978-1418051914 Chapter 16 Lecture Note

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CHAPTER 16

Specialized Destinations:

Casinos, Theme Parks, and Spas

CONTENTS

A. Chapter Competencies

B. Introduction

C. A Short History of Gambling

D. Gaming Issues

E. Contracts and Gambling Debts

F. Torts Involving Casinos

G. Casinos and the Dram Shop Act

H. Riverboat Casinos and the

Jones Act

I. Casinos on Native American

Reservations

J. Internet Gambling

K. Theme Parks

L. Hotel Spas

M. Answers to Case Example

Questions

N. Answers to End-of-Chapter

Questions

Chapter Summary

Exciting developments in the hospitality industry include the increased numbers of casinos, theme parks, and

spas. These facilities present unique management challenges. Gambling is not a recent phenomenon. Games of

chance have been around since as early as 2300 B.C. Today gaming is a thriving industry. Casinos are second

only to the lottery as the most popular form of gaming. Tribal gaming now plays a major role in the gaming

industry. There are several legal issues that are peculiar to casinos. Gaming issues are handled by gambling

commissions set up by states with legalized gambling.

Many casino patrons who bet large amounts of money establish credit with the casino. This transaction is a

contractual one, not unlike seeking credit on a Visa or MasterCard. Unfortunately, a gambler often loses and

can incur gambling debts. As in any contract case, the gambler can assert any applicable contract defenses.

Torts involving casinos involve negligence. Casinos are not insurers of their guests’ safety. Other torts

involving casinos are false imprisonment, trademark infringement, and copyright infringement. Most casinos

offer their guests free drinks while they are gambling. Casinos are held to the same accountability under the state

dram shop act as a hotel or restaurant.

Many cities bordering on waterways have adopted riverboat casinos. Numerous federal laws affect events

occurring on boats on the waterways of the United States. These laws are referred to as maritime laws. One

federal maritime law, known as the Jones Act, enables employees injured while on a boat to sue in court for the

full value of their injury, including pain and suffering.

In recent times, many casinos have been built on Indian reservations. Although the law of the state in which

the reservation is located may outlaw gambling, that fact does not preclude the reservation’s governing body

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from determining that gambling will be permitted on the reservation. Native American tribes exercise sovereign

authority over their members and territories. Tribes are separate from federal and state governments and have

the power to regulate their internal affairs by making their own substantive law. Congress passed the Indian

Gaming Regulatory Act (IGRA) in 1988. It restricts a tribe’s ability to conduct gambling activities. Since the

advent of the public Internet in 1995, online gambling has exploded in popularity. Online casinos are prolifer-

ating and they use catchy names. Funds for online betting must be deposited using a credit card.

A. Chapter Competencies

After studying Chapter 16 the student should be able to:

1. give a brief history of gambling.

2. explain the term “pari-mutuel” betting.

3. identify the two events that stimulated the proliferation of Native American casinos in the United

States.

4. state the objectives of government regulation of gambling.

5. list at least two responsibilities of state sponsored gambling commissions.

6. describe the duty a casino owes to inform patrons of laws relevant to gambling.

7. explain the term “card counter.”

8. explain the term “shoe.”

9. explain the meaning of the term “pathological” or “compulsive” gambler.

10. identify the defenses available to a gambler who has incurred a sizable loss while betting on credit.

11. state the duty of care owed by a casino to its patrons.

12. explain when false imprisonment occurs.

13. define “probable cause.”

14. define “trademark.”

15. define “copyright.”

16. explain what maritime laws are.

17. describe the Jones Act and its relevance to casinos.

18. discuss the reasons for the proliferation of riverboat casinos.

19. identify the two circumstances that led to the proliferation of casinos on Native American

reservations.

20. explain the term “sovereign authority.”

21. explain the Indian Gaming Regulatory Act (IGRA).

22. identify the four requirements mandated by the IGRA for Class III gaming.

23. explain the term “compacts.”

24. give at least three examples of terms that are included in a state–tribal compact.

25. explain what laws regulate online gambling.

B. Introduction

❊An exciting development in the hospitality industry is the increased numbers of casinos and casino

resorts.

❊Just as these facilities present unique management challenges, they also create specialized legal

issues and applications.

C. A Short History of Gambling

❊Contrary to conventional wisdom, gambling is not a recent phenomenon.

