Class action lawsuits are not uncommon in the gaming industry but they pose a real threat. Gaming depends on a positive image and operators can ill afford to be portrayed as evil or harmful in the press, state legislatures or courts. However, several recent class actions are doing just that.
For example, a U.S. district judge in Nevada recently granted a motion for certification in a class action suit against Wynn Resorts. The suit alleges management deceived investors by not disclosing earlier Steve Wynn’s history and pattern of sexual misconduct, which actually was disclosed by the Wall Street Journal.
Ultimately, Wynn resigned and the management and board of directors were reorganized. But the price of the corporation’s stock fell from a peak of $195 a share in May 2018 to a low of $48 in April 2020. The plaintiffs sued to regain some of the money they lost as a result.
More recently, a federal judge in Kentucky allowed a class action lawsuit brought by Caesars employees against Russell Investments Trust Company (RITC). Plaintiffs claimed their retirement accounts lost value due to RITC’s change in investment strategies.
In another Kentucky case, VGW Malta Ltd. agreed to pay $11.5 million to a group of patrons at the Chumba Casino and Luckyland Slots. Any player who had spent more than $5 in any 24-hour period at either of those casinos between March 2017 and 2022 could join the suit.
The plaintiffs argued the games were illegal in Kentucky and, therefore, they had been cheated. Not so coincidentally, the state Legislature recently passed a law banning those so-called “gray” games.
Yet another suit involves Caesars’ sports-betting advertising. Plaintiffs allege Caesars misleads would-be bettors with false advertising about bonuses and free or risk-free bets.
The language in those ads has prompted lawmakers in several states to propose bills that would limit a sports betting company’s advertising or ban the ads altogether; eliminate tax breaks for advertising and promotions; and/or ban those promotions.
Observers said gaming operators are most wary about this particular suit. Besides the potential cost to Caesars, the suit will shine a spotlight on sports betting advertising and promotions and potentially label the industry as greedy, harmful, and predatory.
They note what happened to tobacco, opioids, asbestos and lead-based paint, products that offer serious health risks. Lead-based paint and asbestos are gone; tobacco advertising is banned and smoking now is illegal in public spaces in most states, except in casinos in numerous jurisdictions.
