DeCosmo v. Blue Tarp Redevelopment, LLC

• Decision Date: 23 June 2021
• Docket Number: SJC-13031, SJC-13060
• Citation: 487 Mass. 690,169 N.E.3d 510
• Parties: Ted DECOSMO v. BLUE TARP REDEVELOPMENT, LLC. A. Richard Schuster & another v. Wynn Resorts Holdings, LLC, & others.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

487 Mass. 690

169 N.E.3d 510

Ted DECOSMO¹

v.BLUE TARP REDEVELOPMENT, LLC.²

A. Richard Schuster ³ & another⁴

v. Wynn Resorts Holdings, LLC, & others.^5,6

SJC-13031, SJC-13060

Supreme Judicial Court of Massachusetts, Hampden.

Argued April 7, 2021.

Decided June 23, 2021.

Joshua N. Garick, Woburn, for A. Richard Schuster & another.

Wayne F. Dennison, Boston, for the defendants.

Jeffrey S. Morneau, Springfield, for Ted DeCosmo, was present but did not argue.

Matt Cameron, for Stop Predatory Gambling Foundation, amicus curiae, submitted a brief.

David S. Mackey & Melissa C. Allison, Special Assistant Attorneys General, for Massachusetts Gaming Commission, amicus curiae, submitted a brief.

Present: Budd, C.J., Gaziano, Lowy, Cypher, Kafker, Wendlandt, & Georges, JJ.

KAFKER, J.

According to the wise gambling proverb, "If you must play, decide upon three things at the start: the rules of the game, the stakes, and the quitting time." The gamblers challenging the rules of the game and the stakes here (plaintiffs) were blackjack players at the Encore Boston Harbor Casino, operated by Wynn Resorts Holdings, LLC, Wynn MA, LLC, and Wynn Resorts, Ltd. (Encore); and the MGM Springfield casino, operated by Blue Tarp Redevelopment, LLC (MGM). They played at tables requiring smaller bets and paying out a winning "blackjack" at six dollars for every five dollars bet (6:5), rather than three dollars for every two dollars bet (3:2) as at the more expensive tables. The plaintiffs sat down at tables with the basic rules and 6:5 payouts printed on the felt of the table, were dealt blackjacks, and won.

With the advice of counsel, they now contend that they are entitled to 3:2, not 6:5, payouts, because the Massachusetts Gaming Commission's (commission's) blackjack rules, particularly rule 7(d), do not clearly authorize payouts of 6:5 except with games played by dealing rules different from those used at the plaintiffs’ tables. Unfortunately, rule 7(d) is at least somewhat ambiguous. In response to the plaintiffs’ claims, the commission has consistently interpreted rule 7(d) to authorize the 6:5 payout option at issue.

In a case brought by A. Richard Schuster and Robert Ranson, on behalf of themselves and all others similarly situated, a Federal District Court judge nonetheless denied Encore's motion to dismiss and certified a question of law to this court. In a separate case brought by Ted DeCosmo, on behalf of himself and all others similarly situated, a Superior Court judge agreed with the casinos and the commission and allowed MGM's motion to dismiss. We conclude that the plaintiffs understood the rules and the stakes, and that deference is due to the commission's interpretation. Therefore, the plaintiffs lose this last bet. They should have quit while they were ahead.⁷

1. Gaming and blackjack in Massachusetts. Commercial gambling is illegal in Massachusetts except where expressly authorized by the Commonwealth. See G. L. c. 271, § 2 ; G. L. c. 23K. "Only those table games and their rules authorized by the [c]ommission and posted on the [c]ommission's website ... may be offered for play in a gaming establishment." 205 Code Mass. Regs. § 147.02 (2018). New games or game variations may not be offered until they are approved by the commission in accordance with the process set out in the regulations, which requires independent certified testing, field trials, public comment, and review. 205 Code Mass. Regs. §§ 147.02, 147.04 (2018).

Blackjack is a card game in which players total the value of their cards and attempt to get more points than the dealer without going over a combined value of twenty-one. Initially, all players and the dealer are dealt two cards. If a player's first two cards include one ace and one card with a value of ten (which includes a ten, jack, queen, or king), that player has been dealt a blackjack.

The commission has written and published detailed rules of blackjack, which govern game play, equipment, wagers, and payouts. The rules expressly refer to "blackjack" and "the 6 to 5 blackjack variation" (6:5 variation). The 6:5 variation is not the 6:5 option at issue in these cases. The major differences between standard blackjack and the 6:5 variation are as follows: standard blackjack uses six or eight decks of cards that are dealt face up from a dealing shoe, whereas the 6:5 variation uses one or two decks that are dealt face down from the dealer's hand. In standard blackjack, blackjacks receive 3:2 payouts, whereas in the 6:5 variation, blackjacks receive 6:5 payouts.⁸ The payouts in standard blackjack are more favorable for the player, but the higher number of decks are more favorable for the house. The same is not true of the 6:5 variation: the payouts are less favorable for the player, but using fewer decks increases the player's advantage.

Rule 7(d) contains the only direct reference to playing by standard blackjack rules with a 6:5 payout:

"If the licensee chooses the option to pay a blackjack at odd [sic ] of 6 to 5 and doesn't use the 6 to 5 variation, then Section 7(c) is void. If the licensee uses this option on 6 or 8 deck games, this variation's rules must be displayed on the layout in plain sight."⁹

2. Facts and procedural history. a. Schuster matter (SJC-13060). Encore does not offer the 6:5 variation. Encore does, however, offer a version of blackjack that uses eight decks of cards dealt face up (as in standard blackjack) and that pays 6:5 for a blackjack (as in the 6:5 variation). We will refer to this game as 6:5 payout blackjack. Tables offering 6:5 payout blackjack displayed the following rules: "Blackjack pays 6 to 5. Dealer must draw to 16 and soft 17^{[10 ]} and stand on hard 17's and all 18's. Insurance pays 2 to 1." Encore offers 6:5 payout blackjack on the main casino floor, which is open to the general public. Encore also offers standard blackjack (with a 3:2 payout) on the upper level of the casino, which is reserved for Encore's "high rollers."

Schuster and Ranson played 6:5 payout blackjack at Encore, were dealt one or more blackjacks, and received 6:5 payouts. On July 15, 2019, Schuster commenced a proposed class action suit in the Superior Court, which Encore removed to the United States District Court for the District of Massachusetts. The District Court judge denied Encore's motion to dismiss as to the blackjack dispute. See Schuster v. Encore Boston Harbor, 471 F. Supp. 3d 411, 426 (D. Mass. 2020). After reviewing "the language of [rule] 7(d) in context," a preliminary decision from the commission's investigation and enforcement bureau (IEB) that Encore was in compliance with the rules, and a transcript of the commission's discussion of that decision, the District Court judge concluded that Schuster "made a plausible claim as to Encore's potential violation of the [commission]’s rules regarding the appropriate payout odds on ‘a blackjack,’ or, in the alternative, Encore's failure to comply with the notice requirements of [rule] 7(d) regarding even-money insurance wagers." Id. at 422. After the complaint was thereafter amended to add Ranson as a plaintiff, the judge, upon the joint motion of the parties, then certified the following question to this court:

"Did the February 11, 2019 version of the Rules of Blackjack that were published by the [commission] and posted on its website in accordance with [ 205 Code Mass. Regs. § 147.02 ] permit a Massachusetts casino to pay 6:5 odds to a player who was dealt a winning Blackjack hand, while not otherwise playing by the ‘6 to 5 Blackjack Variation’ rules that were articulated in Rule 6a of the February 11, 2019 version of the Rules of Blackjack?"

b. DeCosmo matter (SJC-13031). Like Encore, MGM offered 6:5 payout blackjack and publicized the 6:5 payout on the felt.¹¹ DeCosmo played 6:5 payout blackjack at MGM, was dealt a blackjack, and received a 6:5 payout. On July 29, 2019, he brought a proposed class action in the Superior Court. MGM's motion to dismiss was granted, and DeCosmo appealed. We thereafter granted MGM's application for direct appellate review.

c. Commission revisions. In the time since these cases were commenced, the commission has revised both the blackjack rules and the applicable blackjack table regulations. This case therefore only applies to the limited period of time between the commencement of these cases in July 2019 and the revision of the rules in October 2020.

3. Discussion. a. Standard of review. As to the DeCosmo matter, this court reviews an order on a motion to dismiss de novo. See, e.g., Dunn v. Genzyme Corp., 486 Mass. 713, 717, 161 N.E.3d 390 (2021). The Schuster matter came to us as a certified question of law. See S.J.C. Rule 1:03, as appearing in 382 Mass. 700 (1981). Although the procedural postures of these cases are different, the legal questions therein and our analysis of them are essentially identical. Therefore, we address them together.

b. Game authorization. These cases require us to interpret the commission's rules of blackjack and equipment regulations. As an initial matter, the plaintiffs contend that the regulations carry more legal weight than the rules of blackjack, and thus any conflict between the regulations and the rules should be resolved in favor of the regulations. We disagree. In these cases, the blackjack rules and regulations carry equal weight, as they are proposed and approved through similarly rigorous processes.

The plaintiffs rely on Northbridge v. Natick, 394 Mass. 70, 76, 474 N.E.2d 551 (1985), in which this court stated that "internal guidelines" and "policy statements" set by an agency "without going through the procedures required for the promulgation of a regulation ... do not have the legal force of a statute or regulation" (quotation and citation omitted). See Biogen IDEC MA, Inc. v. Treasurer & Receiver Gen., 454 Mass. 174, 186, 908 N.E.2d 740 (2009) ( Biogen ) ("courts give the force of law only to formal agency regulations" even though "agencies must abide by their own...