play in segment 2 was taking place. At 2:30 a.m. on January 17, when play in segment 2 ended, casino staff gathered all the chips in play, comparing them with authentic chips to determine if any counterfeits had made their way into the tournament.
The event began on January 14 and play was suspended on the morning of January 17 before any hands were dealt. While the tournament was in session, four segments (Day 1A, Day 1B, Day 1C, and Day 2) were completed. Day 2 began on January 16, 2014 at around noon. Day 2 play ended at or around 2:30 a.m. on January 17, 2014.
By 8:45 a.m. the following morning, the tournament director had provided Borgata security officials with four tournament chips he believed to be counterfeits, and Borgata had advised the Division of Gaming Enforcement of the problem. At a 10:00 a.m. meeting attended by Borgata's president, vice president and general counsel, vice president of finance, the casino controller, senior security staff and the tournament director, a decision was made to suspend play for the remaining twenty-seven players still in the tournament and conduct an internal chip audit used in the tournament.
That same day, a Division detective obtained Harrah's hotel registry to determine the guests occupying the rooms feeding the clogged sewer line. Cross-referencing the registry with the list of tournament entrants yielded five names, including that of Christian Lusardi. As later detailed in a lengthy report by the State investigator conducting an investigation of Borgata's internal controls for the tournament, Lusardi was well known to Borgata officials as a "high action player," having gambled at the casino since at least 2008.
Borgata officials "tagged" Lusardi in 2010 for monitoring after receiving an anonymous letter mentioning his name in connection with possible cheating activity in three card games and his comments to a Borgata floor manager about cheating occurring at another casino. Although Borgata's surveillance logs on Lusardi contain numerous entries, including a bizarre incident in which he is observed on tape placing a backpack, later discovered to contain a "fake" gun and a "home-made bomb," in a trash can, most note him simply being observed after placing a large bet. Only one entry, from August 2012, which notes he was observed on closed-circuit television monitors "possibly being a TC [three card] cheat" contains any report of observed cheating activity. Lusardi was admittedly not on the exclusion list. See N.J.S.A. 5:12-71 (conferring authority on the Division to maintain list of individuals who must be excluded from the casinos).
Given that Borgata turned over the backpack and its contents to the Atlantic City Police Department and notified the FBI, neither of which took any action, we assume the "bomb" was also not real.
The chip audit conducted on January 17 found 160 counterfeit $5000 chips among the tournament chips. Upon being advised the tournament had been compromised, the Director issued an order on January 18, 2014 pursuant to N.J.A.C. 13:69F-8.6(b), cancelling the first event of the multi-event tournament. The Director ordered Borgata to hold all unpaid prize money in escrow pending further order, and to maintain a record of all prize money paid to participants before the event's suspension.
Gaming's Investigation and the Director's Final Order
Later that same afternoon, a Borgata employee recovered twenty-two $5000 chips from a clogged toilet in a men's room near the poker tournament rooms. A review of surveillance tape revealed Lusardi entered the men's room at the conclusion of play on January 15. He was, at that point, the tournament chip leader with $519,000 in chips. Lusardi was arrested and charged in connection with the counterfeit tournament chips.
Lusardi apparently pled guilty to criminal mischief and trademark counterfeiting and was sentenced to five years in State prison. He is not a party to either of these appeals.
Following cancellation of the first event of the tournament, the Division undertook a two-month investigation into the counterfeit chips and Borgata's compliance with internal controls and gaming regulations in its conduct of the tournament. The State investigator conducting the investigation was able to track Lusardi's movements throughout the tournament. Surveillance tape from closed-circuit television monitors allowed her to analyze his hand movements to surmise when he likely put the counterfeit chips into play, although the tapes apparently do not show any more than some suspicious movements. The report details the procedures Borgata adopted and filed with the Division to oversee the tournament. The investigation report does not fault the casino for not detecting the cheating or for non-compliance with its internal procedures or any Division regulation.
In a supplemental report, the investigator reviewed the analysis the Division commissioned from Borgata, which listed every player in the tournament, when they played, where they played and where they could have come into contact with Lusardi or the counterfeit chips. As twenty-seven players were still in the tournament at the suspension of play, the tournament ranking included in the analysis listed the 28th through 450th place finishers and the prize money each was awarded before being eliminated.
