O Canada! Home of Class Action Lawsuits on Compulsive Gambling

On June 11, 2008, an Ontario accountant and his wife filed a $3.5 billion (CAD) class action suit on behalf of compulsive gamblers in Ontario, alleging that the Ontario Lottery and Gambling Corporation (OLGC) promised to exclude them from gambling in its locations then failed to do so. The lawsuit, Dennis v. Ontario Lottery and Gambling Corporation, seeks to represent customers of Ontario's 10 casinos and 21 racinos and joins three other Canadian class actions based on compulsive gambling theories:

• Brochu v. Loto-Quebec, the first of the Canadian class actions on compulsive gambling, seeks more than $500 million (CAD) on the theory that video lottery terminals (VLTs) in bars in Quebec province prey on compulsive gamblers by creating an "illusion of control." Three equipment manufacturers, International Game Technology (IGT), GTech and WMS Gaming, have been joined in the lawsuit. A late 2007 trial date was cancelled due to an interlocutory appeal; the lawsuit is now seven years old.
• Walsh v. Atlantic Lottery Corporation, filed in 2003 in Nova Scotia, also challenged VLT machines, contending that they are "inherently addictive."
• Schick v. Boehringer Ingelheim, an Ontario class action that is barely three years old, seeks to recover damages experienced by gamblers whose gambling addiction allegedly was fostered by the prescription drug Mirapex, a treatment for Parkinson's disease and restless-leg-syndrome.

What accounts for the proliferation of Canadian class actions concerning compulsive gambling? Two principal factors stand out. First, Canadian law is generally more sympathetic to plaintiffs who claim that a business has a duty-of-care to customers. Though no Canadian court has yet found such a duty in a compulsive gambling lawsuit, a report by the Ontario government recommended the recognition of such a duty. Indeed, defendants in Canadian compulsive gambling litigation have been quicker to settle than their American counterparts have been.

Perhaps more importantly, the Canadian government pays the attorney fees of the plaintiff in any class action that clears a relatively simple initial hurdle. The predictable consequence of this practice is to make class action litigation far more attractive to plaintiffs' lawyers than it is in the United States.

The Dennis lawsuit, just filed in Ontario, attacks the OLGC's implementation of its policy for excluding from its casinos those gamblers who ask to be excluded. Mr. Dennis claims to have lost over $500,000 at OLGC facilities, more than a third of that amount after he signed a self-exclusion agreement with OLGC in 2004. The Toronto Sun quotes the plaintiffs' lawyer as insisting that the company's self-exclusion policy is a sham, and that the OLGC must use "state-of-the-art" procedures for identifying compulsive gamblers and denying them entry to casinos.

Mr. Dennis claims to represent a class of compulsive gamblers who signed such agreements with the OLGC, while his wife purports to act on behalf of the class of family members of those people in Mr. Dennis' class. Both classes makes claims based on (i) OLGC's supposed negligence in implementing its self-exclusion program, (ii) OLCG's alleged breach of the self-exclusion agreement, and (iii) "occupier’s liability," a statutory obligation in Canada to provide a safe business premises.

The plaintiffs' petition includes several assertions:

• That 36 percent of OLGC's revenue comes from "problem gamblers" and 19 percent is derived from compulsive gamblers.
• That since its self-exclusion policy was adopted in 1999, OLGC relies solely on "memory enforcement" – that is, on the ability of its employees to remember the faces of thousands of self-excluded gamblers. This approach does not, the petition argues, satisfy OLGC's obligation to use its "best efforts" to keep self-excluded gamblers off the casino floor.
• That OLGC should use the same techniques to exclude compulsive gamblers, according to the petition, that it uses to exclude cheaters, including checking of identification cards.

Mr. Dennis' theory of recovery has been urged by self-described compulsive gamblers in several lawsuits in the United States, but has never succeeded in this country.