COURT OF APPEAL FOR ONTARIO
Simmons, Armstrong and Watt JJ.A.
C55521
BETWEEN
Joaquim Moreira, Moshe Braunstein and Remo Gigliotti
Plaintiffs/Defendant by Counterclaim (Appellants)
and
Ontario Lottery and Gaming Corporation, Falls Management Company, Falls Management Group, L.P., and John Doe #1, John Doe #2, John Doe #3, and the Alcohol and Gaming Commission of Ontario
Defendants/Plaintiff by Counterclaim (Respondents)
AND BETWEEN
C55527
Tebaldo Barbuscio
Plaintiff/Defendant by Counterclaim (Appellant)
and
Ontario Lottery and Gaming Corporation, Falls Management Company, Falls Management Group, L.P., and John Doe #1, John Doe #2, John Doe #3, and the Alcohol and Gaming Commission of Ontario
Defendants/Plaintiff by Counterclaim (Respondents)
Edward L. Greenspan, Q.C., for the appellants Joaquim Moreira and Remo Gigliotti
W. Xavier Navarrete and Glen Perinot, for the appellants Moshe Braunstein and Tebaldo Barbuscio
Derek D. Ricci and Nicholas Van Exan, for the respondents Ontario Lottery and Gaming Corporation, Falls Management Company and Falls Management Group, L.P.
John S. Kelly and Tom Schreiter, for the respondent Alcohol and Gaming Commission of Ontario
Heard: November 1, 2012
On appeal from the judgment of Justice Edward P. Belobaba of the Superior Court of Justice dated April 30, 2012.
A. OVERVIEW
1The appellants are high stakes gamblers who lost approximately $2.1 million while playing roulette at the Niagara Fallsview Casino Resort (“Fallsview Casino”) over a period of about three-and-a-half years.
2The appellants say that, throughout that three-and-one-half year period, the casino operators had in place a “floating ball rule”, which permitted roulette dealers to remove a “floating ball” from a spinning roulette wheel and to call a “no-spin”, ending the particular game and making all wagers void.
3A floating ball can take one of two forms: either a ball that becomes stationary on the numbers ring of the roulette wheel as the wheel continues to spin (a “ghost ball”), or a ball that continues to roll around and around (a “runner”) without falling into the numbered pockets, sometimes for a considerable period of time.
4The appellants contend that, under provincial law, the casino operators were required to have their “floating ball rule” approved as a rule of play by the regulator of provincial lottery schemes, the Alcohol and Gaming Commission of Ontario (the “AGCO”).
5Because the casino operators failed to obtain the AGCO’s approval of their floating ball rule, the appellants say that the roulette games they played at the Fallsview Casino did not qualify for the Criminal Code1 exemption from the prohibition against gambling and were therefore illegal. Accordingly, the appellants sued the casino operators and the AGCO in two separate actions claiming damages as well as the return of their gambling losses.
6On a summary judgment motion to dismiss the appellants’ actions, Belobaba J. concluded that, even if the roulette games were illegal, the appellants would not be entitled to a remedy in this case. In reaching this conclusion, he relied significantly on the fact that the appellants’ wagers were returned whenever the floating ball practice was invoked. The motion judge therefore dismissed the appellants’ actions. He also granted summary judgment to the Ontario Lottery and Gaming Corporation (the “OLGC”)2 with respect to two actions by the OLGC for recovery of the amount owing on gambling loans made to two of the appellants (the “collection actions”).
7The main issues on appeal are: (i) whether the roulette games played by the appellants at the Fallsview Casino during the relevant period were illegal; (ii) whether the motion judge erred in holding that, even if the roulette games played by the appellants were illegal, the appellants would not be entitled to a remedy against either the casino operators or the AGCO; and (iii) whether the motion judge erred in failing to find that s. 47.1 of the Gaming Control Act, 1992, S.O. 1992, c. 24, bars the collection actions because they are an attempt to use civil proceedings to recover illegal gambling loans.3
8For the reasons that follow, I would dismiss the appeals.
B. Background
9The Fallsview Casino opened in June 2004. Under the terms of the relevant provincial legislation, the OLGC manages it. Since the casino opened, one of either Falls Management Company or Falls Management Group, L.P., has acted as the OLGC’s agent in operating the casino on a daily basis. (In these reasons, the OLGC, Falls Management Company and Falls Management Group, L.P., are collectively referred to as the “casino operators”.)
10The appellants frequented the Fallsview Casino between June 2004 and late 2007 or early 2008. During that period, they spent many hours playing roulette together, or immediately next to each other, at one of three roulette tables in the Salon Privé of the casino, typically wagering amounts in excess of $1,000 per spin.
11During the three-and-one-half years that the appellants frequented the Fallsview Casino, collectively, they lost approximately $2.1 million.
12During 2006 and 2007, two of the appellants, Moshe Braunstein and Tebaldo Barbuscio, borrowed money from the Fallsview Casino to finance playing roulette and other games. For that purpose, the two appellants issued signed markers to the Fallsview Casino. In the case of Mr. Braunstein, the markers totalled $34,700; in the case of Mr. Barbuscio the markers totalled $75,000.
13In late 2007 and early 2008, the OLGC made formal demands for repayment of the gambling loans.
14In April and June of 2008, the appellants commenced these two actions against the casino operators and the AGCO, claiming a total of $14 million in damages for negligence, breach of contract, unjust enrichment and misrepresentation under the Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A.
15In January 2009, the OLGC sued Mr. Braunstein and Mr. Barbuscio in separate actions for repayment of their gambling loans. As of that date, Mr. Barbuscio had repaid $11,000 of the $75,000 he had originally borrowed.
16In August 2009, the appellants’ actions were ordered to be heard together and the collection actions were deemed to be counterclaims.
17After the actions were ordered to be heard together, the AGCO and the casino operators brought motions for summary judgment requesting that the appellants’ actions against them be dismissed. The OLGC also moved for summary judgment on its collection actions. After hearing submissions over two days, the motion judge dismissed the appellants’ actions and granted judgment in favour of the OLGC on the collection actions.
C. The Legislative Framework PERMITTING LOTTERIES and Games of chance in Ontario
18As a general rule, gambling and betting are illegal in Canada. Section 201 of the Criminal Code4 stipulates that “[e]very one who keeps a common gaming house or common betting house is guilty of an indictable offence”. Further, s. 206 of the Criminal Code contains specific prohibitions against lottery schemes and games of chance.