Having been furnished with the investigative report and tournament analysis of player activity, the Director issued his final order. After noting the Division's determination "that Borgata was in compliance with the [Casino Control] Act and the regulations promulgated thereunder, specifically regulations related to the conduct of tournaments, and its poker tournament internal controls," the Director ordered Borgata to pay a total of $50,893 to entrants winning prizes not yet paid at the suspension of play; and to distribute the remaining unpaid prize funds ($1,433,145) and its portion of all entry fees ($288,660), a sum totaling $1,721,805, as follows: $560 to each of 2,143 entrants who may have been affected by contact with counterfeit chips and were eliminated from the tournament without qualifying for a prize; and $19,323 each to the remaining entrants.
In an amplification of his reasoning, the Director explained he "focused on achieving an equitable and fair distribution in light of the [Division's] role in protecting the public by assuring the integrity of casino gaming." He explained the fund distribution as follows:
2216 entrants were not impacted by the introduction of the counterfeit chips. These entrants simply participated in the Event, played without any contact with the Suspect, and "busted out" of their own accord. Accordingly, I determined that they need not participate in any distribution of the remaining funds.
423 entrants had qualified for a prize prior to the cancelation of the event. Each of these entrants received a minimum of $1,082 up to $6,338, amounts which exceeded their fee to participate. Accordingly, I determined that it would be equitable to allow them to retain their prizes but that they should not receive further benefits.
2143 entrants may have been impacted by the Suspect's conduct but "busted out" without qualifying for a prize. Fairness compels my determination that these entrants be made whole by returning to them their entry fee of $560 each. The payment required by this determination will reduce the remaining funds by $1,200,080 leaving a balance of $521,725.
27 entrants remained active at the time the Event was canceled. Each of these entrants had a different chip total. While an entrant's chip total can be an indicator of the ultimate result had the event proceeded to a conclusion, there is an element of chance involved in the ultimate outcome. Due to the cancelation of the Event, I can do no more than speculate about what the outcome would have been and it is impossible to ascertain who ultimately would have qualified for which prize amounts. Moreover, the relative standing of the final 27 entrants was impacted by the Suspect's
introduction of counterfeit chips. Accordingly, I determined that the most equitable result was to allocate the remaining funds in equal amounts to each remaining active entrant. The calculation results in a determination that each of the 27 entrants should be paid $19,323, an amount which is greater than that which would have been paid to the 10th place prize winner.
Lusardi's and Plaintiffs' Tournament Play and Prize Share
Lusardi began playing in the tournament around 11:00 a.m. on January 14, Day 1A, in the Poker Room. He played there until 4:30 p.m. Lusardi left the Poker Room and began playing in the Event Center at roughly 4:45 p.m. He busted out almost two hours later. On January 15, Day 1B, he paid another $560 entry fee and played in the Event Center from 10:54 a.m. to 7:26 p.m. At the end of Day 1B, Lusardi was the tournament's chip leader. Lusardi did not play on Day 1C. On Day 2 of the tournament, January 16, play began at noon, and ended at approximately 2:30 a.m. on January 17. Lusardi started playing around noon in the Poker Room and never left there. He busted out between midnight and 1:00 a.m. At the end of play on Day 2, there were twenty-seven players remaining.
Plaintiff Musterel entered the tournament twice, busting out each time. He played on Day 1A in the Poker Room. Because Lusardi played there as well, Musterel was refunded $560 for his Day 1A entry fee under the Director's final order. Musterel also played on Day 1C, when Lusardi did not play. He was accordingly not reimbursed for his $560 entry fee on that day.
Plaintiff Celeste also entered the tournament twice. He played on Day 1A in the Poker Room, when he busted out. Because he may have been affected by the counterfeit chips, his entry fee was refunded. After re-entering the tournament, Celeste remained as one of the final twenty-seven players when play was suspended and thus was awarded $19,323 for his place among the finalists.
Plaintiff Vaghefi entered the tournament four times. He busted out twice in his Day 1A entries. He was refunded his entry fee for play in the Poker Room where Lusardi played but not for the second entry when he played elsewhere. Because he played in the Event Center when Lusardi did during Day 1B, Vaghefi's third entry fee was also refunded. On his last entry, he placed 240th and was awarded $1,489 which, per the Director's order, he was entitled to keep.
