Court Upholds Casinos Right To Unreasonably Exclude

Sometimes you just get a bad feeling about someone.

When you are working in a casino, it might be a player making bizarre bets, like hitting on 19, and winning; or a guy who looks like he is aching for a fight; or a small group, hanging around the slot machines, blocking the security cameras.

Can you order them off the property, and tell them not to return or they will be arrested for the crime of “defiant trespass”?

As with much of the law, the problem is not whether you are right or wrong. The question is: Do you really want to be a defendant in what might be a long and expensive lawsuit? Even if a casino only has to present evidence in court of concrete facts showing why its decision to exclude an individual was reasonable, it has already lost – lost in terms of executives’ time wasted and unrecoverable attorneys’ fees.

A recent case from the Court of Appeal of New Zealand summarizes the laws for casinos around the world, and comes down firmly on the side of the casinos.

The story begins when Zhang Ping Wu left China in April 2000 and emigrated to New Zealand. Mainland China has no legal casinos, but Auckland, at the moment, has one, Sky City Casino. He became a frequent and often successful slot player, winning in the vicinity of NZ$100,000 to NZ$150,000 (about half that in US$) and two cars. He claims the trouble began on April 15, 2001, when he complained that the pay-out percentages on some of the slot machines were not what the Casino Control Authority had approved.

Three days later there was an incident. There is almost always an “incident” in cases where a patron is excluded, and the casino and patron almost never agree on what actually happened.

In this incident, Sky City says that Wu pointed his finger in an employee’s face and said in Mandarin, “You’d better watch out.” The employee says that the phrase “is taken extremely seriously … in the Chinese culture,” that it is usually meant as a threat of physical harm and that he, the employee, feared for his physical safety.

Wu’s version of the incident is, of course, quite different. He says that a friend told him that the employee had said to her that Wu had been winning excessively and was an unethical gambler. Wu says that he said to the employee in Mandarin that he should not make such allegations about him and asked for an apology.

Whatever really happened, the casino sent Wu a letter banning him for two years. Wu in turn hired one of the country’s top solicitors representing players, Peter J. K. Spring of Keegan Alexander Tedcastle & Friedlander.

Wu filed suit. Importantly, the casino did not accuse Wu of cheating, which is obviously a ground for expulsion. But Wu did not allege he was banned because he is Chinese. Almost all states with legal casinos have enacted statutes prohibiting discrimination on the basis of race and religion.

Wu sought, and obtained, an interlocutory injunction preventing Sky City from banning him. The casino appealed and the higher court reversed.

Wu’s major problem was section 67 of the New Zealand’s Casino Control Act:

“The fact that a casino is licensed … shall not entitle any person to enter or to remain on the casino premises … every person shall leave the casino premises when required to do so by or on behalf of the holder of the licence [sic].”

Wu argued that Sky City owes “a legal duty” to the public and may not ban members of the general public without good cause. That duty was created when the Legislature legalized and regulated casinos and gave Sky City a monopoly in Auckland.

The Court looked to precedents from around the world and found conflicting laws. Hundreds of years ago, the common law of England developed the doctrine that “A man’s home is his castle.” In the U.S., this was expanded to allow operators of amusement places, such as racetracks, the right to kick out anyone without having to give a reason.

But, at the same time, exceptions were being carved out. One of the most important for this case is the doctrine that any company which is given “the monopoly of a public privilege” must make its facilities available to all, and at a reasonable price. Regulated companies, like electric companies, cannot decide to cut off service because they do not like a customer.

The New Zealand Court pointed to the opinion of the New Jersey Supreme Court in Uston v Resorts International Hotel. That Court held that state regulation is so complete that Atlantic City’s casinos could not exclude card-counters, only the Casino Control Commission had that power. But the New Jersey Court also indicated that an amusement place which held itself out as being open to the public could not unreasonably exclude anybody.

The New Zealand Court announced that the rights of private landowners had to give way: “the common law of New Zealand will now recognise [sic] a casino or other licensed gambling facility as a business affected by the public interest in circumstances where the operator enjoys a monopoly … the operator’s right to exclude members of the public may be qualified by an obligation to do so only for an articulated good reason.”

Yet, Sky City won, because the common law can always be trumped by a statute.

The common law is created and changed by courts through their published opinions. A court declaring the common law is not the same as a court interpreting a constitution. A legislature cannot act in violation of its constitution, but it can pass laws changing the common law.

The New Zealand Court of Appeal held that is exactly what the New Zealand Parliament had done, when it enacted the Casino Control Act’s section 67.

The lesson for casinos is clear: Lawyers can tell you what the common law is at any moment, but a court can then change the ground rules. If you want to exclude someone and you do not want to have to defend your actions in court, make sure you have a statute giving you that power.