Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—Iowa Sup. Ct.: Casino wins jackpot as patron’s suit over slot malfunction tossed, (Apr 27, 2015)

By Linda O’Brien, J.D., LL.M.

A casino patron could not recover a $41 million bonus allegedly won on a slot machine due to the machine’s malfunction, according to the Iowa Supreme Court. In affirming the district court’s grant of summary judgment to the casino, the state high court determined that the patron had no contractual right to the bonus under the rules of the game and could not show an ascertainable loss of money or property in support of her Iowa Consumer Fraud Act claim (McKee v. Isle of Capri Casinos, Inc., April 24, 2015, Mansfield, E.).

In July 2011, Pauline McKee attended a family reunion in Waterloo, Iowa and went gambling at the Isle of Capri casino and hotel, operated by IOC Black Hawk County, Inc. McKee began playing a penny slot machine and, after wagering $0.25, a message appeared that she won 185 credits (or $1.85) and a “bonus award” of over $41 million. Upon investigation by the Iowa Racing and Gaming Commission, it was determined that a technical glitch in the machine caused the message to appear in error. Based on the Commission’s determination that the message was an invalid display, the casino refused to pay McKee the $41 million.

McKee filed suit, alleging breach of contract, estoppel, and violations of the Iowa Consumer Fraud Act. The district court granted the casino’s motion for summary judgment, and McKee appealed.

The Consumer Fraud Act prohibits unfair, deceptive, and fraudulent acts in connection with the advertising, sale, or lease of consumer merchandise and establishes a private right of action for consumers who suffer an ascertainable loss of money or property as a result of the prohibited practice or act.

The court found that the district court’s grant of summary judgment was proper. The rules of the game formed a contract between the patron and casino, and the game rules did not provide for any kind of bonus. Any message that appeared on the screen indicating the patron would receive a bonus was a gratuitous promise, and the casino’s failure to pay could not be challenged as a breach of contract. It was not relevant that McKee failed to read the rules before playing the game, since the rules were readily accessible to her and she had an opportunity to read them.

Furthermore, since McKee had no contractual right to the bonus, she could not have suffered an ascertainable loss of money or property under the Consumer Fraud Act when she was denied the bonus, in the court’s view. Thus, the district court’s grant of summary judgment was affirmed.

The case is No. 14-0802.

Attorneys: Stephen J. Powell (Swisher & Cohrt, P.L.C.) and Steven R. Enochian (Low McKinley Baleria & Salenko) for Pauline McKee. Stacey L. Cormican and Mark A. Schultheis (Nyemaster Goode) for Isle of Capri Casinos, Inc. and IOC Black Hawk County, Inc.

Companies: Isle of Capri Casinos, Inc.; IOC Black Hawk County, Inc.

Cases: StateUnfairTradePractices IowaNews