The CASINO IMPACT:
Unforseen Effects of Casino Gaming
on Civil Litigation in Mississippi

by

Richard T. Phillips and Robert R. Morris, III

This article, originally published in the Summer, 1998 issue of VIOR DIRE, the Mississippi Trial Lawyers Magazine, examined the effects of casino gambling on civil litigation in Mississippi. From their offices in Batesville and Hernando, Mississippi, the authors observed first-hand both anticipated and unanticipated effects of casino gambling on civil litigation in the area. Drawing on experience during the five years since the first casino opened in Tunica, the authors examine specific areas of casino-related litigation including employee rights, patron disputes, premises liability, and personal injury and wrongful death cases including dram shop and casino-related automobile accidents. The authors then question whether the presence of casinos have had a broader, unforseen impact on civil litigation as a whole in the area, not just that directly related to the casino industry.

Transformation of a Region

Few realized the impact casino gambling would have on Northwest Mississippi when Tunica's first casino, the Splash, opened its doors five years ago last month. The success of Tunica's casino industry exceeded all expectations. The statistics are staggering. Forty thousand gamblers a day visit Tunica's nine huge casinos. The number of hotel rooms in the county has grown from 16 in the 1992 to almost 6,000 today as competing casinos add convention facilities, entertainment and recreational complexes. From fields where only cotton and soybeans grew before 1992, there now rise glittering hotels and mega-complexes, including a new 317-foot hotel tower, the tallest building in Mississippi.

In 1985, Rev. Jessie Jackson brought national attention to northwest Mississippi with his visit to Tunica's "Sugar Ditch," where residents lived in poverty amid open ditches of sewage. The casino industry has transformed this county Rev. Jackson once described as "America's Ethiopia." Known as recently as the 1980s as the poorest county in the continental United States, Tunica County today is ninth highest of all Mississippi counties in per capita income. In five years, over 13,000 casino jobs have come to this county of 8,500 residents.[1].

Not even the "experts" foresaw the magnitude of the economic impact of casino gambling on Tunica and northwest Mississippi. A consultant's report released in October, 1992 predicted: "Direct gambling tourist employment [in the county] will reach 2,150 by 1996." Today, 13,498 people work in Tunica's nine casinos. Tunica County's tax revenues have increased from $3.5 million in 1992 to over $35 million this year. Mississippi Gaming Commission records show gross revenues in 1996 for the Mississippi River county casinos as over one billion, eight million dollars.[2].

There have been negative, as well as positive, effects of casino gaming on life in the area. Increased bankruptcy filing, increased crime, and gambling addiction are among the adverse effects chronicled in an October 1997 series of articles by the Memphis COMMERCIAL APPEAL which examined social ills, as well as economic benefits, of legalized gambling in the region.[3]. Some effects of casino gambling were anticipated. Others were unforeseen. Just as casino gaming has made a significant impact on life in north Mississippi in general, it has had a similar impact on civil litigation in the region.

Broadening Scope of Casino Impact

When the casinos first opened in Tunica, the direct impact, while great, was limited to a relatively small segment of the populace. Landowners whose land bordered casino sites sold tracts at previously unheard of prices; subcontractors and building supply companies enjoyed unprecedented prosperity as time mattered more than costs to casinos missing millions of dollars in revenue each week opening was delayed; a previously under-employed work force streamed to the casinos for their first "real" jobs.

The ripple effect was immediate. As growth continued, the casinos touched a widening circle of area residents. Real estate agents placed mid-level casino workers and their families who moved from Nevada and New Jersey; developers built subdivisions and apartments in neighboring Tate and DeSoto counties to house casino employees; automobile dealers sold vehicles to local families who for the first time had two breadwinners, two paychecks, and a need for transportation to two work sites. The casinos' economic impact broadened as homegrown businesses sprang up to supply expanding casinos with ancillary services. The casino impact was felt by residents who never dreamed their lives would be affected by casino gaming in Tunica, Mississippi.

Effects on Civil Litigation Practice

The casinos' influence on civil litigation in many respects followed a similar course of evolution. (1) The impact has gone from specific to an ever-broadening influence on litigation practice and practitioners; (2) In litigation, as in the economy, casino gambling has had both anticipated and unanticipated results.

