Seat Switchers Banned For Life

Laura and Jill Waters -- Banned Gamblers

       Five years ago two middle aged gamblers Laura Waters (62) and her sister-in-law Jill Waters (57) won a $2,000 jackpot at Pauma Casino in Southern California. They also found themselves banished from the casino for life. In addition they were accused of money laundering and told neither of them would be paid the money they had won. Here’s what happened according to the players as reported by J Harry Jones in the San Diego Union Tribune.

       The two women frequently visited various Native American casinos, shared their cards, and split their winnings as many other couples do. On the evening of May 28 they were playing a Super 8 Race slot machine with Laura’s card in the machine when an announcement came over the loud speaker offering $1 hot dogs. Laura left to get two, and Jill moved over to her seat to watch the machine while her sister-in-law was gone. When Laura returned, the 9 yellow cars had come up and the machine signaled a hand-pay of $2,040. Laura sat back down in the seat she had left temporarily, and when the casino worker finally arrived, she handed him her driver’s license. Fifteen minutes went by before a security agent approached the women and asked who pushed the winning button. Jill said she had and explained why they later switched seats.

       He then escorted the two women to a locked room in the back, complete with a bench with built in handcuffs - an interrogation room. During this time the women were questioned on videotape, some paperwork was completed, copies of their driver’s licenses were made, and photographs were taken. After close to two hours, some papers were put in front of them to sign. It was explained that by signing the papers they were acknowledging that they were banned from the casino and could be arrested if they ever tried to reenter. The two just wanted to get out of there by then and so they signed. They complained that they were being treated like criminals for breaking a law they didn’t know existed.

       Later when they looked at what they had signed, they reacted indignantly at being treated like undesirables. Jill Waters wrote a letter of complaint to California’s Gaming Commission. She was later notified that the Pauma Band’s Gaming Commission would hold a closed hearing to review the matter and how they were treated. During that hearing the women were shown an edited videotape of the interrogation during which Jill admitted to having had past problems with the Internal Revenue Service. She said the editing made it appear she was admitting she was trying to avoid taxes by switching seats. She denied her IRS problems had anything to do with the change.

       The Pauma Gaming Commission finally ruled Jill could collect her $2,040 jackpot (which she has done), but said the lifetime ban will stay in effect. The reason given was "suspicious activity and spontaneous statements that confirmed her intent to avoid tax reporting requirements pursuant to Title 31”. Pauma officials were cleared of any wrongdoing by the California State Department of Justice which conducted a separate investigation into the matter after receiving Jill Waters’ complaint letter. That agency agreed the videotape showed a measure of collusion on the part of the players to avoid one person having to pay taxes on the winnings.

       I always liked Pauma Casino and the people who work there, and I felt it was a friendly place to play. But now I’m not so sure. The casino doesn’t seem to have handled this dispute very well. Do we know the whole story, I wonder. 

       This debacle took place around the same time that the government was extending the requirements for Title 31 compliance under the Bank Secrecy Act to casinos. Sometimes when a federal requirement is new, people don’t know how to apply those new requirements very well.

       There’s an article on the internet taken from Indian Gaming written by Stephanie Maddocks in September 2010 to help casinos understand what they were expected to do that was published about the same time these women were banned (July 2010). An earlier article by Joe Oprosko also in Indian Gaming in May 2007 addressed this same topic. Wikipedia says the US Senate Committee on Indian Affairs met Nov 17, 2011 for hearings on this issue. I mention these writings and dates only to show that this Title 31 compliance was a fairly new encumbrance at the time the Waters women were banned, and casinos were just learning how to meet their reporting obligations. 

        I would like to think that perhaps Pauma overreacted in their attempts to comply with these new Title 31 requirements that they didn’t yet understand very well.

       In any case, there’s a lesson to be learned from all this. If you are sharing a machine with a friend when a hand-pay jackpot comes up, don’t try to change who gets the W2G by lying or by changing seats. Just accept it’s the one who pushed the button. You can settle the money split and tax hit later without involving anyone else.

       Watch for coming articles on casino exclusion lists and Title 31.