The Law Division Action
In their complaint alleging negligence, violations of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -120, promissory estoppel, breach of contract, breach of the implied duty of good faith and fair dealing and unjust enrichment, plaintiffs alleged Borgata
failed to properly supervise the event (or their staff); failed to implement adequate security measures; failed to detect a participant's introduction of a significant amount of counterfeit chips into the game . . . did not halt the event as soon as the event was, or should have been, recognized as compromised; failed during the tournament to count the chips on an ongoing basis and failed to adequately secure the legitimate chips during breaks in play.According to plaintiffs, Borgata knew its security measures were inadequate to detect a player attempting to compromise the event. They claim that although defendants "held out the subject poker tournament to be a fair, honest and uncompromised gaming event that gave participants a fair opportunity to win that prize money," in reality it was "rigged."
The judge hearing Borgata's summary judgment motion asked plaintiffs' counsel at oral argument how the case was different from one already dismissed by another judge in the vicinage brought by others of the twenty-seven players remaining in the tournament when play was suspended. Although maintaining the other judge erred in dismissing that case, counsel was forced to concede the legal issues were the same.
The motion judge adopted the reasoning of the first judge to consider claims arising out of the compromised poker tournament, that is, that jurisdiction over the controversy is squarely in the Division because the specific conduct alleged to have occurred is within the Casino Control Act's prohibitions against the use of bogus chips. Adopting as persuasive the first judge's finding that the Division had both the expertise and the specifically delegated authority to sanction licensee violations of the Casino Control Act or its implementing regulations and to afford remedies to plaintiffs, and had, indeed, already done so, the judge granted Borgata's motion for summary judgment.
Discussion
We first address plaintiffs' appeal of the Director's final order governing the distribution of the tournament proceeds. Our role in reviewing the decision of an administrative agency is limited. In re Carter, 191 N.J. 474, 482 (2007). We accord a strong presumption of reasonableness to an agency's exercise of its statutorily delegated responsibility, City of Newark v. Nat. Res. Council in Dep't of Envtl. Prot., 82 N.J. 530, 539, cert. denied, 449 U.S. 983, 101 S. Ct. 400, 66 L. Ed. 2d 245 (1980), and defer to its fact finding. Campbell v. N.J. Racing Comm'n, 169 N.J. 579, 587 (2001). We will not upset the determination of an administrative agency absent a showing that it was arbitrary, capricious, or unreasonable; that it lacked fair support in the evidence; or that it violated legislative policies. In re Stallworth, 208 N.J. 182, 194 (2011); Campbell v. Dep't of Civil Serv., 39 N.J. 556, 562 (1963).
Applying those standards here, we find no basis to reverse the Director's order. The issue confronting the Director was how to fairly disburse the proceeds of a poker tournament hopelessly compromised by the illegal acts of one of the participants. Restitution of money retained by a casino licensee is among the specified powers delegated to the Division by the Legislature. See N.J.S.A. 5:12-129a.
Instead of dividing up the remaining $1,433,145 in unallocated prize money among the twenty-seven players remaining when play was suspended, resulting in a $53,079.44 award to each, as would have benefitted Celeste, or refunding the entry fees of all entrants, even those not possibly affected by the illegal play, as would have benefitted Musterel and Vaghefi, the Director reasonably chose to ensure that every entrant possibly affected by Lusardi's illegal conduct got their entry fee back, that prize winners kept their prizes and that the remaining twenty-seven players shared equally in the remaining funds without unfairly penalizing any.
That decision benefitted all three plaintiffs. But to refund the entry fees of players not possibly affected by any illegal play, as Musterel urges in advocating for the return of his second entry fee, would necessarily reduce the amount available for distribution to Celeste and would require clawing back Vaghefi's prize for his 240th place finish.
Plaintiffs' proposed solution to those problems is for the Division to fine Borgata in order to pay the participants more. They cite no authority, however, that would have allowed the Director to fine a casino licensee and provide the proceeds to gamblers. Moreover, the Division's investigation did not reveal that Borgata violated any regulation or internal control in running the tournament for which imposition of a fine would be authorized and appropriate.
