Golden Nugget Poker Reversal Shows Even Powerful NJ Gaming Regulators Have Their Limits

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The New Jersey Division of Gaming Enforcement has earned its “best in class” reputation among U.S. regulators ever since it exceeded industry expectations by managing to meet its self-imposed six-month deadline of launching online casino gaming in the state in November 2013.

But on Thursday, the vaunted agency saw its wings clipped for the second time in seven days.

A New Jersey appeals court concluded that contrary to a lower court ruling, DGE did not have “exclusive jurisdiction over all gaming-related advertising.”

Because of that finding, the appeals court reversed a summary judgment that had dismissed a violation of the state’s Consumer Fraud Act made by a Vermont man who had visited Atlantic City in 2015 to attend a “Grand Poker Series” tournament at Golden Nugget.

Advertisements for the event touted $150,000 in prize money to be distributed from the results of a dozen “one-day tournaments” to be held over the course of 10 days.

But Golden Nugget, citing a lack of players, canceled the bulk of event while stating that “pursuant to the tournament rules, it paid plaintiff [Michael Bandler] a portion of the limited prize money generated by the entry fees that the casino collected.”

Did the plaintiff get a raw deal?

Bandler cited expenses for travel, lodging, and meals to attend the event as “consequential damages” he suffered due to what he claims was deceptive advertising.

Golden Nugget countered that “absent an explicit statement that prize money was guaranteed, the advertisement did not mislead plaintiff to believe that it was, particularly since the disclaimer stated the tournament could be changed or cancelled at any time.”

Perhaps most interesting is how the appeals court reached its conclusion: by inviting the office of the attorney general, which has ultimate jurisdiction over such matters, to weigh in on the case.

“The Attorney General urges us to reverse the trial court’s order,” the Appellate Division noted. “We attach great weight to an agency’s interpretation of a statute it is charged with implementing, particularly those that require technical expertise.

“The [Casino Control Act] delegates to the Division the authority to issue and enforce regulations governing ‘gaming-related advertising’ but it does not delegate to it the power to adjudicate common law on non-CCA statutory claims, or to award damages.”

The DGE oversight of “gaming-related advertising,” the appeals court concluded, “referred to advertising related to the technical aspects of gaming in which the Division’s expertise was essential, and uniformity was intended.

“The advertisement involved here invited the public to visit a casino by offering a prize or reward that plaintiff contends was falsely promised.

“The issue is whether the statement ‘$150,000 IN PRIZE MONEY’ was deceptive, where the casino omitted stating it intended to pay $150,000 only so long as enough people signed up, and the only indirect reference to that intent was the disputed disclaimer in small print about official rules and the right to change or cancel the event.

“The advertisement itself does not pertain to arcane or technical rules of the game. No special expertise vested in the Division is required to resolve the question.”

The case has now been remanded back to New Jersey Superior Court to review the merits of the Vermont man’s claim.

The other limit on DGE’s power

Last week, DGE Director David Rebuck submitted a report to the state’s Casino Control Commission that cited 40 conditions that needed to be accepted in the proposed $17 billion merger between Eldorado and Caesars.

The most controversial, it seems, was the requirement that the new company remove restrictive deed covenants on three defunct Caesars assets: Showboat Hotel Atlantic City, The Claridge hotel, and the former Atlantic Club casino.

Given the magnitude of what would become the largest gaming merger in U.S. history, the companies seemed to be in no position to let the deal stall on such an issue. The New Jersey approval also was the last one of two dozen needed to complete the transaction.

So Eldorado and Caesars agreed to the requirement, as well as all the others, including a guarantee of $400 million to be expended on upgrades at the new company’s Caesars, Harrah’s, and Tropicana casinos in the city.

News of those required concessions led Hard Rock and Ocean Casino — both two-year-old casinos on the Boardwalk that could face heightened competition at those locations — to make a last-minute attempt to intervene in the proceedings.

While that effort failed in a formal sense, last Friday’s 10 a.m. hearing — the third in three days — was delayed for 90 minutes for reasons the commission never explained. When the meeting finally began, Commission Chairman James Plousis singled out the deed restriction requirement as the one that “greatly complicates this matter.”

Plousis added that the “perceived ills” from the deed restrictions are “not related to the merger plan that is before us today.”

So ultimately, Plousis and Commissioner Alisa Cooper each voted to approve the DGE recommendations — minus what in some respects could be the most important of all, the addition of potential new casino properties on the Boardwalk.

In the merger case, an attorney general’s representative expressed DGE’s recommendations to the commission and took questions from Plousis and Cooper on various issues.

Photo courtesy of Shutterstock.com

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John Brennan

John Brennan has covered NJ and NY sports business and gaming since 2002 and was a Pulitzer Prize Finalist in 2008, while reporting for The Bergen County Record.

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