❊In the United States, both European colonists and Native Americans brought a history of gambling

from their own cultures.

❊Lotteries were viewed in England as a popular form of voluntary taxation and became fashionable

in America as European settlers arrived here.

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❊Examples of pari-mutuel betting include horse racing and greyhound dog racing. With a pari-mutuel

system, the track does not care which horse wins because, unlike other gambling, the money used

to pay the winners is not the track’s, but rather that of the people holding the losing tickets.

❊Riverboat casinos are ships carrying casino facilities that take patrons out to sea where state

gambling prohibitions are not applicable.

❊Pari-mutuel betting facilities have suffered with the proliferation of casinos.

❊A phenomenon that is compensating somewhat for pari-mutuel’s loss of popularity is simulcast

wagering; that is, broadcasting races over a television network, thereby enabling bettors at other

tracks and locations around the country not only to watch the live races via television and place

their bets, but also to cash in their winning tickets as if the race were being held at their

location.

❊Gambling today.

■Gambling today is a thriving industry.

■Tribal gaming now plays a major role in the gaming industry.

■Online gambling, which includes Web sites at which players can place their bets, is also

popular.

■Gambling is highly regulated by government.

■State-sponsored gambling commissions oversee casino operations.

D. Gaming Issues

❊Several legal issues are peculiar to casinos.

❊Resolution of gaming issues.

❊A casino owes no duty to inform patrons of laws relevant to gambling.

■In a number of cases, patrons who have been arrested for violating gaming laws asserted a duty

on the casino to inform them of the law.

❊Exclusion of card counters permissible.

■A card counter has an advantage in blackjack play because, as the cards in the shoe decrease, the

likelihood of cards not yet played coming up is increased.

■Thus, the card counter secures an advantage in the odds.

■To counter the counting advantage, a growing number of casinos utilize a device that, on a

continuing basis, automatically shuffles the cards that have been played and uses them to resup-

ply the cards from which the dealer draws. This eliminates the ability of a counter to anticipate

cards not yet played, thereby eliminating the problem of card counters.

❊Slot machines.

■Slot machines are very popular casino gaming devices.

■Sometimes these devices malfunction, resulting in an apparent but not real win for a

customer.

E. Contracts and Gambling Debts

❊Many casino patrons who bet large amounts of money will establish credit with the casino.

■The transaction is a contractual one, not unlike seeking credit on a Visa or MasterCard.

■Unfortunately, a gambler often loses.

■As in any contract case, the gambler can assert any applicable contract defenses, including

incapacity (underage, mentally incompetent, or very intoxicated), duress (threats of harm), and

unconscionability (grossly unfair, resulting from unequal bargaining power).

❊Compulsive gamblers.

■Unfortunately, some people suffer from a recognized disorder called pathological gambling or

compulsive gambling, which is a recognized illness in the field of psychology.

■The casino industry has addressed this problem in certain ways. Congress created a commission

to conduct a study of gambling’s impact at all levels of our society.

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F. Torts Involving Casinos

❊Negligence.

■Like other hospitality facilities, casinos are not insurers of their guests’ safety. They are, however,

obligated to act reasonably to safeguard the well-being of their patrons.

■Management should ensure that seating is adequate in the casino playing area.

❊Criminal activity at casinos.

■The large sums of money that flow in casinos unfortunately attract criminal activity.

■One scam involves the manufacture and sale of fraudulent slot-machine tokens. When such a

scam is discovered, the casino alter the machines so that they reject the fraudulent tokens.

■Another illegal scheme promoted by organized crime involved the game of blackjack and

consisted of “capping,” or increasing the amount of winning bets after the cards are dealt. The

rules of the game forbid players from altering their bets once the dealer begins to distribute the

cards. Therefore, this scheme requires the participation of the dealer.

■Casino patron as crime victim.

•The casino owes its customers the same duty of care as hotels and restaurants owe to use

reasonable care to protect patrons’ safety.

•Reasonable precautions will, however, protect the casino from civil liability for negligence in

the event a crime victim sues the casino for the loss.

■Duty owed to intoxicated patrons who become crime victims.

•Virtually every casino has numerous bars, and free alcohol is frequently provided to gamblers.

•As a result, overindulgence is a recurrent problem.