The Division in its brief makes the awkward argument that Borgata's regulatory compliance is both supported by the record and was not a material consideration of the agency when it selected a distribution formula. We understand the argument as the Division taking no position on plaintiffs' Law Division claims against Borgata, a position confirmed by the Division's counsel at oral argument on appeal. The Division's unwillingness to take a position on the Law Division matter, in which it was not a party, does not preclude us from concluding that allowing that case to proceed would undermine the agency's ability to regulate casino gambling in this State.
The Director reasonably chose to divide the entrants into four classes of similarly-situated players: 1) entrants who busted out not playing near Lusardi and not exposed to counterfeit chips; 2) entrants who busted out who might have been exposed to counterfeit chips in play; 3) entrants who won a prize of between $1,082 and $6,338 for placing between 450th and 28th in the tournament, all of whom may have been exposed to counterfeit chips; and 4) the last twenty-seven entrants still in the tournament when play was suspended who would certainly have been exposed to counterfeit chips.
The Director's distribution formula fairly ensured, with the addition of the $288,660 in administrative fees it required Borgata to contribute, that every entrant who may have been victimized received, at a minimum, the return of his or her entry fee; prize winners got to keep their prizes; and the remaining twenty-seven entrants received $19,323 in prize money. As the formula treats all four classes fairly and all players within each class equally, and is based on the facts in the record, deference to the Director's expertise in fashioning an equitable remedy is appropriate.
Although plaintiffs claim they were denied a hearing, plaintiffs' counsel confirmed at oral argument they never sought one, as they intended to press their claims against Borgata in the Law Division. Moreover, they have not identified any factual dispute which would have required a trial-type adjudication. See In re Consider Distribution of Casino Simulcasting Special Fund (Accumulated in 2005), 398 N.J. Super. 7, 20 (App. Div. 2008). Plaintiffs have asserted no statutory right to a hearing, and they have no constitutionally protected property interest in the opportunity to gamble, see Doug Grant v. Greate Bay Casino Corp., 232 F.3d 173, 189-90 (3d Cir. 2000), so due process would not require one.
Although nothing prevented the agency from holding a "fairness hearing" to allow tournament players to comment on the Division's proposed distribution formula, see Builders League of South Jersey, Inc. v. Gloucester Cty. Utils. Auth., 386 N.J. Super. 462, 470-72 (App. Div. 2006) (endorsing "fairness hearings" in various litigation contexts as a means to evaluate the reasonableness of settlements affecting numerous individuals), certif. denied, 189 N.J. 428 (2007), the wisdom and practicality of employing such a device in such circumstances we leave to the Division. At oral argument on appeal, plaintiffs' counsel advised plaintiffs would have no objection to the Director's order so long as it was construed to be without prejudice to their right to pursue their claims against Borgata in the Law Division.
Because the Director's distribution formula for the tournament funds is supported by substantial evidence in the record, consistent with legislative policy, and is not arbitrary, capricious, or unreasonable, we affirm the April 14, 2014 final order.
We turn now to consider plaintiffs' appeal from the entry of summary judgment dismissing their Law Division complaint. We review summary judgment using the same standard that governs the trial court. Murray v. Plainfield Rescue Squad, 210 N.J. 581, 584 (2012). Our task here is thus to determine whether the motion judge was correct that plaintiffs could not maintain a private cause of action against the Borgata on their claims of negligence, consumer fraud, breach of contract, promissory estoppel, unjust enrichment and breach of the implied covenant of good faith and fair dealing.
Plaintiff argues the judge misstated and misapplied the summary judgment standard and erred in construing the case law regarding the jurisdiction of the Division. Because we apply the same standard as the trial judge and review questions of law de novo without deference to interpretive conclusions we believe mistaken, Nicholas v. Mynster, 213 N.J. 463, 478 (2013), Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995), we do not address those arguments. Instead, we limit our discussion to plaintiffs' argument that they are not limited to an administrative remedy in the circumstances of this case.
We note, however, that plaintiffs' argument that the judge violated Rule 1:36-3 in relying on the first judge's reasoning in dismissing an almost identical complaint is misplaced. The transcript makes patent the judge conducted an independent review of the facts and the law in correctly entering summary judgment dismissing plaintiffs' complaint. The judge proceeded sensibly to review the ruling in the first suit, in the course of independently deciding this matter. Doing so did not violate the letter or spirit of Rule 1:36-3.
