Question

Case 10.1

"Pauline McKee, an 87-year-old grandmother, was attending a family reunion at the Isle Casino Hotel Waterloo, a combination hotel and casino. One evening she and several members of her family gambled at the casino. McKee was playing a penny slot machine called “Miss Kitty.” A person wins at the Miss Kitty game by lining up different combinations of symbols from left to right on the slot machine screen. The game includes a button entitled “Touch Game Rules” in the lower left-hand corner of the screen. Tapping this button displays the rules that govern the game and a chart describing potential winning combinations of symbols. These rules do not mention any additional bonus, jackpot, or prize available to a person playing the Miss Kitty game. The rules state “MALFUNCTION VOIDS ALL PAYS AND PLAYS.” A sign posted on the front of the machine reiterates “MALFUNCTION VOIDS ALL PAYS AND PLAYS.” McKee did not read the rules before she played the slot machine.

While playing the game, McKee won $1.85 based on how the symbols had lined up on the slot machine screen. However, at the same time a message appeared on the screen stating “Bonus Award $41797550.16.” The casino paid McKee $1.85 but refused to pay the alleged bonus, claiming it was an error and not part of the game. McKee sued the casino in district court to recover $41,797,550.16. The casino introduced evidence that the appearance of the bonus on the screen was an error in the computer system of the game. The casino made a motion for summary judgment, which was opposed by McKee. The district court held that the rules of the Miss Kitty game were an express contract between McKee and the casino. The court granted summary judgment to the casino. McKee appealed.

Issue

Was there a contract between the parties that provided for the payment of a bonus when playing the Miss Kitty slot machine?

Language of the Court

Gambling contracts are governed by traditional contract principles. We agree with the district court that the Miss Kitty rules of the game are the relevant contract here and that they form an express contract. Further, it is undisputed the rules of the Miss Kitty game did not provide for any kind of bonus. Hence, in our view, McKee had no contractual right to a bonus. Nor is it relevant that McKee failed to read the rules of the game before playing it. It is sufficient that those rules were readily accessible to her and she had an opportunity to read them. On the play in question, the alignment of the reels entitled McKee to a prize of $1.85, and the casino paid it to her, fulfilling its side of the contract.

Decision

The Supreme Court of Iowa affirmed the district court’s grant of summary judgment in favor of the casino."

Read Case 10.1 in your text.

A) Do you think the Court ruled correctly? Why or why not?

B) What does the term "a contract is a contract is a contract" mean and how does it relate to this case?

C) Identify two (2) other examples when people may not read rules or provisions of service that may affect them if there is a problem.

D) Pick an ethical principle that the casino followed by not paying the bonus.

Answer 1

Q-A) Do you think the Court ruled correctly? Why or why not?

A: Yes, the court ruled correctly because there was an implied contract between a player at the casino and the casino owners/management. This kind of relationship is similar to that of a doctor and a patient, where a patient voluntarily approaches for consultation and/or treatment thereby consciously or deliberately agreeing or accepting to the doctors advice or terms. Such kind of contracts are not expressed or written but are implied based on the actions or conduct of the parties concerned. The old lady, Ms. Pauline McKee, had agreed to subject herself to the terms and conditions of the casino when she had bought tokens and played at their slot machines.

Further, the casino was quite clear on its policy and rules were clearly displayed to remove any ambiguity on terms and conditions at their casino: "The game includes a button entitled 'Touch Game Rules' in the lower left-hand corner of the screen. Tapping this button displays the rules that govern the game and a chart describing potential winning combinations of symbols. These rules do not mention any additional bonus, jackpot, or prize available to a person playing the Miss Kitty game. The rules state “MALFUNCTION VOIDS ALL PAYS AND PLAYS.” A sign posted on the front of the machine reiterates “MALFUNCTION VOIDS ALL PAYS AND PLAYS.”

Besides, it is said that the customer Ms. Pauline McKee had not read the rules before playing the slot machines. This clearly is the customer's (Ms. Pauline McKee) fault for not reading the rules, and even if she had read the casino rules, the rules were amply clear as to their policy and terms concerning additional bonuses, jackpots or prizes. When humans are not perfect, machines, computers, tools and equipments can also have faults and errors and malfunction from time-to-time without advance warning and the sign posted by the casino on the front of their slot machine stating, "MALFUNCTION VOIDS ALL PAYS AND PLAYS." covers this loophole where a customer cannot fail to notice and ignoring it would not be an untenable excuse from a customer.

In this case, the court ruled correctly. The court held that the contract was expressed, however in reality, the contract was that of an implied-in-fact contract based on the conduct of the two parties towards each other. None of the contracting parties in this case had formally agreed or signed up to a contract and the contract was not expressed or written but rather it was implied. The court further held that gambling contracts are governed by traditional contract principles wherein implied contracts would also be covered and traditional contracting principles would hold true for implied contracts as well as expressed or written contracts.

Thus, the court judgment was correct in its summary dismissal of Ms. Pauline McKee's case and the casino cannot be held liable for any fault or error in the slot machines as they were transparent right from the beginning as to their rules and terms and conditions.

Q-B) What does the term "a contract is a contract is a contract" mean and how does it relate to this case?

A: The term "a contract is a contract is a contract" means that contracts are amply clear and cannot be negated or overlooked. A contract cannot be changed later on without prior approval from the contracting parties. What is agreed upon is final in terms of offer, acceptance and consideration which are the three key elements of a contract and cannot be modified or voided without prior consent of all parties concerned. In this case, the contract was pertaining to an implied-in-fact contract which is not expressed or written but is based on the conduct or actions of certain parties towards each other thereby implying or suggesting some kind of mutual agreement to perform certain roles or actions. The contract was set on traditional contracting principles which holds true even for implied contracts. Implied contracts do not have to be expressed either in written or oral but assumed. In this case, the contracting parties were the customers at the casino on one hand and the casino owner/management on the other hand. When a customer walks in to a casino, they are doing so consciously and voluntarily thereby subjecting themselves to the terms and conditions or rules of the commercial establishment (casino). On its part, the casino has clearly stated its rules on the slot machines which a customer can view at the click of a button prior to playing any games. Then if the customer continues to play on the slot machines, it is understood that the customer at the casino has agreed and accepted the rules of the establishment and must abide by the same. Such implied contracts must be fair to the concerned parties.

Q-C) Identify two (2) other examples when people may not read rules or provisions of service that may affect them if there is a problem.

A: Two examples of when people may not read rules or provisions of service that may affect them if there is a problem are:

i) A live-in relationship between two partners.

ii) A restaurant-customer relationship.

Such contracts are implied-in-fact contracts which are not written or expressed but based on the conduct of the parties towards each other.

Q-D) Pick an ethical principle that the casino followed by not paying the bonus.

A: The casino was ethical in principle for standing upto its beliefs and taking a stand based on its convictions. In this case, it is amply clear that the casino management/owners were transparent in terms of its conduct in creating prior awareness on its rules, terms and conditions or provisions. It is a matter of ethics to be transparent and honest in ones intentions, conduct and actions. Here, the casino's intentions were good and honest and there was no malice in the casino's intent. Thus, one can say that the casino was ethical and principled in not paying the bonus since there was no intent to cheat the customer.