When gaming was first legalized in 1992, Mississippi attorneys who entered the field experienced an immediate direct impact. Their practices were consumed with gaming license applications, site approval disputes, and the myriad complex corporate issues involved in establishing, financing, and opening casinos.[4]. As the gaming industry matured, casino litigation evolved from initial establishment matters to broader issues, and the impact spread from specialists to a widening circle of litigation practitioners.

An increase in traditional civil litigation was anticipated from disputes directly involving casinos. In an industry that employed 13,000 workers to serve over 40,000 on-premises customers a day, premises liability and workers compensation claims, for example, would be expected. The dangerous mix of increased traffic, poor roads, and free casino alcohol could be expected to give rise to increased numbers of automobile accidents and ensuing personal injury and wrongful death litigation. New types of civil litigation, such as patron disputes, could also be expected as a result of the casinos opening. Other types of cases

arising from the casino influx, such as class action litigation under the Worker Adjustment Retraining and Notification ["WARN"] Act, were never anticipated.

Employee Rights

Mississippi imposes fewer restrictions on casinos than any other state with river boat gambling. Here the gambling "boats" don't have to cruise; there are no loss limits; and state tax on revenues is only 8 per cent, compared to the more typical 20 per cent in other states with river boat gaming. Not surprisingly, casino operators are pleased with such arrangements. The manager of one of Tunica's casinos was quoted recently as saying: "The environment of the State of Mississippi is good. . . . They allow us to manage our business to where we are profitable. The regulatory set-up is good."[5].

As part of its laissez-faire approach to casino regulation, Mississippi places no caps on the number of licenses the state will issue. While some states impose strict limits on the number of casinos they will license, the Mississippi Gaming Commission has an express policy of allowing as many casinos enter the market as can compete. This approach has proven successful overall as ever-larger and more competitive gambling and entertainment complexes have entered the Tunica market, each striving to out do the other. The natural result of Mississippi's "free market approach," however, is that smaller casinos must close or move on. Seven Tunica casinos have closed or moved in the last five years. [6]. Closings impact thousands of casino employees. The case of the Southern Belle Casino presents one such example. Although management had assured workers for weeks that rumors of a closing were untrue, the Southern Belle casino shut down on August 25, 1995, without warning. Nearly 1,000 north Mississippi employees were suddenly without jobs, without pay, and without benefits through the Belle's self-funded retirement and medical plans.

Provisions to protect employment benefits of casino workers are glaringly absent from the Mississippi regulatory system. The state is yet to consider, for example, provisions for the protection of employee benefits such as those applicable in New Jersey. [7]

When adequate regulation to prevent an injury is absent, civil litigation often must remedy the damage. The result of the Southern Belle closing was a class action under the Worker Adjustment and Retraining Notification ["WARN"] Act.[8]. Adopted by Congress in 1988 to alleviate the adverse effects of large plant closings and mass lay-offs, the "WARN Act" requires any employer with 100 or more employees to give 60 days advance notice of a closing, or give workers 60 days severance pay. One of the first cases interpreting the WARN Act arose from the closing of the Atlantis Casino in New Jersey and held that casinos were employers covered by the Act. (9).

A civil class action on behalf of the Southern Belle employees was filed under 29 USC Section 2104. Claims for WARN Act benefits are claims for wages entitled to priority status under the Bankruptcy Act. (10). When the Belle's parent company filed for bankruptcy, an Adversary Complaint was filed by the employees in the bankruptcy proceedings. (11). The result was a recovery for the terminated Southern Belle employees.

Whether "economic development" on the backs of minimum-wage employees is a desirable goal is an issue ignored in Mississippi's rush to create a "favorable regulatory environment" for the casino industry. While a "survival of the fittest" mentality prevails in the casino regulatory arena, (translated as "devil take the hindmost" for thousands of casino employees), employee rights will continue to be an active field of civil litigation.