19However, s. 207 of the Criminal Code authorizes the government of each province to conduct and manage lottery schemes, including games of chance, and to regulate and license the manner in which such lottery schemes are delivered.
20Importantly, s. 207(1)(a) of the Criminal Code stipulates that “[n]otwithstanding any of the provisions of this Part relating to gaming and betting, it is lawful for … a province … to conduct and manage a lottery scheme in that province … in accordance with any law enacted by the legislature of that province” (emphasis added).
21In Ontario, the authority to regulate lottery schemes is vested in the AGCO, a quasi-judicial regulatory agency established under the Alcohol and Gaming Regulation and Public Protection Act, 1996, S.O. 1996, c. 26, Sched.
22The AGCO regulates lottery schemes through the administration of the Gaming Control Act. The Gaming Control Act, and O. Reg. 385/99, enacted under the Gaming Control Act, set out the statutory framework for regulating the conduct and management of lottery schemes.
23Under s. 3 of the Alcohol and Gaming Regulation and Public Protection Act, the AGCO is required to exercise its powers and duties under the Gaming Control Act “in the public interest and in accordance with the principles of honesty and integrity, and social responsibility.”
24In contrast to the regulatory power exercised by the AGCO, the authority to conduct and manage lottery schemes on behalf of the province is vested in the OLGC, a Crown agency established under the Ontario Lottery and Gaming Corporation Act, 1999, S.O. 1999, c. 12, Sched. L. Section 0.1 of that Act indicates that the purposes of the Act are: a) to enhance the economic development of the province; b) to generate revenues for the province; c) to promote responsible gaming; and d) to ensure that anything done for one of the other three purposes is also done for the public good and in the best interests of the province.
25Importantly, s. 3.7 of the Gaming Control Act authorizes the AGCO to “approve in writing rules of play for the playing of lottery schemes conducted and managed by the [OLGC] if the regulations have not prescribed rules of play.”
26Section 22(2) of the Gaming Control Act requires that casino operators ensure that lottery schemes are played in accordance with the rules of play approved by the AGCO:
- (2) No registered supplier who provides services related to the operation of the gaming site maintained for playing a lottery scheme conducted and managed by the [OLGC] … shall permit the playing of a lottery scheme on the site except in accordance with,
(b) the rules of play approved in writing by the [AGCO] for lottery schemes, if none have been prescribed by the regulations.
27Further, under s. 30 of O. Reg. 385/99 casino operators are required to submit to the AGCO for its approval “a complete description of each game of chance that it intends to offer for play at the premises.” The operator must also ensure that the games offered are approved by the AGCO and played in accordance with the rules approved by the AGCO:
- (1) An operator of a gaming premises shall submit to the board of the [AGCO] for its approval a complete description of each game of chance that it intends to offer for play at the premises.
(2) The description shall include,
(a) a summary of the game, including its objectives, the rules of the game, the method of play and the wagers that may be made;
(b) the chances of winning the game and the advantage of the operator in relation to each wager; and
(c) a description of the equipment, if any, used in the playing of the game.
(4) An operator of a gaming premise shall ensure that the games of chance offered for play at the premises are approved by the board and played in accordance with the rules approved by the board. [Emphasis added].
D. The issues before the motion judge
28In his reasons for judgment, the motion judge noted that the appellants had raised an array of issues in their pleadings and written material and had added some new issues in oral argument. However, in his view, ultimately there were only two issues before the court.
29The first issue was whether the roulette games played by the appellants were rendered illegal because of a practice by the roulette dealers of reaching into the roulette wheel while it was spinning to remove what is commonly referred to as a “floating ball” before the ball dropped into a pocket when the casino operators had failed to submit a “floating ball rule” to the AGCO for approval.
30The second issue identified by the motion judge was whether the appellants had a viable claim for damages or unjust enrichment.
E. The motion judge’s reasons
31The motion judge began the analysis section of his reasons with the damages issue. He concluded that the claims in breach of contract, tort and misrepresentation could not succeed because the appellants had not filed any evidence of damages. That left for consideration the appellants’ illegality argument and their claim for unjust enrichment.
32Concerning the illegality argument, after noting the relevant regulation and the content and evolution of the approved rules of play, the motion judge said that if the summary judgment motions for dismissal of the appellants’ actions turned only on the “floating ball” issue, he would have dismissed the motions. In his view, stopping roulette games to remove a floating ball was contrary to provincial gaming laws. This is because, as a matter of common sense, any rule that allows a dealer to stop the game for non-obvious reasons5 is a rule of play. By not including a “floating ball rule” of play when it applied for AGCO approval,6 the casino operators breached ss. 30(1) and (4) of O. Reg. 385/99 because they did not submit a “complete description” of the roulette game and because they did not ensure that the game in question was being played “in accordance with the rules approved by the board.”
33In introducing this section of his reasons, the motion judge said the “floating ball rule” was “probably” a rule of play and that it was “probably” not approved as required. Further, in concluding this section, the motion judge acknowledged that the submissions of the casino operators and the AGCO on this issue were more extensive and nuanced than he had explained. However, because the determination of these motions did not turn on this issue, he found it unnecessary to devote further time to it. Accordingly, although the motion judge’s conclusions regarding the illegality issue are stated in a definitive manner, I accept that he regarded them as tentative.
34The motion judge next turned to the appellants’ claims for unjust enrichment.
35He began by reviewing the appellants’ arguments, which were premised on Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629. In Garland, a gas company was required to repay late payment charges it had collected that had been approved by the Ontario Energy Board because the Supreme Court determined that the late payment charges were illegal.
36However, the motion judge identified an important feature of this case distinguishing it from Garland – namely, the fact that no money or benefits were ever retained by the casino operators. After every “floating ball” call, the players’ wagers were returned. Accordingly, the casino operators were not enriched and the appellants suffered no deprivation. Moreover, because the casino operators returned the players’ wagers each time a floating ball was called, unlike the situation in Garland, the casino operators obtained no “proceeds of crime”.
37Finally, the motion judge rejected the appellants’ argument that the absence of a “floating ball rule” made all of the roulette games played by the appellants illegal. He said he knew of “no legal authority that supports such a broad-sweeping proposition.”