•Intoxication can lead to disorderly conduct, which may cause the casino to physically evict the

person from the premises.

❊False imprisonment.

■Occasionally, a facility believes a patron has engaged in criminal activity and wants to detain the

person during an investigation.

■A potential problem exists: If the investigation reveals that the patron has done nothing illegal,

the facility may be liable for false imprisonment.

❊Trademark infringement.

■A trademark is a name or logo that identifies the source of a product or service.

■A well-known trademark has considerable value in attracting customers.

■As a result, a trademark of a popular product can be very valuable.

■Occasionally, competing companies will adopt a trademark similar to the leading company in the

field. Their purpose may be to divert customers to their establishment. This is unfair to the owner

of the well-received trademark and to the misled patrons.

❊Copyright infringement.

■A copyright is the exclusive right to reproduce creative work such as artwork, writings (books,

poetry, essays, and so forth), music, and software.

■One who creates such a work is entitled to the exclusive right to reproduce it.

■If another party wishes to reproduce copyrighted work, such as a restaurant owner who would like

to copy a painting onto paper placemats, the restaurateur must first obtain the permission of the artist.

■Customarily, the artist will charge a fee for that permission.

■A person whose copyrighted work has been reproduced without permission can sue to force the

infringer to “cease and desist” from further copying and to compensate the copyright owner for

any losses resulting from the unauthorized duplication.

G. Casinos and the Dram Shop Act

❊The Dram Shop Act is a statute that imposes liability on establishments that sell alcohol for certain

injuries resulting from illegal sales (the patron was visibly intoxicated when served, was underage,

or was a known alcoholic).

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❊In most states, the liability applies only to a third party injured by the illegally served patron.

❊Most casinos offer their guests free drinks while they are gambling. The plaintiffs in several lawsuits

were given free drinks by a casino after becoming intoxicated. They then incurred significant

gambling debts owed to the casino. They sued the casino, claiming that the debt constituted dam-

ages resulting from illegal alcohol service and therefore they should be relieved from their debt.

❊The court rejected this argument and held for the casino.

❊For these reasons, the Dram Shop Act does not apply to a gambler who is served alcohol by a casino

after becoming visibly intoxicated and who continues to place bets and thereby incurs a gambling

debt. The bettor is not entitled to reimbursement of his loss from the casino.

H. Riverboat Casinos and the Jones Act

❊Many cities bordering on waterways have adopted riverboat casinos.

❊In some states, a riverboat located dockside but totally in a body of water can legally house gaming.

In other states, a boat must travel a certain distance off shore before it can validly permit gambling.

❊Litigation has resulted to determine which laws apply to riverboat casinos.

❊One issue that varies greatly depending on which law applies is the appropriate remedy when an

employee on a riverboat casino is injured while on duty.

❊The Jones Act.

■What constitutes a vessel has been the subject of several cases.

I. Casinos on Native American Reservations

❊In recent times, many casinos have been built on Native American reservations.

■Although the law of the state in which the reservation is located may outlaw gambling, that fact

does not preclude the reservation’s governing body from determining that gambling will be per-

mitted on the reservation.

❊Lawsuits against Native American tribes.

■One of IGRA’s goals was to balance the states’ interest in regulating high-stakes gambling within

their borders and the Native Americans’ resistance to state intrusions on their sovereignty.

❊Lawsuits against casino employees.

■Not infrequently, Native American tribes will transfer the management of casinos to a corporate

entity separate from the tribe. These entities are normally named as a defendant when a casino

patron is injured and sues. The question arises whether these entitities are entitled to immunity;

they customarily are.

■Dram Shop Act.

•Tribal immunity is not a bar to a lawsuit arising from the wrongful sale of alcohol at a Native

American casino.

•The reason is the state’s concern for the protection of the safety of its residents.

❊Indian Gaming Regulatory Act.

■The federal government has maintained some oversight of gaming conducted on reservations.

Its authority is embodied in the Indian Gaming Regulatory Act (IGRA), which was adopted by

Congress in 1988.

■IGRA provides a comprehensive design for regulating gaming activities on Native American lands.

■The class most highly regulated is known as Class III and includes blackjack, craps and related

dice games, wheel games, roulette, electronic games of chance, slot machines, card games in

which the players play against the house, and keno.