Patron Disputes

Another new area of civil litigation involves patron disputes, suits by patrons whose claims of winnings are denied by the casinos. Such a dispute arose when, on April 8, 1995, Effie Freeman pulled the lever of "Cool Millions" progressive slot machine number 5638 at the Splash casino in Tunica. The "Cool Millions" machines are big jackpot, progressive slots found in many Mississippi casinos. They are part of an electronically connected progressive system owned and operated by CDS, a company out of Gulfport. "Cool Millions" advertises: "Three Bucks; Three Ducks: Equals an Instant Million Dollars."

Mrs. Freeman, who rode a tour bus from Alabama to play the slot machines in Tunica, put her money in "Cool Millions" machine number 5638 at 5:00 p.m. and pulled the lever. Bells sounded and lights flashed as three ducks lined up on the machine. The amount of the progressive jackpot at the time was over $1.7 million. A crowd gathered as Mrs. Freeman awaited the attendant. When the attendant arrived, however, she informed Mrs. Freeman the bells indicated a "jam" rather than a "jackpot" and that her winnings were only $5.

Proceedings under the dispute resolution process of the Mississippi Gaming Control Act ensued. Sections 75-76-159 et seq of the Mississippi Code set forth the procedure for resolution of the claim whenever a casino refuses payment of alleged winnings to a patron. Whenever the dispute involves $500 or more, the casino is required to notify the executive director of the Gaming Commission. The executive director conducts an investigation and renders a decision. (12). If dissatisfied with the opinion of the executive director, either party may file a petition with the Mississippi Gaming Commission requesting a hearing before the full Commission. (13). The Commission appoints a hearing examiner who conducts a hearing on the matter and renders a final decision.

Provisions for judicial review of the Commission decision are found in Section 75-76-167 (appeal to the circuit court of the county in which the dispute arose) and Section 75-76-173 (appeal to the Mississippi Supreme Court). The Circuit Court is presented a complete record of the proceedings before the commission and may order that additional evidence be taken. (14). Judicial review is conducted by the Circuit Court sitting without a jury. (15). The reviewing court may affirm the decision of the commission, remand the case for further proceedings, or reverse the decision if substantial rights of the petitioner have been prejudiced. (16).

The entity initially charged with resolution of patron disputes under the Mississippi system is the Gaming Commission. The Commission's role as an economic promoter of casinos has been criticized as placing this decision maker at odds with the interests of patrons whose disputes it is to resolve. A 1996 PEER Report on adequacy of gambling regulation in Mississippi found the economic development role assumed by the Commission neither contemplated nor authorized by the Gaming Control Act. (17). The PEER Report recommended (1) that the Commission monitor casino compliance with legal requirements governing the handling of patron disputes as part of its casino audit program, and (2) that the Commission eliminate from its mission statement the language directing it to "promote economic development" through its work with the gambling industry. "Such language," the report found, "places the commission in the conflicting roles of industry regulator and industry developer." (18).

Premises Liability and Workers' Injuries

The massive number of people frequenting the casinos has resulted in numerous on premises personal injuries. According to the circuit court docket in Tunica County, Mississippi, the greatest number of civil cases in which casinos are parties are premises liability cases such as "slip and fall" cases. (19). Because of the large number of out-of-state patrons, many more premises liability cases are filed in federal court in the Northern District of Mississippi. Typical of such cases is Linda Lichtman v. Harrah's Tunica Corporation . (20). On October 5, 1995, Memphis resident Linda Lichtman and two of her friends were walking into the original Harrah's casino in Tunica. Ms. Lichtman fell when her foot struck one of several holes in the pavement where the parking lot joined the main entrance. She suffered a fractured hip requiring surgery and causing Ms. Lichtman to incur medical bills of almost $20,000. After trial of a traditional "trip and fall" case in federal court, the northern district jury returned a verdict of $125,000, finding the casino liable for failure to properly maintain the premises.

An industry with over 13,000 employees can be expected to face numerous cases involving worker injuries. Since the casino barges are required by law to "float," an initial question is whether injuries to such employees fall under the Jones Act and general maritime law. This question was answered in the negative in Pavone v. Mississippi River Boat Amusement Corporation . (21). In Pavone , the Fifth Circuit Court of Appeals held that an indefinitely moored floating dockside casino is not a vessel under the Jones Act or general maritime law. Work-related accidents on the premises are not covered by the Jones Act. (22). Such injuries are covered by Mississippi Workers Compensation, however, and the Workers Compensation Commission currently handles numerous claims by casino employees. (23).