The law is well established that the Division of Gaming Enforcement has primary jurisdiction over interpretation of the Casino Control Act, its implementing regulations and a casino licensee's compliance with internal controls. See N.J.S.A. 5:12-133b (providing the Division with "exclusive jurisdiction over all matters delegated to it or within the scope of its powers under the provisions of this Act"). Nevertheless, the Supreme Court has held "the Legislature did not intend to prevent [casino] patrons from seeking vindication of common-law claims in the courts." Campione v. Adamar, Inc., 155 N.J. 245, 260 (1998).
"[C]ourts are not ousted of jurisdiction over common law damage claims against casinos merely because the claims arise from gambling transactions," Smerling v. Harrah's Entm't, Inc., 389 N.J. Super. 181, 189 (App. Div. 2006). The test for preemption is the one applied by the Supreme Court in Lemelledo v. Beneficial Management Corp. of America, 150 N.J. 255, 270 (1997):
In order to overcome the presumption that the CFA applies to a covered activity, a court must be satisfied . . . that a direct and unavoidable conflict exists between application of the CFA and application of the other regulatory scheme or schemes. It must be convinced that the other source or sources of regulation deal specifically, concretely, and pervasively with the particular activity, implying a legislative intent not to subject parties to multiple regulations that, as applied, will work at cross-purposes. We stress that the conflict must be patent and sharp, and must not simply constitute a mere possibility of incompatibility.
Applying the Lemelledo standard, courts have found the casino regulators, the Casino Control Commission and the Division of Gaming Enforcement, to have "exclusive control of the regulation of the rules of casino games and of the content of gaming-related advertising." Smerling, supra, 389 N.J. Super. at 190. Applying the standard here, we are convinced plaintiffs' claims under the CFA and for negligence and promissory estoppel are preempted by the Casino Control Act, because it vests in the Division exclusive control over the conduct of poker games played in the casinos and the running of gambling tournaments.
The Act was amended in 2011 to shift "responsibilities and functions from the Casino Control Commission [CCC] to the Division of Gaming Enforcement." L. 2011, c. 19, § 134.
Plaintiffs' negligence, consumer fraud and promissory estoppel claims are all grounded in Borgata's failure to insure a fair game untainted by counterfeit chips. Specifically, plaintiffs contend Borgata
failed to properly supervise the event (or their staff); failed to implement adequate security measures; failed to detect a participant's introduction of a significant amount of counterfeit chips into the game . . . did not halt the event as soon as the event was, or should have been, recognized as compromised; failed during the tournament to count the chips on an ongoing basis and failed to adequately secure the legitimate chips during breaks in play.Each of these alleged derelictions, however, is the subject of a detailed regulation governing the conduct of a casino licensee, that only the Division has the power to enforce.
A licensee intent on holding a gaming tournament must provide the Division, at least five days before the start of the event, the date and time of the tournament, the number of expected entrants, the equipment to be used, a description of security and surveillance measures implemented for the tournament, and three certifications from senior casino staff. N.J.A.C. 13:69F-8.6(b). Should the licensee conduct the tournament in a materially different way than described in the applicable internal controls, or in a way that compromises the security or integrity of gaming operations, the Division can require the licensee to stop play. N.J.A.C. 13:69F-8.6(c).
A casino must also have a surveillance department supervised by a director of surveillance, N.J.A.C. 13:69D-1.11(b)1, to oversee "[t]he maintenance of a current surveillance submission, as a condition to the commencement and continuation of gaming operations," which submission must be "approved by the Division upon a determination that it conforms to the requirements of the Act and provides adequate and effective controls over the operations of the surveillance department . . . ." N.J.A.C. 13:69D-1.11(b)1xix.
A licensee is also required to maintain a security department, N.J.A.C. 13:69D-1.11(b)5, tasked with enforcing the law and protecting the physical safety of persons and property in the casino. See ibid. Through implementation of its internal controls, a licensee must ensure "through the use of the casino security department, that the casino . . . [is] constantly secure during normal operations . . . ." N.J.A.C. 13:69D-1.3(a)3. Internal controls include the detection "of cheating, theft, embezzlement, and other illegal activities in the casino, casino simulcasting facility, count rooms, slot booths, and cashiers' cage," as well as the detection of persons who may be excluded pursuant to N.J.S.A. 5:12-71 or N.J.A.C. 13:69G-1.7. N.J.A.C. 13:69D-1.11(b)1vii, viii.
