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It's very rare for players to hit the jackpot on a slot machine. Can a casino make sure they never have to pay that out by having the machines "malfunction" to display a larger-than-maximum amount in those rare cases, and then avoid having to pay out anything close to the maximum, while still retaining all the player losses?

Example stories where the answer seems to be "yes" can be found with Katrina Bookman or Pauline McKee. Both played the slots at casinos that kept the players' losses, until they were notified by slot machine hardware that they'd won >$40M. Then the casinos pointed to signs “Malfunction voids all pays and plays,” and claimed that since the machines were malfunctioning, the casino didn't have to pay more than a couple dollars. The Iowa Supreme Court agreed with the casino in McKee's case and the New York State Gaming Commission agreed with the casino in Bookman's.

In the words of Bookman's lawyer, "the casino used the same broken machine to take money from players, and that everyone who used the machine should at least get their money back...Doesn’t that mean a place can claim a machine is broken every time somebody wins?" That is the question here.

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    You can read the ruling in the McKee case. The court's opinion was that since the posted rules of the game didn't promise that payout, the casino wasn't obligated to pay it. They explicitly say that the ruling wasn't based on the "malfunction" argument. See page 20. – Nate Eldredge Jun 17 '17 at 15:30
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In the case of McKee v. Isle of Capri Casinos, we can tell because that case has been legally decided. As the court says, there was a contract and "the patron was not entitled to the bonus under those rules", and plaintiff "failed to prove the necessary elements of either promissory or equitable estoppel". They did not "represent to her that a bonus would be available if she played the game", and did not "promise to pay the $41 million after the notice was displayed".

The (very complex) rules of the game are easily available on the machine, and there is a prominent disclaimer that "MALFUNCTION VOIDS ALL PAYS AND PLAYS". Under the rules, the winning configuration stated that she was entitled to $1.85. The problem was that it also announced "Bonus Award - $41797550.16". This was due to an inexplicable software error which in communicating with the central computer awarded a "legacy bonus", which is no part of the game in question. The maximum legacy bonus is $99999.99; the manufacturer knows of the possibility of this kind of error and has implemented a fix that is thought to eliminate the problem.

The first point then is that the casino didn't just claim there was a malfunction, they proved that there was one. Second, the terms of the contract hold: she was entitled to $1.85, and the extraneous message was not part of the contract. That is, she did not actually win the large payout, the malfunction was in saying that she received a bonus. If a patron could likewise prove that they had actually won but the machine malfunctioned to represent the situation as a loss, they would of course be entitled to the appropriate winnings. The problem simply resides in the difficulty of a patron proving that.

  • So if, as a casino owner, I configure my machines to always be provably "malfunctioning" when they award their highest prizes, I can legally avoid having to ever pay them out? – WBT Jun 18 '17 at 13:03
  • Only indirectly, since that would violate gaming laws and you'd get shut down. – user6726 Jun 18 '17 at 13:42
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In some countries with tighter regulation on gambling than the USA which still allow it, a malfunction voids the spin or game.

The player is entitled to a refund of all money affected by a malfunction, and the casino is obligated to return it whenever such an event occurs, or hold the money for some time while attempting to identify the player(s) affected.

Claiming a malfunction on every major winning spin would eventually lead to complaints, scrutiny and the casino being shut down. They have been penalised heavily for much less, in terms of breaches of responsibility and trust.

  • "The player is entitled to a refund of all money affected by a malfunction" As far as I can tell, this is not how it works in practice. Players continue to lose without refund any and all money affected by malfunctions, and if a player knew enough about the details of how the machine worked to have a decent chance at being able to prove it, the player can likely then be prosecuted for fraud. Further, if the regulators receive their funding from casino revenues, their incentives are aligned to side with casinos & hold players liable for malfunctions. – WBT Jun 18 '17 at 12:59
  • This is practise in some countries, as mandated by strictly-enforced law. Regulators are public and receive money from the same source as every other government department. – Nij Jun 18 '17 at 17:47

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