Supreme Court of Canada to Examine VLT Case
A VLTs case that began in 2012 in Newfoundland and Labrador has finally reached the Supreme Court of Canada. The highest court in the land will consider two challenges to an appeals court decision that allowed the VLTs case to become a class action affair.
As many as 30,000 people in Newfoundland and Labrador could be affected by the outcome of the VLTs case, all of whom paid the Atlantic Lottery Corporation (ALC) to gamble on video lottery terminals, more commonly known as VLTs.
Many provinces in Canada allow VLTs. Moreover, their state-run lottery corporations rely on that revenue to fund many educational and social programs. A Supreme Court of Canada decision could therefore have far-ranging impact across the country.
Almost a Decade Ago
Everything started in 2012 when Douglas Babstock and Fred Small, sued the ALC, alleging that the lottery regulator was guilty of unlawful gain from VLT revenue. They claimed that they were due damages because the machines were “mesmerising,” as well as inherently deceptive, addictive, and dangerous “when used as intended.”
Further, the plaintiffs believed that VLTs violated the Newfoundland and Labrador criminal code. They claim technology was used to attract players and make them falsely believe they will win money when they actually lose money. That, they say, was illegal.
More people joined in as the case moved forward. In 2017, the case then became a class action claim. The VLTs case now includes up to 30,000 people who played VLT games anytime after April 2006. Everyone in the class action suit now wants monetary compensation and the machines removed from all public locations.
The defendant, the ALC, has repeatedly argued that VLTs are decided purely by chance. Furthermore, previous court cases have determined that the games are in full compliance with Newfoundland and Labrador laws.
Plaintiffs Refuse VLTs Case Defeat
The plaintiffs have lost their case as it went through the court system. In 2018, however, the Newfoundland and Labrador Court of Appeal approved the class action case again. The move gave the plaintiffs, led by Toronto lawyer Kirk Baert, renewed vigour to continue pursuing the matter.
However, the Court of Appeal also rejected the plaintiffs’ claims that VLTs violated the Competition Act of Canada and a 1710 British statute regarding deceitful gaming.
Even so, the class action moved forward, and they appealed the case to the Supreme Court of Canada.
Last week, the Canadian Press reported that the high court will look at the case on the basis of two challenges regarding the classification of the lawsuit as a class action matter. If the Supreme Court of Canada rejects the class action status, the case is likely dead. And if the status is upheld? The court may then decide to look at the entirety of the case to rule on its merit.
There are many reasons for the intense scrutiny of the case, including potential lost revenue for the four Atlantic territories serviced by the ALC. The ALC brought in enough revenue during the 2017-2018 financial year to distribute over $491 million to the four provinces. It was also able to pay out more than $412 million to winning players. Newfoundland and Labrador alone took in nearly $139 million of the distribution of revenue. This was then spent primarily on communities that participate in lottery programs.
Retailers also benefit greatly from hosting VLTs on their premises. The machines can offer reel games, similar to slots, and keno, and they can put the machines in their restaurants, liquor stores and bars in order to receive a portion of the revenue based on the amount of money collected by those VLTs.
That same 2017-2018 year, there were close to 4,000 retailers participating in the ALC’s VLT system. They subsequently split more than $134 million in profits. Most retailers will not be keen to part with their machines.
The outcome of the case before the Supreme Court of Canada could impact all ALC provinces, as well as others that offer VLTs. A ruling against the ALC could prompt lawsuits across Canada. All of the governments may then have to fight for the machines. Or else find other ways to generate the income they will lose from giving them up.