Specifically, in regard to counterfeiting, N.J.A.C. 13:69D-1.20(a) provides that "[n]o casino licensee shall cause or permit gaming chips, coins or plaques to be added to, or removed from [the] table inventory during the gaming day." See also N.J.S.A. 5:12-114a(1) (making it unlawful for any person playing in a licensed game "[k]nowingly to use bogus or counterfeit chips"). The casino must "remove a set of gaming chips in use from active play whenever it has reason to believe the casino . . . has accepted counterfeit chips or whenever any other impropriety or defect in the utilization of that set of chips makes removal of the chips in active use necessary or whenever the Division so directs." N.J.A.C. 13:69E-1.1(f). When the chips are removed under subsection (f), "the casino licensee shall immediately notify the Division and the reason for removal." N.J.A.C. 13:69E-1.1(g).
N.J.S.A. 5:12-100b also provides:
Gaming equipment shall not be possessed, maintained or exhibited by any person on the premises of a casino hotel except in a casino room, in the simulcasting facility, or in restricted casino areas used for the inspection, repair or storage of such equipment and specifically designated for that purpose by the casino licensee with the approval of the division.
The internal control plan submitted to the Division must include "[p]rocedures for the security, storage and recordation of cash, chips and other cash equivalents utilized in the gaming . . . operations." N.J.S.A. 5:12-99a(9). The dealer and casino supervisor must count the chips remaining at a gaming table when the table opens for gaming and when the gaming is concluded. N.J.A.C. 13:69D-1.21(d), (h). When counting the chips during the opening and closing of the gaming table, the dealer and supervisor must sign a Table Inventory Slip, recording the total value of each denomination of gaming chips remaining at the table. N.J.A.C. 13:69D-1.21(d), (f), (h).
At the conclusion of gaming, the Table Inventory Slip must be recorded by the casino supervisor. N.J.A.C. 13:69D-1.21(h)3.
The table inventory must also be counted whenever "gaming tables remain open for gaming activity during the drop box collection." N.J.A.C. 13:69D-1.21(g). A drop box is attached to each gaming table and used to exchange cash and coupons. N.J.A.C. 13:69D-1.16. The casino must file a schedule setting forth the times at which a drop box is collected, but at a minimum it must be collected once per day, N.J.A.C. 13:69D-1.17.
N.J.A.C. 13:69D-1.21(e) provides that any discrepancy between the amount of chips counted during gaming and the amount listed on the Table Inventory Slip "shall be immediately verbally reported to the casino manager, assistant casino manager, or table games shift manager in charge at such time and the security and surveillance departments." If the discrepancy is greater than $100 however, security and surveillance personnel must "promptly prepare and sign a report" and provide a copy of the report to the Division. Ibid.
The internal control plan submitted to the Division must include procedures for storage of chips. N.J.S.A. 5:12-99a(9). Generally, when the gaming table is not open, the table inventory must be stored "in the table inventory container with a Table Inventory Slip, by locking a clear cover on the container which shall be conspicuously marked on the outside with the game and the gaming table number to which it corresponds." N.J.A.C. 13:69D-1.20(d)1. When the table inventory container is removed or returned from the table, the surveillance department must be notified. N.J.A.C. 13:69D-1.20(f).
During tournaments, at least two employees, one of whom must be "a supervisor from the casino games or security department or other department approved by the Division," may take and return the tournament chips to an approved storage area, and record in a tournament chip inventory ledger information including the value of the chips. N.J.A.C. 13:69E-1.4A(d).
Apart from these extensive rules governing the actual conduct of gaming, the Division is required, by statute, to maintain a list of individuals to be excluded from casinos. N.J.S.A. 5:12-71. Exclusion is appropriate when an individual's presence in a licensed casino would be "inimical to the interest of the State of New Jersey or of licensed gaming therein." See generally N.J.A.C. 13:69G-1.3(a). When a licensee refers someone it believes is a candidate for exclusion, the Division investigates that person. N.J.A.C. 13:69G-1.4(a). If, after an investigation, the Division determines the person should be excluded, it must commence an action identifying the person and the basis for exclusion. N.J.A.C. 13:69G-1.4(b). Any person proposed for inclusion on the excluded list has a right to a hearing. N.J.A.C. 13:69G-1.5(b).