■Where a tribe has undertaken gaming operations without satisfying these prerequisites, the fed-

eral government is authorized to obtain search warrants and seize slot machines and related gam-

bling devices and paraphernalia from the tribe’s casinos.

■The managers and operators of a Native American casino operating illegally are subject to federal

prosecution for the violation.

■Additionally, the United States government can seek injunctive relief against the casino to

prevent it from operating.

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J. Internet Gambling

❊Since the advent of the public Internet in 1995, online gambling has exploded in popularity.

■Online casinos, using catchy names such as Virtual Vegas, High Card Casino, and BigCat Inter-

net Casino, feature nearly every game available in a brick-and-mortar facility. These include

blackjack, roulette, poker, keno, slot machines, sports wagering, lotteries, and bingo.

■Funds for betting must be deposited by using a credit card, electronic withdrawal from a bank

account, certified check, money order, or wire transfer. Once the account is open, the user is able

to place bets.

■Laws impacting the gambling industry address such matters as licensing, fraud, crimes, addi-

tional consumer protection measures, and taxation of earnings made by casinos and gamblers.

Some states prohibit online gambling within the state.

■Additional developments on the issues of the legality and regulation of online gambling are

anticipated in the near future.

K. Theme Parks

❊Many family travelers spend some of their vacation time at theme or amusement parks. These

facilities typically provide various attractions, carnival rides, games of skill, and other entertainments.

❊Issues particular to this type of facility can result in liability if adequate precaution is not exercised

by park management.

❊Crowd control.

■Many theme parks attract large numbers of visitors on a daily basis. Crowd control requires

reasonable care by the park.

•All would-be visitors are entitled to admission upon payment of the designated fee.

•The park is not required to tolerate customers who damage property, injure others, or

otherwise disrupt activities.

•The park can establish reasonable rules of conduct to ensure that visitors are not exposed to

risk of injury by others.

❊Amusement rides.

■Warnings about rides.

•Theme parks with rides should alert potential riders to anticipated risks.

■Assumption of risk.

•The rule of assumption of risk (sometimes called the “no duty” rule) may be applicable.

•According to this rule, the participant in an activity impliedly consents to commonly

appreciated risks associated with that venture.

•Thus, a person injured from the usual and expected risks inherent in an activity is not entitled

to compensation.

■Minimum height rules.

•For safety reasons many rides have minimum height rules.

•Park operators should anticipate some disagreements with customers on whether certain

youngsters meet the height requirement.

•If not properly managed these disputes can escalate to verbal and physical fights, resulting in

claims against the park of assault, battery and false imprisonment.

■Ride safety – government regulations.

•Government regulations require that carnival rides be at all times in a safe condition and in

conformance with operation and maintenance procedures provided by the manufacturer.

•All aspects of the ride’s operation are implicated, such as setup, integrity of the structure,

inspection schedule, and electrical mechanisms and hook-ups.

•Violations of these rules can result in serious injury and even death to riders.

•Some state laws provide that a violation of these regulations that results in death constitutes

manslaughter, which means recklessly causing a person’s death.

•The charge is a serious felony and can result in a long prison term.

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■Ride safety – negligence.

•Freakish accidents can happen if attention to safety is lax.

•To avoid such accidents the park should establish procedures requiring mechanisms to ensure

that all employees are clear from dangerous locations before testing rides, and provide

appropriate training on the safe testing of rides.

■Fences.

•Many rides are surrounded by fences.

•Some act as barriers for protection of passersby and others for demarcation of the area where

riders can gather preliminary to boarding.

•The fences need to be properly installed and maintained. Failure to do so can result in liability.

❊Other attractions.

■Care of animals – negligence.

•Some theme parks display wild animals of various varieties. These creatures are unpredictable

and need to be securely caged so they cannot contact park-goers.

•Whether or not the park will be liable if the animals attack depends on factors such as whether

the park took appropriate precautions and whether it adequately trained the animals’ feeder.

■Parades.

•Theme parks often provide parades, complete with stunt performers, for the entertainment of

patrons.

•Tricks can be dangerous and cause injury.

■Skating rinks.

•A risk of skating rinks is that skaters will collide, causing one or both to fall and suffer injuries.

•The operator of a rink should post signs that inform the skaters of all safety rules, and provide

monitoring to avoid rowdy or inappropriate behavior that might heighten risks.