38Although the motion judge said he found “considerable merit” in two additional arguments made by the AGCO,7 because of his conclusion on the damages issue, he found it unnecessary to deal with them.
F. The Appellants’ Position on Appeal
39As was the case before the motion judge, on appeal to this court, the appellant presented an array of arguments relating to the nature of their causes of action and their claims for damages.8
40However during the course of oral argument, the appellants confirmed that, as against the casino defendants, they rely only on their cause of action for unjust enrichment and, as against the AGCO, they rely only on their cause of action for negligence.
41The appellants rely on the motion judge’s finding that the “floating ball rule” is a rule of play and that it had not been approved by the AGCO. However, they submit that he erred in failing to find that non-compliance with the Gaming Control Act and related regulations rendered all the roulette games they played illegal.
42Further, with respect to both causes of action they advance, the appellants say the motion judge erred by taking too narrow an approach to the appropriate remedy. In particular, they say the motion judge erred by failing to recognize that, because all the roulette games the appellants played were illegal, they are entitled to the return of, or damages for, the $2.1 million in losses they incurred while playing.
43Finally, the appellants Braunstein and Barbuscio say that because s. 47.1 of the Gaming Control Act9operates as a bar to the collection of illegal gambling debts, the motion judge erred in granting summary judgment to the OLGC on its collection actions.
G. Analysis
(1) Were the Roulette Games Played by the Appellants at the Fallsview Casino during the Relevant Period Illegal?
(i) Introduction
(a) The nature of roulette
44Before assessing the illegality issue, it is important to review some of the evidence relating to the nature of roulette, the floating ball phenomenon and the evolution and use of the AGCO approved rules of play.
45On the motion for summary judgment to dismiss the appellants’ actions, the casino operators filed affidavits from Shannon Dutton, the Director of Table Games at the Fallsview Casino, and from William A. Zender, a gaming consultant from Las Vegas with 34 years of experience in the gaming industry.
46The uncontradicted evidence of the casino operators’ witnesses indicated that, unlike most other casino games (for example, blackjack and poker), roulette is a game of pure chance. The outcome of every game of roulette is completely random, unpredictable and independent of previous results.
47Further, there is a fixed house advantage associated with roulette. The house advantage is the mathematical edge the casino has over its patrons, which compensates the casino for the entertainment services it provides. In the case of all roulette games played by the appellants, the house advantage was 2.7%.
48As a result of the house advantage and the inherent nature of roulette as a game of pure chance, every player is mathematically more likely to lose than win on each spin of the roulette wheel.
(b) The floating ball phenomenon
49In his affidavit, Mr. Zender explained that a floating ball is a roulette ball that is hung-up above the pockets of the wheel for an unusually long period of time, up to several minutes. Further, the floating ball phenomenon is not unique to the Fallsview Casino. Rather, it is a random, unpredictable and relatively infrequent occurrence – but one that is common to the gaming industry.
50Mr. Zender deposed that, in his experience in the gaming industry, the standard procedure for dealing with a floating ball, where the ball has been either stationary or “running” for several rotations of the wheel, is for the dealer to announce a “no-spin”, reach into the wheel and remove the ball, and declare all bets void.10 Further, in his experience, most casinos and regulators do not have published procedures for dealing with floating balls.
51Mr. Zender also explained that, in his view, it is not possible for a casino to use floating balls and the “no-spin” procedure to its advantage. This is because floating balls are random and unpredictable events that cannot be planned or anticipated by a dealer. In addition, the practice of removing the ball is not based on its location or orbiting path, but rather on the period during which it has been floating. Finally, floating balls occur too rarely for it to be possible for the operator to gain some form of advantage. Mr. Zender was not aware of any instance in which a casino had been able to gain an advantage by adopting a “no-spin” procedure to deal with floating balls.
52Somewhat in contrast to Mr. Zender’s evidence, on a cross-examination conducted in support of a motion, John Stamatakos, Executive Director of Table Games at the Fallsview Casino, acknowledged that the casino would make more money if there were more spins per hour (this is because of the house advantage). However, he also said that the casino would lose money when a floating ball is removed because the casino does not take any bets on a “no-spin”.
53As will become apparent from the approved rules adopted by the AGCO over time, the floating ball phenomenon is not the only type of unpredictable event or irregularity that can occur during a game of roulette. Other types of irregularities include: the ball popping out of the roulette wheel; the ball not completing the required number of revolutions to constitute a valid spin; and a foreign object intentionally or accidentally being dropped or thrown into the wheel.
(c) The evolution and use of the AGCO approved rules of play
54In her affidavit, Ms. Dutton deposed that the AGCO approved rules of play for roulette in March 1999, five years before the Fallsview Casino opened. These rules remained in force across Ontario, essentially unchanged, until February 2008 when the AGCO approved slightly revised rules of play for roulette. The February 2008 revised approved rules of play were amended and approved in April 2008 and again in March 2011.
55The March 1999 approved rules of play for roulette made no provision for random, unpredictable events (“irregularities”) that can occur during the course of a roulette game. The only reference to the possibility of an irregularity was contained in a rule under the heading “Rotation of Wheel and Ball”. The rule required that the ball complete at least four revolutions of the track to constitute a valid spin:
4.3 Rotation of Wheel and Ball
(a) The roulette ball shall be spun by the dealer in a direction opposite to the rotation of the wheel and shall complete at least four revolutions around the track of the wheel to constitute a valid spin.
56The February 2008 approved rules of play for roulette added a heading “Irregularities”. That heading contained two provisions and stipulated that a Dealer or Supervisor could call a “no-spin” in two situations: (i) if the ball did not complete at least four revolutions of the track; and (ii) if the roulette ball left the roulette wheel. The two provisions read as follows:
5.5.1 If the Dealer or Supervisor determine the Roulette ball does or will not complete at least four revolutions, ensuring a random outcome, the Dealer and/or Supervisor announces a “No Spin”. When possible, the ball is removed from the wheel before it drops into a number.
5.5.2 If the Roulette ball leaves the Roulette wheel, the Dealer and/or Supervisor announces a “No Spin”. The Roulette ball is then placed on the last winning number.
57The April 2008 revised approved rules for roulette did not amend the provisions set out above. The March 2011 revised approved rules added a third provision under the subheading “5.5 Irregularities”, specifying additional circumstances in which “no-spins” could be called, including in the event of a floating ball:
5.5.3 No spins include, but are not limited to:
a) The ball and wheel moving in the same direction;
b) A foreign object in the wheel;
c) At the operator’s discretion, if the ball is floating for 3 or more rotations of the wheel;
d) If the Supervisor believes it to be in the best interest of the integrity of the game.
58According to Ms. Dutton’s affidavit, the 2008 revisions to the approved rules of play were “part of a multi-year province-wide effort to update the rules of play for all table games, not just roulette.” In the case of the approved rules of play for roulette, the 2008 revisions “did not change the way the game of roulette was played in any material way.” Instead, the revisions “merely codified existing practice and provided added guidance with respect to such things as placing wagers and dealing the game.”
59Further, with respect to the 2011 revisions to the roulette approved rules of play, Ms. Dutton deposed that they “did not change the way the game of roulette was (and continues to be) played in any material way. Rather, the 2011 rules of play merely codified existing practices with respect to dealing the game of roulette, and provided greater clarity and specificity.”
(ii) Discussion
60In a nutshell, the appellants contend that the “floating ball rule” is a “rule of play” and accordingly, under s. 30(1) of O. Reg. 385/99, the casino operators were required to include the “floating ball rule” in the complete description of the rules of roulette they submitted to the AGCO and to obtain the AGCO’s approval of the rule.
61According to the appellants, the casino operators’ failure to obtain the AGCO’s approval of the “floating ball rule” and their ongoing use of the “floating ball rule” in the roulette games played by the appellants means that such roulette games were played under rules (or at least one rule) not approved by the AGCO.
62This, in turn, means that the roulette games in which the appellants participated were played in contravention of s. 22 of the Gaming Control Act and in contravention of s. 30(4) of O. Reg. 385/99. If that is the case, the roulette games were not played “in accordance with [the] law[s] enacted” by the province as required by s. 207(1)(a) of the Criminal Code. Accordingly, the roulette games do not qualify for the exemption from criminal liability contained in s. 207 and are therefore illegal.
63I would not accept the appellants’ position for several reasons.
64First, I am not persuaded that the casino operators’ floating ball practice is a rule of the game that required the AGCO’s approval.
65Under s. 30(1) of O. Reg. 385/99, the casino operators’ obligation is to provide to the AGCO “a complete description of each game of chance it intends to offer … includ[ing] … a summary of the game, including its objectives, the rules of the game, the method of play and the wagers that may be made.”
66The appellants’ position effectively asserts that any failure by a casino operator to describe a “rule of the game” amounts to a breach of provincial law that would deprive the casino operator of the benefit of the exemption from criminal liability contained in s. 207 of the Criminal Code. Assuming, without deciding, that this interpretation is correct, as I have said, I am not persuaded that the casino operators’ floating ball practice is a rule of the game.
67Considered in context, in my opinion, the requirement to provide a complete description of the “rules of the game” is a requirement to describe the rules by which the game is played and which ensure the integrity and fairness of the game assuming it proceeds in the ordinary course.
68As such, the obligation to describe the rules of the game does not encompass an obligation to consider and provide a rule to respond to every irregularity that may occur during a roulette game. Nor does it encompass an obligation to describe casino-operator practices that have no impact on the fairness and integrity of the game.
69The phrase “complete description of … the rules of the game” is not defined in either the Gaming Control Act or the regulations enacted under that Act. Consistent with established principles of statutory interpretation, the words should be read “in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”: Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26.
70The legislative scheme in this case is intended to ensure that lottery schemes and games of chance, where they are permitted, be conducted responsibly and in the public interest.11 Of necessity, this requires that the legislative scheme ensure that permitted lottery schemes and games of chance are conducted in a manner that ensures the fairness and integrity of the game.
71Towards those ends, the legislature requires that casino operators submit to the AGCO for its approval a complete description of each game of chance they intend to offer, including the “rules of the game”, and that casino operators and staff ensure that each game of chance is played in accordance with the approved rules of play. This allows the legislature to strictly control gambling operations that may otherwise exploit individual gamblers or harm the broader public interest.
72In order to achieve this objective, the legislature requires the regulator to review rules such as (i) the objectives of the game, (ii) the wagers that may be made, (iii) the chances of winning, and (iv) the advantages of the operator in relation to each wager. All of these rules are integral to the fairness and integrity of games of chance and failure to regulate these items would undermine the remedial function of the legislation.
73However, the practice of removing a floating ball has no impact on any of these variables. Nor does the practice have an impact on any other aspect of the fairness and integrity of the game.
74When a floating ball is removed, a “no-spin” is declared, all wagers are void and a new game is started. While there was some suggestion that casino operators could make more money from the use of a floating ball practice because the practice increases the number of spins per hour, in my view, that suggestion has no air of reality. The evidence in this case supported a finding that floating balls are a relatively rare event. There was no evidence that use of a floating ball practice actually appreciably increases the number of spins per hour on a consistent basis. Moreover, because of the house advantage, casinos are more likely to lose money on the occasions when the floating ball practice is invoked because they lose the particular opportunity for a win. For all practical purposes, a “no-spin” resulting from a floating ball is a non-event – just as all other “no-spins” arising from other irregularities are non-events.
75As noted by the casino operators, it is impossible to exhaustively define every eventuality that may occur in a roulette game. If a particular dealer practice impacts the fundamental fairness or integrity of the game, a rule describing the practice should be submitted to the AGCO for approval. However, there is nothing to indicate it was the legislature’s intention to make it mandatory that casino operators submit to the AGCO for approval detailed descriptions of practices that have no substantive impact on a game of chance or its players.
76In short, while standard practices concerning the appropriate response to irregularities that occur during a roulette game may be of assistance, and while the AGCO can choose to include rules adopting such practices in its approved rules of play, such practices are not strictly “rules of the game” in the sense that they govern how a roulette game must be played to ensure the fairness and integrity of the game assuming the game proceeds in the ordinary course.
77Second, and in the same vein, I am not persuaded that practices adopted by a casino operator in response to an irregularity constitute departures from AGCO approved rules of play where the AGCO approved rules of play do not address what should occur in the event of a particular irregularity.
78As I have explained, the March 1999 rules of play approved by the AGCO for roulette, did not contain any provisions addressing what to do in the event of an irregularity. They did stipulate that, to constitute a valid spin, the ball had to complete four revolutions of the track of the wheel. However, they did not specify what procedure casino operators should follow if the ball did not complete four revolutions of the track. Nor did they address what casino operators should do in the event of any other irregularity.
79Rules addressing what to do in the event of an irregularity were introduced for the first time into the rules of play approved by the AGCO in February 2008. Those rules specified the procedure to be followed if the ball did not meet the requirements for a valid spin (four revolutions of the track of the wheel), as well as the procedure to be followed if the ball left the roulette wheel.
80Such events are irregularities that necessitate a response by a casino operator when they occur. In the absence of a response, the roulette game could not continue. In my view, it would be absurd to suggest that the legislature intended that, because the AGCO had no approved rule in place to respond to such irregularities prior to 2008, all roulette games played in Ontario prior to 2008 were therefore illegal.
81The third reason I do not accept the appellants’ position is that I do not accept the motion judge’s distinction between “obvious” and “non-obvious” reasons for stopping a roulette game as a basis for determining whether the procedure for responding to an irregularity is a “rule of the game” that requires the AGCO’s approval.
82At para. 17 of his reasons, the motion judge expressed the view that “any rule that allows a dealer … to stop the game for non-obvious reasons is a rule of play.” By way of contrast, he cited the roulette ball flying out of the wheel, a foreign object landing in the wheel or someone pushing the roulette table and dislodging all the chips as “obvious” reasons for stopping a roulette game.
83The motion judge concluded that the casino operators breached ss. 30(1) and (4) of O. Reg. 385/99 because they did not submit a complete description of the roulette game to the AGCO and because they did not ensure that the game was being played “in accordance with the rules approved by [the AGCO].”
84As a starting point, the motion judge’s “common sense” characterization of the floating ball practice as a non-obvious reason for stopping a roulette game overlooked the expert evidence concerning the floating ball phenomenon in roulette. Although a relatively rare occurrence, the floating ball phenomenon is common to the game of roulette and, at least in North America casinos, prompts a common – and therefore perhaps “obvious” – response.
85More importantly, however, the motion judge’s conclusion that the casino operators’ floating ball practice is a rule of play failed to take account of the legislative purpose for requiring approved rules of play.
86As I have explained, the process of removing a floating ball from the wheel, declaring a “no-spin”, and rendering all bets void has no substantive impact on the fairness or integrity of the game of roulette vis-à-vis the players. This is because of the nature of the game as a true game of chance and, to some extent, because of the house advantage. The existence of a floating ball renders the spin a nullity, but it does not disadvantage the players. In these circumstances, I see no basis for distinguishing floating balls from other irregularities that necessitate stopping the game.
87Based on these reasons, I have concluded that the casino operators were not required to obtain AGCO approval of their floating ball practice and that their failure to do so did not make the games of roulette the appellants played illegal. Accordingly, I would not give effect to this ground of appeal.
88In the light of my conclusion on the illegality issue, it is not strictly necessary that I address the remaining grounds of appeal. However, as I would not give effect to the second ground of appeal even if the roulette games were illegal, I will explain my reasons for that conclusion.
(2) Assuming all the Roulette Games the Appellants Played were Illegal, Did the Motion Judge Err in Finding that the Appellants were not Entitled to a Remedy in Unjust Enrichment against the Casino Operators?
89In support of their claim for unjust enrichment against the casino operators, the appellants rely on Garland v. Consumers’ Gas Co.
90As was noted by the motion judge, in Garland, the Supreme Court allowed a customers’ class action against a gas company to recover late penalty payments that had been found to constitute a criminal rate of interest. The gas company levied the charges in accordance with orders made by the Ontario Energy Board. However, the Supreme Court found that, to the extent those orders conflicted with s. 347 of the Criminal Code, they were inoperative. The Supreme Court concluded that the customers had a valid claim for unjust enrichment from the date their action was commenced.
91The appellants submit that the motion judge in this case erred in failing to find that the absence of an AGCO-approved floating ball rule made all the roulette games they played illegal. In particular, they say that the Criminal Code makes gambling per se illegal, unless it is conducted strictly in accordance with a statutory exemption.
92Further, relying on Garland, the appellants say the motion judge erred in finding there was no enrichment and no deprivation in this case. According to them, all bets they placed, and lost, during roulette games that were illegal fall squarely within the ambit of the concepts of enrichment and deprivation, as those concepts have been defined by the Supreme Court of Canada. Moreover, because the games they played were illegal, the Gaming Control Act cannot provide a juristic reason for the enrichment.
93I agree that, assuming all the roulette games were illegal (and not just games where an unapproved floating ball was invoked), all bets the appellants placed and lost would constitute enrichment of the casino operators and deprivation to the appellants. And while I agree that, assuming that all the roulette games were illegal, there may be no juristic reason for the enrichment within the established categories as identified in the current jurisprudence, in my view, the casino operators established “another juristic reason” for the enrichment on the record that was before the court.
94The elements of the test for establishing unjust enrichment are well-established: (1) an enrichment of the defendant; (2) a corresponding deprivation of the plaintiff; and (3) an absence of juristic reason for the enrichment: Garland at para. 30.
95The Supreme Court of Canada has adopted a “straightforward economic approach” to the first and second elements of the test. Accordingly, where the alleged enrichment and deprivation take the form of a monetary payment, the first and second elements are easily established: Garland at para. 31.
96Assuming all the roulette games the appellants played were illegal, the real issue in this case is whether there was “an absence of juristic reason for the enrichment.” In Garland, at para. 44, the Supreme Court concluded that a two-step approach to this issue is necessary.
97In the first step, a plaintiff is required to show that no juristic reason exists from an established category to deny recovery. The established categories include: a contract, a disposition of law, a donative intent, and other valid common law, equitable or statutory obligations. If there is no juristic reason from an established category, then the plaintiff has made out a prima facie case under this component of the analysis: Garland, at para 44.
98At the second step of the analysis, the defendant can attempt to show that there is another reason to deny recovery. At para. 46 of Garland, the Supreme Court indicated that, at this stage, courts should have regard to two factors: the reasonable expectations of the parties, and public policy considerations. In applying these factors, this stage of the analysis may lead to establishing a new category of juristic reason; it may lead to finding a juristic reason applicable only to the particular circumstances; or it may lead to a conclusion that there was no juristic reason for the enrichment.
99Beginning with the first step, at para. 53 of Garland, the Supreme Court concluded that, in that case, to the extent the Ontario Energy Board orders were inoperative because they conflicted with the Criminal Code, they could not constitute a juristic reason for the enrichment of the gas company. The consumers had therefore established a prima facie case at step one of the third element of the unjust enrichment test.
100Nonetheless, moving to step two of the third element, in weighing the reasonable expectations of the parties and public policy considerations, the Supreme Court found that the gas company’s reliance on the inoperative Ontario Energy Board orders provided a juristic reason for the enrichment until the gas company was put on notice of the “serious possibility” that it was violating the Criminal Code.
101At para. 57 of its reasons, the court stated that “the overriding public policy consideration … [was] the fact that the [late payment penalties] were collected in contravention of the Criminal Code. As a matter of public policy, a criminal should not be permitted to keep the proceeds of his crime”.
102However, on the facts of that case, the Supreme Court concluded that, up until the gas company’s customers commenced their action, the gas company’s reliance on the authorization provided by the Ontario Energy Board orders was reasonable.
103In my view, a similar analysis applies here. Although there was some evidence that the appellants complained to representatives of the casino operators on occasion about the casino’s practice of removing floating balls, that evidence was sparse12 – and there was conflicting evidence suggesting that the appellants wanted the ability to call a “no-spin” for a floating ball themselves.
104More importantly, however, during the relevant period when the appellants were playing roulette at the Fallsview Casino, the casino was subject to supervision by its regulator, the AGCO, to ensure that it was complying with the Gaming Control Act and the rules of play.
105This supervision included the existence of a dedicated Compliance Officer assigned to the Fallsview casino. Among other things, the Compliance Officer: (i) maintained an office at the Fallsview Casino; (ii) regularly walked the casino floor to monitor gaming activities; and (iii) had unfettered access to the Fallsview Casino’s Surveillance Department to conduct investigations and ensure compliance with applicable laws, regulations and rules of play.
106Further, the available records of the AGCO for the period from June 10, 2004 to the end of 2008 indicate that the AGCO was not required to issue any warnings or monetary penalties in connection with the operation of the roulette games at the Fallsview Casino. There was no evidence that any of the appellants ever contacted the AGCO with complaints about the conduct or management of the Fallsview Casino.
107Perhaps most importantly, for the purposes of the motion, the AGCO provided evidence to the effect that the rules of play for roulette are not required to deal with all irregularities that may arise from time to time during a game of roulette. While not determinative on the issue of the legality of the roulette games, this evidence supports a finding that it was reasonable for the casino operators to believe the roulette games were legal. If the regulator did not believe an approved floating ball rule was required, it was reasonable for the casino operators to reach the same conclusion.
108Viewed as a whole, the evidence on the motion indicated that it was reasonable for the casino defendants (and the appellants) to rely on the legality of the roulette games. There is no suggestion that the casino operators were put on notice of a “serious possibility” that the roulette games were illegal until such time as the appellants commenced their actions.
109In the circumstances, in my view, the evidence on the motion failed to disclose a genuine issue requiring a trial concerning the appellants’ claim against the casino operators for unjust enrichment.
(3) The Appellants’ Claim for Negligence against the AGCO
110I see no merit in the appellants’ claim for negligence against the AGCO.
111In my view, the appellants’ claims against the AGCO are similar to the numerous actions brought against statutory regulators, who owe a duty to the public at large, by members of the public who have allegedly been harmed by individuals or organizations whose conduct is overseen by the regulators.
112In such cases, it has consistently been held by the Supreme Court of Canada and by this court that statutory regulators’ public duties are incompatible with a private duty of care to individual members of the public, that there is no proximity in the relationship between such regulators and members of the public, and that public policy requires an immunization from a duty of care: Cooper v. Hobart, 2001 SCC 79, [2001] 3 S.C.R. 537; Edwards v. Law Society of Upper Canada, 2001 SCC 80, [2001] 3 S.C.R. 562; Attis v. Canada (Minister of Health, 2008 ONCA 660, 93 O.R. (3d) 35; Williams v. Canada (Attorney General), 2009 ONCA 374, 95 O.R. (3d) 401; Wellington v. Ontario, 2011 ONCA 274, 105 O.R. (3d) 81.
H. Disposition
113Based on the foregoing reasons, the appeal is dismissed with costs to the respondents on a partial indemnity scale fixed in favour of the casino operators in the amount of $15,000 and fixed in favour of the AGCO in the amount of $10,000, both amounts inclusive of disbursements and applicable taxes.
Released: “RPA” February 26, 2013
“Janet Simmons J.A.”
“I agree Robert P. Armstrong J.A.”
“I agree David Watt J.A.”
Appendix “A”
GAMING AND BETTING
Keeping gaming or betting house
- (1) Every one who keeps a common gaming house or common betting house is guilty of an indictable offence and liable to imprisonment for a term not exceeding two years.
Person found in or owner permitting use
(2) Every one who
(a) is found, without lawful excuse, in a common gaming house or common betting house, or
(b) as owner, landlord, lessor, tenant, occupier or agent, knowingly permits a place to be let or used for the purposes of a common gaming house or common betting house,
is guilty of an offence punishable on summary conviction.