As that review demonstrates, all of plaintiffs' allegations deal with highly technical areas of the rules governing casino games or gambling tournaments and gaming equipment, which are the subject of comprehensive regulation by the Division and thus within the special expertise of the agency. The very real possibility of a direct and unavoidable conflict clearly exists between application of the CFA by judges and jurors and the gaming regulations governing this poker tournament. Further, the pervasiveness of the regulations here leave no place for a consumer fraud action. Alternatively, allowing a common-law negligence claim to proceed would be providing plaintiffs with a private right of action for violations of gaming regulations, which New Jersey law does not recognize. See Miller v. Zoby, 250 N.J. Super. 568, 570 (App. Div.), certif. denied, 127 N.J. 553 (1991).
Finding plaintiffs' claims for negligence, consumer fraud, and promissory estoppel barred, we turn to plaintiffs' claims for breach of contract and the implied right of good faith and fair dealing and unjust enrichment. As the late Judge Irenas noted in Marcangelo v. Boardwalk Regency Corp., because "'casino gambling, which only became legal in 1977, is an activity where the respective rights and obligations of the parties have been articulated and developed by statutes and regulations, not by the common law,'" it is "difficult to shoehorn gambling suits into traditional common-law areas, such as contract or tort." 847 F. Supp. 1222, 1228-29 (D.N.J. 1994) (quoting Tose v. Greate Bay Hotel & Casino, Inc., 819 F. Supp. 1312, 1317 n.8 (D.N.J. 1993), aff'd, 34 F.3d 1227 (3d Cir. 1994)).
That observation is especially pertinent as one tries to consider the damages available to plaintiffs, assuming they could prove their claim, for Borgata's breach of its contractual obligation to run a fair poker game, depriving them of their chance to compete for the prize money. Our law requires a "plaintiff prove damages with such certainty as the nature of the case may permit, laying a foundation which will enable the trier of the facts to make a fair and reasonable estimate." Totaro, Duffy, Cannova & Co., L.L.C. v. Lane, Middleton & Co., L.L.C., 191 N.J. 1, 14 (2007) (quoting Lane v. Oil Delivery Inc., 216 N.J. Super. 413, 420 (App. Div. 1987)).
Because poker is a game of chance, none of these plaintiffs could predict or quantify his chances of winning in a meaningful and reliable way. Moreover, even a player such as Celeste, who was among the final twenty-seven players, may just as easily have been benefitted as harmed from the counterfeit chips in play. There is simply no fairly calculable award that would put these plaintiffs in as good a position as if performance had been rendered, and thus no basis for an award of compensatory damages. See Donovan v. Bachstadt, 91 N.J. 434, 444 (1982) (explaining design of compensatory damages is to put the injured party in as good a position as he would have had performance been rendered based upon the parties' reasonable expectations).
A player winning a pot made larger by counterfeit chips is credited with an artificially inflated chip count, thus improving his standing in the tournament. As all players remaining in the tournament at the suspension of play were certainly exposed to the counterfeit chips, as well as all entrants playing on Day 2, the final ranking of players was hopelessly compromised. --------
Even assuming plaintiffs could prove their contract claims, the only conceivable damages available to them would be restitution, returning them to the condition they occupied before the contract was executed. See Totaro, supra, 191 N.J. at 12. Expectancy damages would be too speculative to award, and punitive damages would impermissibly intrude upon the Division's exclusive authority over sanctions. Because plaintiffs have already been afforded restitution by the Director, the administrative proceeding has provided them an adequate remedy to vindicate their damage claims against Borgata, and the motion judge was correct to enter summary judgment dismissing their Law Division complaint. See Campione, supra, 155 N.J. at 262.
Although plaintiffs' disappointing experience in this aborted tournament is regrettable, the Division's response to the situation was fair, and plaintiffs present no legal basis for their claims seeking further enhancement of their recovery.
Affirmed as to both appeals. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION