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Questions Raised on Poker Bad Beat Jackpots

The Los Angeles Times has reported on a legal case involving land casinos which could have implications for online poker operators offering the Badbeat style of jackpot.
The article records a legal suit that claims players were denied a chance to compete for 'bad beat' payouts, for those who lose despite holding strong hands, unless they played at tables where the house collects $1 per pot. Similar practices are caried out ata number of online poker ooms offering the jackpots. PDC Poker
According to the LA Times piece, five Los Angeles County card rooms could lose millions if two recreational poker players win a lawsuit challenging the popular Badbeat jackpot promotion.
Apparently California state officials have warned casinos that the jackpots - in which players can win thousands of dollars for losing - are classed as illegal lotteries.
Card rooms typically collect $1 from every pot, amassing thousands of dollars a day, and use the money to reward players who lose despite holding exceptionally strong hands. These tough-luck gamblers qualify for the casinos' "bad-beat jackpots" - consolation prizes that often far exceed the amount of money scooped up by the winning players.
The LA Times references a 2005 advisory, where then-Attorney General Bill Lockyer cautioned casinos that the promotions violated state law unless players were allowed to win the jackpots without paying the table fee. It's the same legal principle that requires McDonald's to give away game pieces for its popular Monopoly game to consumers who ask for them, regardless of whether they buy anything.
Recreational poker players Dennis Chae and Jeff Kim contend in the lawsuit that the Bicycle Club, Commerce, Hustler, Hollywood Park and Hawaiian Gardens casinos would not allow them to compete for the jackpots unless they played at tables that collected the $1-per-pot fees, even though casino adverts said no purchase was required.
Their lawsuit, filed May 1 in Los Angeles County Superior Court, seeks class-action status and alleges that tens of thousands of players could become plaintiffs. It accuses the casinos of false advertising and unfair competition and seeks monetary damages and an injunction ending the jackpots.
Haig Kelegian, managing general partner of the Bicycle Casino in Bell Gardens, described the lawsuit as a stunt that had little chance of succeeding. If players at his casino ask, and very few do, they can play at tables that don't collect the $1 fees, he said.
"They're just doing this to try to figure out a way to sue somebody," Kelegian said. "We have always had no purchase necessary."
Andy Schneiderman, vice president and general counsel for the Commerce Casino, said in a statement that the casino's bad-beat promotion "complies with all legal requirements."
The poker players' lawyers estimate that the five casinos collect millions annually for the jackpots. They charge "administrative fees" of 15 percent to 25 percent before funding the jackpot pools, collecting hundreds of thousands of dollars in profit, the lawyers said.
"The casinos obviously have tremendous incentive," said Tym S. MacLeod, one of the plaintiffs' lawyers. "This is not a case about collecting gambling losses back; this is a case about putting a stop to the deceptive advertising."

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