Offence in relation to lotteries and games of chance
- (1) Every one is guilty of an indictable offence and liable to imprisonment for a term not exceeding two years who
(a) makes, prints, advertises or publishes, or causes or procures to be made, printed, advertised or published, any proposal, scheme or plan for advancing, lending, giving, selling or in any way disposing of any property by lots, cards, tickets or any mode of chance whatever;
(b) sells, barters, exchanges or otherwise disposes of, or causes or procures, or aids or assists in, the sale, barter, exchange or other disposal of, or offers for sale, barter or exchange, any lot, card, ticket or other means or device for advancing, lending, giving, selling or otherwise disposing of any property by lots, tickets or any mode of chance whatever;
(c) knowingly sends, transmits, mails, ships, delivers or allows to be sent, transmitted, mailed, shipped or delivered, or knowingly accepts for carriage or transport or conveys any article that is used or intended for use in carrying out any device, proposal, scheme or plan for advancing, lending, giving, selling or otherwise disposing of any property by any mode of chance whatever;
(d) conducts or manages any scheme, contrivance or operation of any kind for the purpose of determining who, or the holders of what lots, tickets, numbers or chances, are the winners of any property so proposed to be advanced, lent, given, sold or disposed of;
(e) conducts, manages or is a party to any scheme, contrivance or operation of any kind by which any person, on payment of any sum of money, or the giving of any valuable security, or by obligating himself to pay any sum of money or give any valuable security, shall become entitled under the scheme, contrivance or operation to receive from the person conducting or managing the scheme, contrivance or operation, or any other person, a larger sum of money or amount of valuable security than the sum or amount paid or given, or to be paid or given, by reason of the fact that other persons have paid or given, or obligated themselves to pay or give any sum of money or valuable security under the scheme, contrivance or operation;
(f) disposes of any goods, wares or merchandise by any game of chance or any game of mixed chance and skill in which the contestant or competitor pays money or other valuable consideration;
(g) induces any person to stake or hazard any money or other valuable property or thing on the result of any dice game, three-card monte, punch board, coin table or on the operation of a wheel of fortune;
(h) for valuable consideration carries on or plays or offers to carry on or to play, or employs any person to carry on or play in a public place or a place to which the public have access, the game of three-card monte;
(i) receives bets of any kind on the outcome of a game of three-card monte; or
(j) being the owner of a place, permits any person to play the game of three-card monte therein.
Permitted lotteries
- (1) Notwithstanding any of the provisions of this Part relating to gaming and betting, it is lawful
(a) for the government of a province, either alone or in conjunction with the government of another province, to conduct and manage a lottery scheme in that province, or in that and the other province, in accordance with any law enacted by the legislature of that province;
(b) for a charitable or religious organization, pursuant to a licence issued by the Lieutenant Governor in Council of a province or by such other person or authority in the province as may be specified by the Lieutenant Governor in Council thereof, to conduct and manage a lottery scheme in that province if the proceeds from the lottery scheme are used for a charitable or religious object or purpose;
(c) for the board of a fair or of an exhibition, or an operator of a concession leased by that board, to conduct and manage a lottery scheme in a province where the Lieutenant Governor in Council of the province or such other person or authority in the province as may be specified by the Lieutenant Governor in Council thereof has
(i) designated that fair or exhibition as a fair or exhibition where a lottery scheme may be conducted and managed, and
(ii) issued a licence for the conduct and management of a lottery scheme to that board or operator;
(d) for any person, pursuant to a licence issued by the Lieutenant Governor in Council of a province or by such other person or authority in the province as may be specified by the Lieutenant Governor in Council thereof, to conduct and manage a lottery scheme at a public place of amusement in that province if
(i) the amount or value of each prize awarded does not exceed five hundred dollars, and
(ii) the money or other valuable consideration paid to secure a chance to win a prize does not exceed two dollars;
(e) for the government of a province to agree with the government of another province that lots, cards or tickets in relation to a lottery scheme that is by any of paragraphs (a) to (d) authorized to be conducted and managed in that other province may be sold in the province;
(f) for any person, pursuant to a licence issued by the Lieutenant Governor in Council of a province or such other person or authority in the province as may be designated by the Lieutenant Governor in Council thereof, to conduct and manage in the province a lottery scheme that is authorized to be conducted and managed in one or more other provinces where the authority by which the lottery scheme was first authorized to be conducted and managed consents thereto;
(g) for any person, for the purpose of a lottery scheme that is lawful in a province under any of paragraphs (a) to (f), to do anything in the province, in accordance with the applicable law or licence, that is required for the conduct, management or operation of the lottery scheme or for the person to participate in the scheme; and
(h) for any person to make or print anywhere in Canada or to cause to be made or printed anywhere in Canada anything relating to gaming and betting that is to be used in a place where it is or would, if certain conditions provided by law are met, be lawful to use such a thing, or to send, transmit, mail, ship, deliver or allow to be sent, transmitted, mailed, shipped or delivered or to accept for carriage or transport or convey any such thing where the destination thereof is such a place.
Terms and conditions of licence
(2) Subject to this Act, a licence issued by or under the authority of the Lieutenant Governor in Council of a province as described in paragraph (1)(b), (c), (d) or (f) may contain such terms and conditions relating to the conduct, management and operation of or participation in the lottery scheme to which the licence relates as the Lieutenant Governor in Council of that province, the person or authority in the province designated by the Lieutenant Governor in Council thereof or any law enacted by the legislature of that province may prescribe.
Offence
(3) Every one who, for the purposes of a lottery scheme, does anything that is not authorized by or pursuant to a provision of this section
(a) in the case of the conduct, management or operation of that lottery scheme,
(i) is guilty of an indictable offence and liable to imprisonment for a term not exceeding two years, or
(ii) is guilty of an offence punishable on summary conviction; or
(b) in the case of participating in that lottery scheme, is guilty of an offence punishable on summary conviction.
Definition of “lottery scheme”
(4) In this section, “lottery scheme” means a game or any proposal, scheme, plan, means, device, contrivance or operation described in any of paragraphs 206(1)(a) to (g), whether or not it involves betting, pool selling or a pool system of betting other than
(a) three-card monte, punch board or coin table;
(b) bookmaking, pool selling or the making or recording of bets, including bets made through the agency of a pool or pari-mutuel system, on any race or fight, or on a single sport event or athletic contest; or
(c) for the purposes of paragraphs (1)(b) to (f), a game or proposal, scheme, plan, means, device, contrivance or operation described in any of paragraphs 206(1)(a) to (g) that is operated on or through a computer, video device or slot machine, within the meaning of subsection 198(3), or a dice game.
Exception re: pari-mutuel betting
(5) For greater certainty, nothing in this section shall be construed as authorizing the making or recording of bets on horse-races through the agency of a pari-mutuel system other than in accordance with section 204.
II. Gaming Control Act
Rules of play
- (1) No registered supplier who provides a gaming site, other than a gaming site maintained for playing a lottery scheme conducted and managed by the Ontario Lottery and Gaming Corporation, and no registered gaming assistant who provides services to the registered supplier shall permit the playing of a lottery scheme on the site except in accordance with the rules of play and other standards and requirements that are prescribed by the regulations or established by the Registrar under section 3.8. 2011, c. 9, Sched. 17, s. 11.
Same, lottery schemes of OLGC
(2) No registered supplier who provides services related to the operation of a gaming site maintained for playing a lottery scheme conducted and managed by the Ontario Lottery and Gaming Corporation and no registered gaming assistant who provides services to the Corporation or a registered supplier shall permit the playing of a lottery scheme on the site except in accordance with,
(a) the rules of play prescribed by the regulations;
(b) the rules of play approved in writing by the Board for lottery schemes, if none have been prescribed by the regulations; and
(c) the other standards and requirements prescribed by the regulations or established by the Registrar under section 3.8.
III. O. Reg. 385/99
GAMES OF CHANCE AND RULES OF PLAY
- (1) An operator of a gaming premises shall submit to the board of the Commission for its approval a complete description of each game of chance that it intends to offer for play at the premises. O. Reg. 208/00, s. 10 (1).
(2) The description shall include,
(a) a summary of the game, including its objectives, the rules of the game, the method of play and the wagers that may be made;
(b) the chances of winning the game and the advantage of the operator in relation to each wager; and
(c) a description of the equipment, if any, used in the playing of the game. O. Reg. 385/99, s. 30 (2); O. Reg. 208/00, s. 10 (2).
(3) Revoked: O. Reg. 208/00, s. 10 (3).
(4) An operator of a gaming premises shall ensure that the games of chance offered for play at the premises are approved by the board and played in accordance with the rules approved by the board. O. Reg. 208/00, s. 10 (4).
(5) Revoked: O. Reg. 208/00, s. 10 (5).
(6) The operator of a gaming premises shall, on request, provide a player with a description of the rules of play of any game of chance offered for play at the gaming premises, except for games played on slot machines.
(7) The operator of a gaming premises shall ensure that a sign indicating the maximum and minimum wagers permitted at a game of chance offered for play at the gaming premises is posted at each table at which the game is played and is clearly visible to the players at that table. O. Reg. 385/99, s. 30 (6, 7).
IV. Ontario Lottery and Gaming Corporation Act, 1999,
0.1. The purposes of this Act are,
(a) to enhance the economic development of the province;
(b) to generate revenues for the province;
(c) to promote responsible gaming; and
(d) to ensure that anything done for the purpose set out in clause (a), (b) or (c) is also done for the public good and in the best interest of the province.
47.1 No person may use civil proceedings to recover money owing to the person resulting from the participating in or betting on a lottery scheme within the meaning of section 207 of the Criminal Code (Canada) conducted in Ontario unless the lottery scheme is authorized under subsection 207(1) of the Code.
I note that at para. 2 of his reasons, the motion judge said, “Over the course of the three and a half years of play, one particular manoeuvre of the dealer [the floating ball practice] drew frequent comments and complaints [from the appellants].” In my view, this can only be an introductory comment intended to describe the appellants’ position at its highest, as it was not supported by the weight of the evidence and the motion judge gave no reason for rejecting the weight of the evidence.
Footnotes
- R.S.C. 1985, c. C-46.
- In its capacity as an Operational Enterprise Agency of the Government of Ontario that authorizes the operation of gaming premises in the province, the OLGC manages two Niagara Falls casinos and carries on business under the name Casino Niagara and Niagara Fallsview Casino Resort.
- The motion judge granted summary judgment to the OLGC for the amounts claimed in the collection action because he believed the appellants, Messrs. Braunstein and Barbuscio, had conceded that he should do so in the event their action was dismissed. However, in response to a question from this court following the appeal hearing concerning the nature of their concession, Messrs. Braunstein and Barbuscio asserted that a question was posed by the motion judge in the context of whether the roulette games were illegal. They say that, in that context, they advanced the position that, if the motion judge found the roulette games were illegal, they could rely on s. 47.1 of the Gaming Control Act, 1992, S.O. 1992, c. 24, as a bar to the collection actions. No one has disputed their description of their position before the motion judge.
- The full text of all statutory provisions referred to in these reasons is set out in Appendix ‘A’.
- According to the motion judge, three examples of an obvious reason to stop a roulette game would be: i) if the roulette ball flies out of the wheel; ii) if a foreign object lands in the wheel; or iii) someone pushes the roulette table and dislodges all the chips.
- A “floating ball” rule was added and approved as a rule of play in 2011. However, by that time, the appellants had stopped playing roulette at the Fallsview Casino.
- The AGCO also argued that because its oversight of gaming casinos is pursuant to a statutorily imposed public duty, it does not owe a private duty of care to the appellants. In addition, it argued the appellants’ claims were statute-barred.
- The respondents objected to some of the issues raised on appeal on the basis that some of the claims had not been pleaded. Given my proposed disposition of the appeal, it is unnecessary that I address this issue.
- Section 47.1 of the Gaming Control Act provides:
- At footnote 1 of his reasons, the motion judge says: “The general practice in North American casinos is that the dealer removes a floating ball before it drops into a number, stops play and declares a “no-spin”. The bets are returned to the players, the wheel is spun again and a new game is played. I understand that in European casinos, there is no “floating ball rule”. The roulette ball simply continues to roll until it drops into a numbered pocket. It appears that the reason for the North American practice is a combination of casino efficiency and customer satisfaction (more spin with more bets, more games played more quickly).
- See, for example, s. 0.1 of the Ontario Lottery and Gaming Corporation Act, 1999, which states that “[t]he purposes of this Act are, (a) to enhance the economic development of the Province; (b) to generate revenues for the Province; (c) to promote responsible gaming; and (d) to ensure that anything done for the purpose set out in clause (a), (b) or (c) is also done for the public good and in the best interest of the Province”.
- The appellants did not file responding affidavit evidence on the summary judgment motions. The evidence of the appellants on their examinations for discovery was to the effect that the roulette dealers picked up floating balls of their own volition and that the appellants complained to representatives of the casino operators that this practice was contrary to the rules of play. However, the appellants had no documents to support this assertion and Ms. Dutton’s affidavit (and the exhibits appended to it) indicate that the Fallsview Casino records of player comments (of Players Advantage Club Members) show no record of such complaints. On his cross-examination, John Stamatakos, Executive Director of Table Games at the Fallsview Casino, testified that the appellants did not make any such complaints to him.
