Casinos should say: ‘Enough. Go home.’

Over about 14 months, Harry Kakavas lost $20.5 million in a casino in Melbourne. It could have been worse. He put about $1.5 billion on the table. He sued the casino. It knew or should have known, he said, that he was a pathological gambler. It shouldn’t have continued to take his money. It should have protected him from himself. Nonsense, said the High Court of Australia.

Here’s why:

Even if, contrary to the findings of the primary judge, the appellant did suffer from a psychological impairment, the issue here is whether, in all the circumstances of the relationship between the appellant and Crown, it was sufficiently evident to Crown that the appellant was so beset by that difficulty that he was unable to make worthwhile decisions in his own interests while gambling at Crown’s casino. On the findings of fact made by the primary judge as to the course of dealings between the parties, the appellant did not show that his gambling losses were the product of the exploitation of a disability, special to the appellant, which was evident to Crown.

Equitable intervention to deprive a party of the benefit of its bargain on the basis that it was procured by unfair exploitation of the weakness of the other party requires proof of a predatory state of mind. Heedlessness of, or indifference to, the best interests of the other party is not sufficient for this purpose. The principle is not engaged by mere inadvertence, or even indifference, to the circumstances of the other party to an arm’s length commercial transaction. Inadvertence, or indifference, falls short of the victimisation or exploitation with which the principle is concerned.‘ (paras 160-161 of the judgment).

So it all turned on findings of fact (it wasn’t ‘sufficiently evident’ that his losses were the result of a disability, and if they were, they weren’t the product of a disability ‘special to the appellant.’)

That last criterion is interesting. The court seems to be implying that everyone who puts themselves in the position of losing large amounts of money in a casino is necessarily not quite right in the head. To establish liability you need a degree of vulnerability over and above that possessed by the ordinary punter. By accepting the trial judge’s finding that Kakavas did not suffer from a ‘psychological impairment’, the court was presumably saying: ‘Right: so Kakavas is weak and easily exploited: but that’s true of everyone who walks through the door, buys some chips and sits down at the table. That sort of weakness is within the general bell curve of human flabbiness. But Kakavas wasn’t particularly, dramatically, visibly weak.’

Now link this with the ‘sufficiently evident’ criterion. It’s hard to understand why it wasn’t ‘sufficiently evident to Crown ….that [Kakavas] was unable to make worthwhile decisions in his own interests while gambling….’ Didn’t Crown know how much he’d lost? Did it really think that it was cool calculation that kept him at the table? Didn’t it know that it had an addict on its hands – and an addict who was doing something that was plainly against his objective best interests?

No doubt there’s a thrill in doing something that is plainly against one’s objective interests. No doubt it’s partly that thrill which takes people through the doors of casinos. The figures say that you’re probably going to lose.

The law should be very slow to interfere with people’s right to do stupid things. It should be slow to interfere when the purported justification for truncating individual autonomy is the vindication of wider societal interests, and even slower when the justification is the protection of the individual against himself. And by and large it is. But sometimes it steps in – for instance in R v Brown 1(to criminalise entirely consensual sado-masochism), or in the enforced Caesarean section cases (where part of the rationale is to give the woman something that, at some level of herself, she really wants). In Caesarean section cases the judge, having behaved in a way dubbed by the woman’s counsel in argument as oppressively paternalistic, often gets a gushingly grateful letter from the woman, enclosing a picture of the beaming baby.

It might be said, in the gambling context, that the fact that casinos are unashamed predators on human frailty should make the court more ready to intervene. I’m not sure that’s right. The predatory nature of the casino is a necessary element of the pleasure that the punter gets. If you can’t lose big time, you don’t get the buzz you want. And there should be a strong presumption in all liberal societies that that buzz is itself legitimate.

So: the solution isn’t to lambast the casino. The solution is to make the casino the trusted agent of a benevolently paternalistic society. Crown should have said: ‘Enough: the prospect of you recouping these plainly devastating losses is remote. To continue to play is pathological.’ It’s not necessary, to come to that conclusion, to characterise it as unusually pathological, even by big gamblers’ standards, to stay at the table.  

