Ever Been Misled About the Odds of Gambling?

We would all know someone who thinks they have a way to beat the odds at gambling, but when the odds of winning are represented to be too good to be true, is that misleading? Have you ever wondered if it was unconscionable for poker machines to say you are a “winner” when you have won $2 but already spent $10 gambling?

The Federal Court of Australia on 2 February 2018 in Guy v Crown Melbourne Limited (No 2) [2018] FCA 36 did not accept there was sufficient evidence in that particular case to prove an allegation that Crown Melbourne Casino and Aristocrat Technologies misled the gambling public about the odds of winning when gambling on the Dolphin Treasure poker machines.

The Applicant, Ms Guy, alleged in her claim that the Casino and the poker machines played on the vulnerabilities of potential “problem gamblers” and such conduct was unconscionable.

Unconscionable Conduct

Based on the evidence presented to the Court, it was considered the conduct of the Casino could not be characterised as unconscionable. The meaning of “unconscionable” under both the unwritten law and under section 21 of the Australian Consumer Law (ACL) was looked at.

The Unwritten Law

The claim under the unwritten law was rejected because there was no single individual that could actually be identified that had been victimised or exploited by the Casino’s alleged unconscionable conduct. Therefore, it was considered there was no special disadvantage that could be identified. Even assuming there might be a group of people (or consumers) that partook in gambling services who were habitual or addicted to gambling, or who had problems controlling their gambling behaviour, the Court still took the view that they were not necessarily “vulnerable”. The Court considered even if they were “vulnerable”, it was not in the sense of having a “special disadvantage”. The evidence presented suggested that individuals with a gambling addiction or “problem” retained a level of control. Their self control might be “impaired”, but they retained a level of control over their own actions. There was no evidence to suggest there might be a “special disadvantage” by an identified group of people that the Casino had taken advantage of.

Section 21 ACL

The claim of unconscionability under s 21 of the ACL failed because Ms Guy did not establish any conduct that could be characterised as “unconscionable” in relation to a class of consumers. All the conduct referred to in the claim had obtained regulatory approval under a highly prescriptive regulatory scheme that included assessing the operation of the poker machines for fairness. The Casino was able to show they had complied with their regulatory obligations in all respects.

The poker machines played sounds and flashed lights for any “win”. This happened regardless of whether the “win” was for more or less than the amount that had been bet. The evidence suggested the machines gave “celebratory feedback”, even if a gambler lost more than they “won”. The fact that the gambler was only “winning” an amount less than they had bet was apparent from the information that was on the screen. The regulations required all the information about the amount that had been bet and the amount that was won or lost to stay on the screen at all times. The information was presented very plainly and clearly. The Casino had complied with their regulatory obligations.

One of the difficulties for the applicant was the claim remained at a hypothetical level. Rather than being able to identify a particular special disadvantage by any individual that might suggest conduct capable of amounting to unconscionability, the case tried to establish there was a hypothetical class of consumers that would be vulnerable and the conduct was unconscionable because that class of individuals with gambling additions or problems would be at a “special disadvantage”.

The Court did emphasise that the failure of the allegations in this case was only a failure because of the particular allegations that had been made and on the evidence that had been presented. The Court made it clear that it was not necessary or appropriate to make a broader pronouncement on some of the complex issues about gambling disorders and has left the door open for other claimants that may have a special disadvantage whose specific circumstances should be considered.

Misleading or Deceptive Conduct

The Court was also asked to rule that three (3) alleged representations were misleading.

The Equal Reel and Symbol Representations

It was alleged that a representation was made that the poker machine had five reels of equal size, each having the same number of symbols and that the representation was supported by the sound and appearance which resembled old-fashioned mechanical poker machines which had evenly sized reels that spun around. In reality, there were significantly more stopping points (i.e., symbols) on one of the reels than the others. Some symbols appeared many more times on one reel than on another.

The Court found that the alleged representation had not in fact been made. The five animated reels did appear to spin at an even pace, but there was no evidence to suggest that this would lead a gambler to think about how many “stopping points” existed on each reel or how this might affect the probabilities of winning. The Court did not agree that ticking sounds would induce a theoretical gambler to believe that the reels were evenly sized. The Court considered it was more likely the ticking sound that was made might lead a gambler to believe the reels were moving or promote a sense of pattern and regularity. There was no evidence to suggest they might believe the ticking sound meant anything else and no evidence to suggest a hypothetical gambler might be lead to believe the symbols were evenly dispersed on each reel. The court was not satisfied that a hypothetical gambler would even be conscious of the fact that no symbol appeared more than once. The Court thought a gambler’s focus might be much narrower, watching and focussing on whether the symbols lined up in a winning combination.

In any case, even if these two representations had been made, the Court considered they would not have led a hypothetical gambler into a material error. The probabilities were so exceedingly low, that there was no practical difference between one probability and the other. The evidence was that the probabilities of a win would have changed from one in 41.5m spins to one in 27.6m spins for an individual gambler in any given session. The alleged representations were not likely to cause a hypothetical gambler to come to a mistaken belief about the probability that they could secure a winning line during their gambling session.

Risk Representation

Each poker machine was required to display the “Theoretical Return to Player” (RTP). The Dolphin Treasure poker machine stated “Total Theoretical Return to Player of This Game = 87.97%”. It was significant that the singular word “player” was used. The regulations use the plural word “players”.

It was alleged that this RTP information was the “Risk representation”. That is, the statistical risk of the gambler was that they would only retain the specified percentage of the money they wager in any one session of play. The court was satisfied that the alleged Risk representation had been made. The information was individualised, making it likely that each hypothetical gambler would believe, at least momentarily, that the statement was directed at their individual chances of winning on the machine.

However, the Court found that as the gambler started to bet, the randomness and unpredictability of the outcomes in an individual session would become obvious to the hypothetical gambler. Any initial error that they would be walking away with 87% of what was initially wagered would be quickly dispelled. The Court thought that a hypothetical gambler who was curious enough to access the information display was just as likely to access the brochures at Crown Casino or online materials, which explicitly stated that the “return to player” was an average over millions of games, and there was no requirement for an individual poker machine to actually return that rate in any given period of play.

It was unnecessary for the Court to decide whether the Casino was a “mere conduit”, but the Court leaned towards the view that it was not a mere conduit. The Casino may not have been able to change the poker machine itself, but it could negotiate with Aristocrat about the machine’s presentation and operation. The Casino was capable of providing more accurate information to gamblers about the RTP. It was likely that the hypothetical gambler would understand that any information about odds displayed on the machine was information that Casino endorsed and adopted.

The third representation (the Risk representation) was found to have been made but considered not to have been misleading and at best perhaps gave rise to some confusion that would have been clarified once a gambler started using the poker machine or looked at further information in brochures that were available in the Casino.

Summary

There are significant regulations in place to ensure consumer protection. Actions for misrepresentation will require an applicant to prove not only that the alleged representations were made, but they caused an erroneous belief. Unless there is evidence to suggest a “special disadvantage”or a unique circumstance where a Casino has failed to comply with regulations or has misled consumers, it remains the case that gamblers should never bet more than they can afford to lose!