Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—1st Cir.: Casino slot machine player fails to redeem objections to ‘coinless’ cashout on appeal, (Sep 25, 2024)

By Justin Marcus Smith, J.D.

The casino patron had some points about the user experience with coinless cashout; however, all equitable, statutory, and common law claims failed where coinless kiosk vouchers ultimately provided for full redemption, for example, at a cashier cage.

A Massachusetts casino patron did not have unjust enrichment, consumer protection, or common law claims against Wynn casino operating entities in connection with “coinless” slot machine redemption, affirmed the United States Court of Appeals for the First Circuit. The patron did not have an unjust enrichment claim where the Massachusetts consumer protection statute provided an adequate legal remedy. However, the mere availability of a legal remedy did mean it was viable, and here, the patron did not have viable arguments that the coinless practice failed to comply with relevant casino internal controls and regulations. The internal controls and an industry standard partially incorporated into Massachusetts law specifically provided for the possibility of coinless cashout. The court also affirmed rejection of the patron’s unintended gaming arguments and common law breach of contract, breach of promise, and conversion claims where coinless cashout was arguably inconvenient but nonetheless provided for full redemption, for example, at a cashier cage (Schuster v. Wynn MA, LLC, No. 23-1291 (1st Cir. Sept. 23, 2024)).

A casino patron (Schuster) sued Wynn MA, LLC, Wynn Resorts, Ltd., and Wynn Resorts Holdings, LLC (collectively Wynn) in connection with the redemption of slot-machine tickets at Encore Boston Harbor Casino (Encore). At the times in question, Encore patrons could redeem slot machine cashouts by means of a “TITO ticket.” The patron can either present the TITO ticket at one of the cashier cages or use a self-serve kiosk, known as a ticket redemption units (TRUs). However, the TRUs only distributed whole dollar amounts in paper currency, not coins. Where the casino owed the patron a fraction of a whole dollar, the TRU would dispense paper currency in whole dollars plus a TRU ticket for the balance. Patrons could either redeem the fractional dollar balance at the cashier cages or use it in a slot machine.

Schuster initially brought a putative class action against Wynn in state court alleging that Wynn was “stealing money” from patrons because the TRU tickets did not dispense coins. He asserted four common law claims: breach of contract, promissory estoppel, conversion, and unjust enrichment. After Wynn removed the case to federal district court, Schuster amended his complaint adding a claim for unfair and deceptive practices under the Massachusetts consumer protection statute, Mass. Gen. L. Ch. 93A, § 2 (Ch. 93A).

The district court granted Wynn’s motion to dismiss Schuster’s unjust enrichment claim because it found he had an adequate remedy at law under Ch. 93A. The court later granted Wynn’s motion for summary judgment on all remaining claims and denied Schuster’s motion for class certification as moot. The district court partly based its summary judgment decision on a determination that Schuster had no basis for prevailing on his arguments that the coinless redemption practice was either “unfair” or “deceptive” under Ch. 93A. The court also determined that Schuster could not prevail on his breach of contract or other promise or unlawful conversion claims.

Schuster appealed the district court’s dismissal of his unjust enrichment claim at the pleadings stage and its grant of summary judgment to Wynn on his remaining claims. Applying de novo review to each decision, the United States Court of Appeals for the First Circuit affirmed the district court’s decisions.

Unjust enrichment. The First Circuit affirmed dismissal of the unjust enrichment claim on the basis that there was a legal remedy available to Schuster under Ch. 93A, by precedent. Tomasella v. Nestlé USA, Inc., 962 F.3d 60, 70 (1st Cir. 2020) (other citations omitted). The availability of a remedy was what mattered, not the viability thereof. Id. At 82-83.

Ch. 93 claims. Again applying de novo review to the district court’s summary judgment decision, the First Circuit rejected Schuster’s three-part argument that the coinless practice: 1) violated Encore internal controls; 2) which, in turn, violated Massachusetts gaming regulations; and, consequently, 3) violated Ch. 93A. The First Circuit said it rejected Schuster’s argument at steps 1 and 2.

The First Circuit began by noting here that Wynn was required to comply with internal controls that must comply with Massachusetts gaming regulations. The regulations partially incorporated Gaming Laboratories International standards set forth in GLI-20. 205 Mass. Code Regs. § 143.07 (2022). Wynn argued its coinless practice complied with the relevant controls and regulations, but Schuster argued the TRUs should redeem full ticket value, including fractional dollars in coins, including pursuant to GLI-20.

The First Circuit reasoned that Schuster’s argument here boiled down to the meaning of “funds” on ticket redemption as set forth in Wynn internal controls. The court found Schuster’s argument “fatally flawed” because the plain language of the relevant controls and regulations contemplated a TRU redemption system that could include, as pertinent here, a gaming voucher. The relevant regulations did not explicitly define “funds,” but they did define “unsecured funds” as potentially including a gaming voucher or coupon. The court accordingly rejected Schuster’s argument that “cash” encompassed both paper money and coins.

The court said GLI-20 only further supported its conclusion. It said the GLI-20 standard did not require kiosk redemption to include coins. Conversely, GLI-20 allowed for issuing players a printed ticket or voucher reflecting partial credit for redemption at a cashier or another gaming device.

Unintended gaming. The court turned next to Schuster’s argument that the coinless practice was “immoral, unethical, oppressive, or unscrupulous” because it was designed to encourage undesired additional slot play. Much of Schuster’s argument here turned on inconvenience, especially if TRUs were to malfunction, as well as the adequacy of notice about coinless redemption at TRUs.

The court acknowledged that Schuster “pointed out several issues with the coinless practice,” but it nonetheless agreed with the district court that the record provided no basis for prevailing on the idea that it was unfair. While it might be inconvenient to go to the cashier cage to redeem the fractional dollar balance, the court said the record did not support that possible outcome as “immoral, unethical, oppressive, or unscrupulous.” By extension, the court affirmed Schuster did not show the coinless redemption was “unfair” under Ch. 93A.

Turning to whether the coinless practice was “deceptive” under Ch. 93A for lack of adequate notice, the parties appeared to disagree on the specifics. In any event, the First Circuit agreed with the district court that Schuster’s “deceptive” Ch. 93A claim could not survive summary judgment. The court reasoned here, that, regardless of the nature of posted notice about TRUs being a place where patrons could redeem their slot tickets, patrons could nonetheless redeem their TRU tickets, dispensed in fractional dollars, in lieu of coins.

Common law claims. The First Circuit also affirmed that no reasonable jury could find that Wynn made a contract or promise that Schuster could rely on for a breach of contract or promissory estoppel claim. Schuster viewed the coinless redemption system as overly burdensome, but there was no evidence that Wynn promised a more efficient process.

Last, as to Schuster’s conversion claim, the court said the district court correctly concluded again that patrons could redeem the TRU tickets for fractional dollars either at a cashier or by playing more slots. The court agreed with the district court that no one could reasonably construe that as a refusal to pay what was owed.

The Case is No. 23-1291.

Judge: Montecalvo, L.

Attorneys: Joshua N. Garick (Law Offices of Joshua N. Garick, PC) for A. Richard Schuster. Wayne F. Dennison (Brown Rudnick LLP) for Wynn MA, LLC, Wynn Resorts Ltd. and Wynn Resorts Holdings, LLC.

Companies: Wynn MA, LLC; Wynn Resorts Ltd.; Wynn Resorts Holdings, LLC

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