 

1. [1994] 1 AC 212. See too Laskey, Jaggard and Brown v United Kingdom (1997) 24 EHRR 39

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3 Responses to Casinos should say: ‘Enough. Go home.’

  • Keith Tayler says:

    In the course of my checked career I spent over two years as croupier and gaming inspector in London casinos. I have no interest in gambling but, as with other occupations I have had, I wanted to understand why people gamble and why other people are prepared to provide them with the service of depriving them of their money. I dealt to and observed thousands of gambling addicts and learnt how the casino worked its dirty little tricks on them.

    So, to put it in the vernacular, should a casino stop action on a punter because he is doing his brains? Harry Kakavas does appear to have been subjected to quite a few dirty little tricks and did have banning order against him.. Unfortunately, as the ’Issues in this court’ state, ‘In this Court the focus of the appellant’s forensic strategy shifted away from the proposition that Crown lured or enticed him into its casino. The emphasis of the case advanced here, by the appellant, was upon the exploitation of the appellant’s inability, by reason of his pathological urge to gamble, to make worthwhile decisions in his own interests while actually engaged in gambling.’ Kakavas had failed in the low court to establish that Crown ‘deliberately preyed upon his personality flaws to entice him to gamble in Crown’s casino.’ The shift in focus is described by the High Court as being a ‘bold strategy; bold strategies do not always succeed’ It was not, I believe, so much bold as stupid. Of course it is very difficult to get a court to convict a casino for enticement because, as in this case, it claims ‘Even if it were open to the courts to second guess the legislature’s judgment to permit this sort of activity [lavish complimentary benefits], it would be to descend into incoherence for the courts to require the return of losses suffered by high rollers so as to oblige operators of casinos to close their doors to high rollers’. The Casino Control Act 1991does not appear to prohibit these ’activities’ and I am unsure about the Commissions regulations. In this country Playboy, Ladbrokes and Coral casinos were closed by the Gaming Board for inter alia this type of activity. (The GB were not interested in these activities when I reported that Mecca casinos were practicing them in 1982. Obviously I was working in a favoured casino.)

    Having dropped the enticement strategy, Kakavas’ is left with nothing but his addiction. From the record of his gambling in the casino there is no sign that he was behaving “abnormally”. We must remember that about half the punters would be pathological gamblers, so you have got to do something extraordinary in order to standout from the crowd. From the casino’s records of Kakavas’ gaming, he appears to be quite ordinary, well controlled and his winnings and losses fell within the expected probability of the game. So why should a casino stop the action and return the stakes of a high roller because he is addicted and not, as the court put it, the ‘ordinary punters who, while less extravagant in their gambling habits, are also less able to absorb their losses‘? As a general rule they should not because this would make gaming impossible for just about every other punter could claim a refund.

    Unfortunately we need casinos and other forms of legalised gaming because without them it would go underground and fall into the hands of organised crime. This means casinos and bookmakers have to be able to provide their services to pathological gamblers. This does not mean we have to massively encourage gambling as this and previous governments have. Legislation and regulation that made all forms of enticement illegal might help people like Kakavas. Those that profit from providing gaming services should be forced to pay substantial amounts towards anti-addiction projects and research. We could do a lot to reduce and control gaming, but in the end we are still going to be left with pathetic figure of punters doing their brains.

  • Nicholas Shackel says:

    He lost less than 1.4% of his stake money (20.5 mn/1.5 bn). Roulette with 37 numbers and payout at 35 to 1 will lose you 5.4% of your stake on average. What is he complaining about?

  • Mike Fahey says:

    You play online poker with players from different countries in the online casinos. You wouldn’t even be sure what strategies they might have learnt in Online poker. Hence, you need to be extra careful in the online casinos. You cannot use the strategies which you might have used while playing poker in-person.

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