$54.3 million on the line in jackpot dispute

Imagine hitting it big on a slot machine, only to be told by casino representatives that there was a computer glitch and your jackpot wasn’t worth jack.

It happened to a man in Europe last spring, and the situation points out some key differences in the way disputed jackpots are handled in Nevada and elsewhere.

In Nevada, players can contest questionable calls by casino bosses to appeals officers at the state Gaming Control Board. Whether it’s a malfunctioning machine or a dealer error, local regulators monitor patron disputes regularly, most often siding with the casino but occasionally requiring a casino to pay up when the evidence supports the player.

But that wasn’t the case in a high-profile slot jackpot case this year at Casinos Austria in Bregenz, Austria, where a Swiss flooring installer is filing a civil suit to try to recover a jackpot of 42 million Euro — or $54.3 million in U.S. dollars.

“I will fight this until the day I die,” said 26-year-old Behar Merlaku in a press conference his legal team arranged earlier this month.

The patron dispute is believed to be the largest in industry history.

Merlaku said he hadn’t been able to sleep and that he was suffering psychological problems as a result of having his jackpot wrested away from him.

Here’s what happened, according to his account from the press conference: Merlaku and his wife were playing slot machines last March around the 4 a.m. closing time at the Austrian casino, which is owned and operated by the Finance Ministry of Austria.

Casino patrons received a “last call” to play their final games before closing, and Merlaku decided to try his luck two more times on the Aristocrat machine he was playing.

“I pushed it the first time and nothing happened,” he said. “I pushed it the second time and it hit.”

Merlaku took a picture of the display with the camera on his cell phone before casino officials came to the machine. What they told him, he said, was ruining his life.

A casino executive said the machine had a software error and mistakenly displayed a jackpot amount in excess of what Casinos Austria is even allowed to pay. Officials told Merlaku that there was a glitch in the machine and blamed the manufacturer for the problem. Merlaku was offered a free meal and $100 instead.

Merlaku said his player card was taken from him, the machine display was cleared and local police made some inquiries of casino authorities, but not him.

The gambler hired attorneys to file the civil suit. During the press conference, the attorneys said they weren’t allowed to examine the machine. In fact, the machine has disappeared from the floor and there is no evidence or records showing the jackpot occurred.

The first hearing on the civil case is scheduled for Jan. 10.

Industry expert David Green, who spoke at Merlaku’s press conference, said whether a malfunction occurred or not is no longer the point — it’s how Casinos Austria has failed to resolve the dispute between the casino and the player.

“The onus has been placed on Merlaku to prove that he won rather than it being on Casinos Austria to establish that he didn’t win,” Green said. “The regulatory role is crucial.”

Green said that because gaming is a global industry, it’s important for there to be public confidence in dispute resolution. Casinos Austria, he said, made a big mistake in not placing the machine that had the alleged software glitch under quarantine.

So how are disputes handled in Nevada?

State Gaming Control Board Chairman Mark Lipparelli, who said he hadn’t heard about the Casinos Austria-Merlaku matter until contacted for comment on it, said most disputes in Nevada are resolved at the casino level before regulators even get involved.

“When you consider all the betting volume, the billions of transactions that occur and the number of wagers and slot pulls that occur, the system works really, really well,” Lipparelli said.

Most disputes of small value — generally, anything under $500 — are solved at the machine or table with casino management. Casino companies are required to report disputes over payouts of more than $500 to the Control Board for review. Patrons can also file a complaint for lesser amounts to regulators.

Computerized slot machines have “jackpot flags” installed to alert the casino when it must issue an Internal Revenue Service W2G form for gambling winnings in excess of $1,200. They also help regulators monitor the big payouts that generate disputes.

Lipparelli says some disputes come in the form of machine malfunction questions. He acknowledged that it was possible for a power surge or faulty circuitry to cause malfunctions, but most machines are built with game recall storage so that technicians can backtrack on the last 50 games or hands dealt.

Machines also lock up in a malfunction and maintain memory so that technicians can review what happened during play.

“Often, it involves a misunderstanding by a customer of the rules of the game,” Lipparelli said. “Sometimes, it involves a player who didn’t see what he thought he saw. And sometimes, it’s a legitimate dispute over an outcome.”

When a dispute occurs, an enforcement agent will go to the casino to investigate what happened, taking testimony from the player and the casino. Lipparelli acknowledged that players disputing an outcome have the burden of proof, but unlike what happened in the Casinos Austria case, licensed operators in Nevada are required to provide a record of evidence. Based on what the agent finds, a ruling letter is issued on the matter.

“Sometimes, a casino will see the gray area in the dispute and pay players rather than lose them as customers,” Lipparelli said. “It all depends on the circumstances.”

If the player or casino disputes the conclusion of the agent, the matter can be appealed to a Control Board hearing officer who will evaluate the report and possibly seek additional evidence. In some cases, video can be reviewed and internal slot machine records can be accessed.

The hearing officer hears about three to five appeals a month and reports those reviews to the Control Board, which considers them at monthly meetings. Lipparelli says the Control Board sides with the hearing officer about 95 percent of the time, and most of the hearing officer’s findings favor the casino.

Lipparelli says the majority of claims aren’t supported by facts, which is why the board usually upholds the decisions of the hearing officer. Occasionally, a dispute will spotlight a procedural flaw or problem that can turn into a policy discussion that is noted to the Nevada Gaming Commission, which can consider regulatory changes to better the system.

Disputes adjudicated by the Control Board can be appealed to District Court, but Lipparelli says that rarely happens. He says that while most of the appeals heard by the Control Board appear to favor the casinos, it’s hard to calculate how many disputes are resolved in a player’s favor before it even reaches regulators

“I think we have an elegant system in place,” Lipparelli said. “It’s our job to protect players, but we have to protect the casinos as well.”

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