■Other amusements.

•Additional attractions that can result in liability if a facility fails to exercise reasonable care in

their maintenance and operation include: rock climbing walls, bicycle paths, go-carts, tube

slides, fireworks displays, bleachers for viewing events, and pedestrian walkways.

❊Admission discounts.

■Amusement parks on occasion will offer a promotional admission rate to residents of the area

immediately surrounding the park. The purpose of such discounts is to encourage attendance,

particularly during slow periods.

❊Season passes.

■Theme parks often sell season passes, allowing the holder free admission and possibly access to

amusements during specified months.

■The passes customarily include terms and conditions that form part of the contract between the

park and the pass holder.

■Facilities issuing such passes should ensure the terms and conditions accurately state the rights

and restrictions associated with the pass. Discontent with the terms by buyers of the passes can

lead to a lawsuit.

L. Hotel Spas

❊Increasingly, upscale hotels are adding a spa to their offerings. Spas provide a variety of services in-

tended to promote relaxation, relieve stress, and enhance physical appearance.

❊

The services offered may include massage; facials; body wraps (a treatment in which strips of

cloth are soaked in herbal teas and swaddled around the body); body scrubs; aromatherapy;

manicures and pedicures; make-up lessons and application; exfoliation; cellulite reduction treat-

ments; therapeutic baths,;hydrotherapy (moisturizing treatment for dry skin); kurs (a series of

body treatments that include mineral water, mud baths, and herbs); and salon services (hair

treatments).

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❊As with virtually all areas of a hotel or restaurant, various aspects of operating a spa can result in li-

ability if reasonable care is overlooked by management.

❊Licensing.

■A license evidences authorization from the state for the license holder to offer specified services.

■In most states the spa itself must be licensed.

■Additionally, many of the services offered by a spa require service providers, including mani-

curists, facialists, specialty practitioners, masseuses, and cosmetologists (one who provides hair,

nail, and skin treatments), that the state requires to be licensed.

■Providing services without the necessary license is illegal.

■Potential penalties for the spa and hotel include fines and negative publicity.

❊Sanitation and nails.

■Most spas offer manicures (treatment of fingernails) and pedicures (treatment of toenails).

■The spa should ensure the manicure tables and pedicure facilities are scrubbed, all tools are ster-

ilized after each use, emery boards and toe separators are used on one customer only, the man-

icurist/pedicurist washes her hands between each client, and other sanitary rules are strictly

followed.

❊Wet and slippery floors.

■Spas often include shower facilities, hot tubs, and/or a pool.

■Customers will inevitably track water onto the floors, having failed to fully dry off after use of

the water facilities.

❊Effect of liability waivers.

■To reduce liability spas often require their customers to sign a waiver of liability, which is a doc-

ument stating that customers agree to waive their right to sue the spa and hotel if they are in-

jured while at the facility.

■As a general rule, the law does not like to release a party from liability for wrongdoing.

❊Property stolen from locker.

■Spa patrons usually change clothes prior their treatments or using the sports facilities.

■The spa customarily provides a locker for the visitor’s use. Often the lock for the locker is also

provided by the club.

❊Massages.

■The process of administering a massage necessarily involves close personal contact between the

masseur/masseuse and the customer. Often the latter is minimally clothed or draped only in a

towel to intensify the benefits of the procedure.

■This environment can lead to claims of sexual abuse or rape.

■To avoid this type of liability spa management should perform criminal background checks on

all its workers and verify credentials including necessary licenses.

■Ongoing management likewise is critical.

❊Tanning booths.

■Spas sometimes include tanning booths.

■This equipment should be inspected regularly to ensure proper operation. Apparatus that mal-

functions due to the fault of the spa can result in injuries and liability.

M. Answers to Case Example Questions

16-1-1. How big a role did the casino emergency alarm system play in the court’s decision?

A casino, like restaurants and hotels, must act reasonably to protect the well-being of patrons.

The casino’s alarm system in this case played a very significant role in the court’s determina-

tion that the casino acted reasonably in addressing the needs of the gambler in distress. The

emergency “call” button was readily available to the blackjack dealer; by pushing the button,

security was immediately alerted that an emergency existed and its location on the casino floor;

security responded to the location promptly, assessed the situation, and summoned the nurse,

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