Duty of Care

Two recent court cases have clarified the attitude of Australian courts to claims for compensation for where harm has been suffered from excessive gambling and alcohol consumption.

Gambling Duty of Care

The Victorian Supreme Court decision in Kakavas v Crown Casino [2009] VSC 559, was an unsuccessful attempt by a casino high roller to recoup $20 million dollars of his losses from Crown Casino.

Harry Kakavas was a successful Gold Coast real estate agent who loved playing baccharat for large stakes. He was a patron of Crown Casino, Melbourne, soon after its opening. He disclosed his gambling problem to Crown and self-excluded in 1995.

In 2004, Crown became aware that Kakavas was gambling large amounts of money at casinos in Las Vegas, and decided to ask him to return to their casino.

As soon as he returned to Crown, Kakavas negotiated a range of high roller benefits, including a $300,000 hand limit, financial rebates, executive jet travel, accommodation, drinks, limousine service, tickets to the Australian Open, etc. In addition to the negotiated benefits, Crown gave him boxes of "lucky money" on occasions, in amounts between $25,000 and $50,000.

During the succeeding 14 months, Kakavas gambled at Crown frequently, turning over $1.479 billion in 14 months and losing between $20 million and $30 million.

After a losing streak, he stopped visiting Crown and commenced an action for compensation in the Victorian Supreme Court. The basis of his court claim was on the ground that he was a person at a "special disadvantage" by reason of his addiction to gambling and that Crown had acted unconscientiously by deliberately enticing him to gamble at the casino.

Kakavas was successful in establishing that he was a person at a special disadvantage because Crown knew that he was a problem gambler. However, the court rejected Kakavas' claim that Crown had treated him unfairly, and noted that Kakavas was confident, intelligent and an excellent business negotiator. He had wanted to gamble at Crown as much as Crown had wanted his business, and he had negotiated vigorously to obtain the terms and conditions that he desired. The judge noted Kakavas' ability to exercise control, the many instances when he apparently conducted himself in a controlled manner while gambling, and walked away even before his funds were exhausted.

Although Crown had provided an impressive array of inducements to gamble, the judge did not consider this to be unconscionable conduct. Just about all of the benefits provided to Kakavas were standard for a high roller. The dealings between Kakavas and Crown convinced the judge that Crown had not exploited Kakavas' gambling addiction, but rather that Kakavas had pressed Crown to provide the maximum amount of inducements he could get.

Although Kakavas was ultimately unsuccessful in his claim against Crown, the cost to the casino in terms of time, lawyers fees and damage to reputation was significant. This was not the sort of court case that any gaming venue would want to risk.

"Crown does present itself as a world leader in responsible gambling. Its relationship with Mr Kakavas does not give one any confidence that it deserves that status," Justice Harper said.

Implications of the Kakavas decision

Claims for compensation will continue to be made against gaming venues by dissatisfied gamblers. Once a gaming venue knows that a person is a problem gambler, then the venue is at risk of being sued. Even if the gambler is unsuccessful, the cost to the gambling venue in terms of time, money and social standing can be significant.

There is no foolproof way to identify a problem gambler other than self-disclosure by the person. However, once a gambling venue knows that a person has a gambling problem, it is appropriate to involuntarily exclude a known problem gambler for their own good. Gaming venues must be careful to follow good policies and procedures to avoid claims of unconscionable conduct.

BetSafe is the leading responsible gambling consultancy in Australia and has extensive experience in helping gaming venues develop and operate responsible gambling programs that are effective in helping problem gamblers and minimising the risk of the venue being sued.

Alcohol Duty of Care

The duty of care of a licensee to an intoxicated patron was clarified in the recent High Court case of C.A.L. No 14 Pty Ltd v Scott [2009] HCA 47. In that case Mr Scott was drinking one evening at his local hotel, when a rumour went around the pub that there was a police breathalyzer up the road. Mr Scott asked the publican to look after his motorcycle and keys so that he could continue drinking with the intention that his wife would pick him up later from the hotel.

Unfortunately Mr Scott changed his mind after consuming a few more drinks and demanded his keys and motorcycle. He had reached the point of intoxication when the publican refused service. Scott died while riding home. His blood alcohol reading was 0.253g per 100ml of blood. His widow sued the hotel, claiming that the publican had a duty of care to insist that he call Mrs Scott to collect him, rather than handing over the keys and motorcyle.

The High Court followed its earlier decision in Cole v South Tweed Heads Rugby League Football Club, that publicans owe no duty of care to patrons in relation to the amount of alcohol served and the consequences of that service, save in exceptional circumstances.

In coming to that decision, the High Court examined the practical difficulties that faced a publican trying to prevent a patron like Scott. The publican did not know the telephone number of Scott's wife and did not have Scott's permission to phone her. Although the publican had Scott's motorcyle and keys, he would have committed a different tort if he had refused to hand them over to Scott. It was all too difficult.

The High Court made it clear that the publican did have a duty of care to the patron in some areas, such as a duty to ensure that equipment in operation, like gaming machines and kegs did not injure him. The High Court also indicated that it might have a different view if Scott had been classified as a 'vulnerable person'.

The High Court did not answer the question of when a publican might be liable when continuing to serve a patron who was clearly intoxicated in breach of liquor harm minimisation laws. However, the court noted that it was much easier to require a publican to refuse service than to refuse to hand over a patron's property, ring his wife or even drive him home.

It is important that licensed venues remain vigilant to the exceptional circumstances that occasionally arise, when it is appropriate to prevent a person from drinking or gambling when it is obvious that they have a problem and are at risk of suffering harm.

How BetSafe can help

The BetSafe program assists gaming venues in the following areas:

  • Compliance with relevant legislation - including the Gaming Machines Act, Registered Clubs Act, Liquor Act, Privacy Act, Anti-Money Laundering and Counter-Terrorism Financing Act.
  • Reducing the risk of litigation - our policies and procedures have been developed by specialist responsible gambling experts and lawyers. BetSafe provides 24 hour telephone support for venues and all recommendations are confirmed in writing.
  • Duty of care - our program not only ensures that the venues are fulfilling their legal duty of care towards patrons, but are also about ensuring a social responsibility.
  • Public perception - by implementing the BetSafe responsible gambling program at a gaming venue, not only is the venue providing the highest level of consumer protection, but it also improves the way in which it is perceived by the community, patrons and legislators.

BetSafe keeps program members informed of relevant aspects of responsible gambling laws and procedures to ensure that best practice is followed at all times.

BetSafe provides advice and assistance to clubs that participate in the BetSafe program in relation to all aspects of responsible gambling to ensure that they provide the highest standard of patron care and comply with community expectations.

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