What Happens in Las Vegas Does Not Always Stay in Las Vegas

Many years ago, I acted for a client whose business involved running junkets to various gambling destinations in the United States and the Caribbean.  In fact, he enjoyed gambling himself.  Unfortunately, he was not very good at it.  At one point, he managed to leave behind an unpaid debt of several hundreds of thousands of dollars at an offshore casino.

The casino sued him in Ontario, and I spent quite some time trying to figure out some public policy, jurisdictional, or other such argument to help him avoid the claim.  Ultimately, the claim settled before ever seeing the inside of a courtroom so I was never able to test my arguments.

The recent case of Wynn Las Vegas LLC v. Teng puts to rest any question as to whether or not an Ontario resident has any basis for a defence against a claim by a casino for an unpaid gambling debt.

In this case, Teng obtained a line of credit from the Plaintiff casino of $300,000.  The credit agreement which he signed included a provision for interest at the annual rate of 18%.  Funds were to be drawn in exchange for post-dated cheques written on Teng’s Ontario bank account.

Teng drew on the line of credit to the total amount available and checked out of the hotel leaving the entire amount outstanding.  After the casino found no success in attempting to negotiate repayment terms with Teng, it started this action in Ontario. 

Teng first argued by way of defence that the action should have been brought in Nevada.  What advantage Teng or his lawyer may have thought would be gained if the action had proceeded in Nevada was not made clear.  In any event, the judge made short work of that argument when the casino brought a motion for summary judgment.  The judge found that the fact that Teng lived, worked and had assets in Ontario that he had listed on his credit application was sufficient to confer jurisdiction.   Furthermore, Teng had neglected to challenge jurisdiction in his pleading and was thereby found to have accepted the Ontario court’s jurisdiction.

Teng’s second argument had to do with the fact that while playing at the casino, he was offered free alcoholic drinks.  He claimed to have consumed alcohol to excess and as a result, he claimed not to remember what he had done while he was drunk (i.e. drawing down on the line of credit).  As the process of drawing down on the line of credit involved signing cheques payable to the casino, he argued that he was drunk when he signed those cheques and accordingly, he ought not be responsible for the debt that they represented.

It is difficult to predict what the result of this argument may have been under the summary judgment rules prior to the 2011 Court of Appeal decision in Combined Air Mechanical Services, discussed in an earlier post, no matter how absurd the argument might have appeared.  In any event, based on the current case law on summary judgment motions, the judge again had no difficulty concluding that there was simply no genuine issue requiring a trial.  The judge observed that Teng did attempt to negotiate repayment terms, and it was only after the claim had been issued that he suddenly asserted a lack of memory of the critical events. 

Teng also raised an issue relating to regulations under the Gaming Control Act, an Ontario statute that sets out procedures to be followed by casinos in extending credit to players.  Unfortunately for Teng, nothing in the Act or Regulations could be relied upon to relieve Teng of his obligation to repay the loan.  Interestingly, the judge explicitly doubted as to whether or not those regulations would apply to credit extended by a Nevada casino to an Ontario resident.

In any event, judgment was granted in the full amount of the claim with interest at 18% per annum and costs. 

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