Automobile Personal Injury and Wrongful Death Cases

A substantial increase in serious personal injuries and death from automobile accidents in the region has occurred since the casinos opened. Bart J. Cowart, Tunica County coroner since 1982, investigates traffic fatalities in the county. Cowart reports that prior to the casinos' arrival, Tunica County averaged two or three traffic fatalities per year. Since the casinos opened five years ago, Cowart has investigated 72 fatalities from traffic accidents involving people going to, or coming from, Tunica gambling venues. He reports a "conservative estimate" of forty (40) additional deaths at Memphis hospitals after such wrecks. (24). Especially where alcohol or road construction have played a role in such incidents, civil litigation is a frequent result.

Several civil cases arising from automobile-related injuries or deaths have involved casino vehicles directly. Blalock v. Grand Casino, et al. , for instance, arises from the death of a pedestrian struck by a casino bus. (25). McBride et al. v. Classic Coach, Inc., et al. , another wrongful death case, arises from an intersection collision with a casino shuttle from Memphis. (26). Many other cases arise from accidents involving persons on the way to or from casinos. (27). Casino Center Drive, a 3.5 mile segment of roadway that connects three casinos to Highway 61, has been the site of eleven accidents and six traffic fatalities since it opened in July, 1994. (28). The casinos' practice of serving free alcohol has given rise to at least five "dram-shop" type cases in Tunica County Circuit Court. (29).

Diversity of citizenship plays a major role in the increased automobile litigation in the area. Over 50% of the patrons of Tunica casinos are from out of state, with 47% of the customers from Shelby County, Tennessee alone. Choice of law issues relating to insurance coverage, damages, and other issues are common. (30).

Broader Impact

Harder to quantify, but potentially significant, is the broader impact of casino gambling on civil litigation in the region. Does the presence of casino gaming affect all civil litigation, not just that which involves casinos directly?

The economic changes brought to northwest Mississippi by casinos have exerted influence, to some extent, on all civil litigation in the region. Changes are evident in jury make-up. Fewer jurors are unemployed; more prospective jurors in Panola, Tate, Desoto and surrounding counties list as occupation "casino employee." Also, jurors' views of money, like the views of all persons in the region, have been influenced to some extent by the casino industry since its arrival five years ago.

For 100 years Mississippi jurors have come from a state economy at or near the bottom of the ladder. In at least some parts of the state, the casino industry is changing this picture. The casino industry has brought a less "regional" perspective of money to the state as a whole.

A powerful, and largely unforseen, impact results from casino advertizing in the region. No resident of north Mississippi escapes constant bombardment by casino ads. Billboards lining the roads cry: "Over $7 Million Payouts!" and "Hot Slots! $279,987.32 Paid." Newspapers carry ads picturing local "winners" over captions reading: "Mary. Hernando. Wins $100,000!" Casino ads permeate the television and radio airways. Advertising expenditures by Tunica casinos since opening have exceeded $84.3 million, dwarfing expenditures by any other area industry or business.

Prospective jurors are exposed to incessant messages, touting large sums of money, specifically designed by the gaming industry to foster a "jackpot" mentality. Whether consciously or unconsciously, jurors may be influenced by these messages when serving on any civil case. (31).

Conclusion

Casino gaming is having a substantial impact on civil litigation in and around the venues in which casinos operate. Casino-related litigation has a significant effect on the practice of law in these areas. Experience in venues in northwest Mississippi during the five years of Tunica's casinos convinces the authors of this article that the influence of legalized gambling is not limited to cases that involve casinos directly. The casino impact is a factor in all civil litigation in the region.

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This article was published in the Summer, 1998 issue of VOIR DIRE, the magazine of the Mississippi Trial Lawyers Association.

Richard T. Phillips is a founding partner of the nine-lawyer firm, Smith Phillips Mitchell Scott & Rutherford with offices in Batesville and Hernando, Mississippi. Robert R. Morris, III, a graduate of the University of the South and University of Mississippi law school, is an associate in the firm.

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