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Casinos cannot be sued under RICO by card-counting blackjack players who say their efforts to beat the odds are being thwarted by illegal “countermeasures,” such as constant reshuffling of the decks, a federal appeals court has ruled. In Doug Grant Inc. v. Greate Bay Casino Corp., a unanimous three-judge panel found that nearly all of the countermeasures used by the Atlantic City, N.J., casinos have been specifically approved by the New Jersey Casino Control Commission. “In our view, a casino does not commit a predicate RICO act when it engages in conduct the CCC expressly permits,” U.S. Circuit Judge Morton I. Greenberg wrote in an opinion joined by U.S. Circuit Judges Richard L. Nygaard and Robert E. Cowen. Unlike ordinary RICO victims, Greenberg said, the blackjack players “can avoid any injury simply by walking away from the alleged wrongdoers, the casinos, by not playing blackjack in casinos. In fact, that is what the casinos apparently want them to do, at least as long as they count cards.” Although staying out of casinos would deprive them of chances for winning money, Greenberg found that “surely it would be difficult to characterize that lost speculative opportunity as an injury to business or property.” And if they continue to play despite the countermeasures, he said, “they have suffered and will suffer self-inflicted wounds.” The plaintiffs in the suit were 60 blackjack players, all but six of whom have developed card-counting skills, along with several companies, such as Doug Grant Inc., that operate card-counting schools and mock casinos. Their lawyer, Howard A. Altschuler of East Haven, Conn., argued that the countermeasures illegally interfere with the players’ ability to win and forced the card-counting schools to close. The schools also said they were targeted with bomb threats, break-ins, destruction of property, theft of student lists, stalking and other intimidation tactics. Greenberg found that before addressing the legal issues in the case, it was important to describe how blackjack is played in a modern casino. Before a blackjack game starts, the dealer receives up to eight decks of cards from a casino supervisor. At a blackjack table, the dealer then spreads the cards out in a fan, face upward, for visual inspection by the players and then shuffles them. Once the cards are shuffled, the dealer allows a designated player to “cut” the cards by inserting a plastic cut card in the stack at least 10 cards from either end. Any cards in front of the cut card are placed in the back, and the deck is then placed in the dealing “shoe” to begin play. The cards behind the cutting card are not to be used during the game. Since the object of the game is to come as close to 21 without going over, card counters consider certain cards more favorable to the player — the ace, king, queen, jack and 10 — while the cards valued 6 and below are more favorable to the house, and the 7 and 8 cards are neutral. The point of counting cards is to determine whether the shoe contains more player-favorable cards or more house-favorable cards. When there are more player-favorable cards, a player’s chances of winning are increased, and card counters place higher bets. But for card counting to work, the player needs to see as many cards as possible. They prefer a cut toward the end of the shoe, leaving just a small number of cards that won’t be played, and they prefer to have the entire stack played out without reshuffling. In the suit, the card-counting players alleged that the casinos violate the “cheating games” section in the New Jersey Casino Control Act by maintaining card-counting teams and video and computer surveillance equipment to identify card counters and inform the dealers of their participation in a blackjack game so that the dealers can take countermeasures against them. A player the casino identifies as a card-counter is “branded for life,” they alleged, and never is able to play a “fair” game of blackjack without being subjected to countermeasures because the casinos share information about suspected card-counters. The heart of the lawsuit, however, was the players’ objection to the casinos’ practice of re-shuffling the decks “at will” whenever a card-counter is spotted. The suit said that the shuffle-at-will policy provides the casinos an extra 2 percent advantage — nearly double its normal chance of winning — resulting in millions in windfall profits. The players also alleged that the casinos use the policy abusively to the disadvantage of players who are not card-counters by shuffling at will even when there is no suspected card-counter playing at a table. The card-counters also complained that they have been denied “comps,” or free meals, and have suffered threats, harassment and “stalking.” In a bizarre claim, some said they had received pornographic material over the Internet from unidentified people they believed were connected to the casinos. THE CCC REGULATIONS Greenberg found that New Jersey law gives the CCC “comprehensive authority” to define and regulate the rules and conduct of play for blackjack and other casino games, as well as “exclusive jurisdiction” over the interpretation and enforcement of its own regulations. The CCC adopted many of its regulations authorizing card-counting countermeasures in response to the New Jersey Supreme Court’s 1982 ruling in Uston v. Resorts International in which the high court said casinos cannot exclude card-counters but that the CCC could issue regulations designed to neutralize the card-counter threat. The new regulations included several new shuffling options, including the at-will shuffle in which a dealer may shuffle at the end of any hand and the use of a device know as the “continuous shuffling shoe.” Another new regulation allows casinos to change the maximum or minimum bet at any table at any time by simply posting a sign and making an announcement so that a card-counter will not be able to bet high when the shoe becomes player-favorable. Greenberg found that the New Jersey courts “seem not to doubt the legality of the CCC-authorized countermeasures.” In one decision, he said, the New Jersey Superior Court, Appellate Division, found that the CCC “authorizes the disparate treatment of card-counters.” Turning to the card-counters’ federal RICO suit, Greenberg found that nearly all of the predicate acts were the use and abuse of countermeasures which the players called illegal. The “shuffling-at-will” countermeasure, they alleged, violates the criminal casino “cheating” statute, because the casinos do it only when the shoe is player-favorable. But Greenberg said the players were trying to “skew the plain meaning” of the regulation which clearly allows the casinos to shuffle “at the conclusion of any round of play.” “Even if the regulation is an improper exercise of the CCC’s authority — a conclusion that we reject — a casino following it before its invalidation hardly could be subject to RICO liability for that conduct,” Greenberg wrote. Greenberg said he was “disturbed” that the players had presented their arguments “in dramatic hyperbole obfuscating the real issues.” In dismissing the RICO claim, Greenberg said, “we have reached the conclusion that appellants’ allegations that the casinos or any appellee has committed predicate RICO acts are completely insubstantial and border on the frivolous.” Greenberg also flatly rejected the players’ claim that the casinos had violated their constitutional rights to due process and equal protection. “State regulation and the CCC’s authorization of casino activities do not transform the casinos into state actors,” he wrote. Besides, Greenberg said, the countermeasures would survive any rational-basis test since they are authorized by the CCC and “are rationally related to the legitimate state interest of protecting the financial viability of the casino industry.” Finally, Greenberg found that the players “do not have a constitutionally protected property interest in the opportunity to gamble and thus the activities of which they complain do not violate their due process rights.” Attorneys Adam N. Saravay of Tompkins McGuire Wachenfeld & Barry in Newark, N.J., and John M. Donnelly of Levine Staller Sklar Chan Brodsky & Donnelly in Atlantic City, N.J., argued the case for the casinos.

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